Accounting Standards of Banks and the Extent of Compliance

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Research Journal of Finance and Accounting ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol 2, No 4, 2011

Compliance of IAS-30: A Case Study on the Specialized Banks of Bangladesh Md. Shamim Hossain (Corresponding author) School of Business and Economics, Manarat International University Plot # CEN 16, Road # 106 Gulshan, Dhaka-1212, Bangladesh E-mail: Mobile No.: +8801927652385 Abdul Alim Baser Brac Business School, Brac University 66 Mohakhali Dhaka 1212 Bangladesh E-mail: Mobile No.: +8801814750380 Abstract This Journal aimed at scrutinizing the prevailing accounting standard for the banks and find out the extent of compliance by them. To find out the degree of compliance the study has gone through the annual reports of all the sample banks. Very naturally it is hoped that all of them are required to comply with the standard to uphold the stakeholders’ interest. Banking industry’s nature of operation is totally different .Recognizing this aspect some specific IAS (International Accounting Standard) have been prescribed for them. One of which is IAS 30(Disclosures requirements for banks and similar financial institutions). Although IAS-30 has been superseded by IFRS (International Financial Reporting Standard)-7, ICAB (Institute of Chartered Accountants of Bangladesh) prescribed to comply with IFRS-7 from on or after 1st January, 2010. Hence compliance of IAS-30 is of importance here. Keywords: IAS, IFRS, Specialized banks, compliance. 1. Introduction Banking industry is the most flourishing as well as the most contributing sector of our economy. Banking can be termed as one of the primitive business though its institutional look is not so old. Banking sector is the driving force of any country for its sustainable development. It is more than truth for a developing country like ours. At present Bangladesh have 49 scheduled commercial banks, 6specialized banks, 4 nationalized commercial banks and some NGOs operating for micro credit expansion. The specialized banks play a pioneer role in this regard. They are virtually the catalyst of our socio economic development. Hence their beneficiaries are many. Above all they are business entities. Therefore compliance of required laws and regulations are compulsory for them. Here lie the major clues for the compliance of accounting standard. Banks and other similar financial institutions are different from other business entities. To disclose the financial performance and financial position of this type of financial institutions, regulatory watchdogs prescribed different techniques. One of such techniques is to comply with the applicable accounting standard such as IAS-30. Though not mandatory, compliance of IASs aims at faithful representation of financial performance and financial position of an entity. In spite of being flourishing and major sector prior work on compliance with IAS-30 shows a questionable conclusion as to the degree of compliance. Moreover prior works were done on commercial banks and with other standards also. Hence comes the scope of scrutinizing compliance of IAS-30 by the specialized banks of Bangladesh. Again since all the specialized banks are SOEs (State owned Enterprise) it has deep importance to find out the compliance status of these banks.


Research Journal of Finance and Accounting ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol 2, No 4, 2011 2. Objectives of the study: 1. To find out the degree of compliance of the standard by the banks. 2. To find out the deviation from the standard.

3. Methodology of the study To draw the conclusion on the topic only the secondary source of information has been analyzed. This includes annual reports, articles on this issue, different relevant acts etc. The analysis is done by content analysis which is widely being used in a social science research which involves reading the annual report and pocking up both...
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