CHAPTER-I

INTRODUCTION

1.1 Background
Accounting is the systematic and comprehensive recording of financial transactions
pertaining to a business, and it also refers to the process of summarizing, analyzing and
reporting these transactions to oversight agencies and tax collection entities. Accounting is
one of the key functions for almost any business; it may be handled by a bookkeeper and
accountant at small firms or by sizable finance departments with dozens of employees at
large companies. In most cases, accountants use generally accepted accounting principles
(GAAP) when preparing financial statements. GAAP is a set of standards related to balance
sheet identification, outstanding share measurements and other accounting issues, and its
standards are based on double-entry accounting, a method which enters each expense or
incoming revenue in two places on a bank's balance sheet.
Banks and similar business entities, such as thrifts or credit unions, offer the most
commonly recognized and frequently used financial services: checking and savings accounts,
certificates of deposit (CDs), home mortgages, and other types of loans for retail and
commercial customers. Through means such as credit cards, wire transfers, letters of credit
and currency exchange, banks act as payment agents, facilitating financial transactions
between consumers and businesses or between companies. Investment banks specialize in
providing services designed to facilitate business operations, such as capital expenditure
financing and equity offerings. Protection of assets and protection against financial risk,
secured through insurance products, is an essential service that facilitates individual and
corporate investments that fuel economic growth.
Gothenburg has a long tradition of cross-departmental collaboration in education
program and courses, research programs and infrastructural initiatives in the areas of
Business Administration and Accounting. In 2005, the Centre for Business Solutions was
formed as one of the strategic initiatives at the School of Business, Economics and Law. This
involves an increased focus on Accounting Information Systems (AIS) related issues, and the
creation of an inter-university platform for teaching and research within the area of AIS. In
order to become an accepted part of the international community of AIS research and to
establish University of Gothenburg as a center of excellence within the area the research

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program seeks to extend the current understanding of AIS, but also to provide useful
knowledge to managers in their efforts to manage organizations effectively and efficiently.

In short, Global IME Bank Limited was established on 2007 A.D. with an objective
of extending professionalized and efficient banking service to various segments of the
society. The bank has initial share capital of Rs. 5 billion, paid up capital Rs. 4 billion 10
crore . Today, this bank has grown to become one of the lending bank in Nepal. GIBL is a
joint venture bank. GIBL is the only bank having representative office in foreign soil. The
office facilities remittance of Nepalese working in India can even open accounts through the
office.

Bank of Kathmandu is a ‘A’ grade bank. Presently is has 50 branches and its head
office is Kamal Pokhari, Kathmandu. The bank at Butwal is its fourth and its operation since
a decade ago led by Mr. Ekraj Rawal as branch manager with a team of seven staffs. Bank of
Kathmandu was established on March 10, 1995 and come into operation on October 18, 1995
with an objective of extending of professionalized and effective banking services to various
segments of the society. Its shareholders structure is group of companies holding 51% of total
capital. Financial institution holding 5.43% and rest 43.57% holding by general public. It
means BOK listed on the stock exchange market (NEPSE). The bank has grown to become
one of the leading banks in financial sectors. It became awarded by ‘bank of year 2011’.

1.2 Problem Statement

All the above contents explain here the importance of accounting system in financial
institution of the bank. The important of this analysis is equally even from every aspect
shareholders analyze these statements to have information about the firm. Similarly share
holder shows great concern about the overall strength and weakness of the bank. The study
tries to seek the answer to the following questions:

 What are the factor affecting accounting systems in the bank?

 How accounting system affects the financial performance of the bank?
1.3 Objectives of the Study
The basic objective of the study is to highlight the accounting system in financial
institution of the bank. The main focus of the bank is going to better accounting system by
institutions. The main objectives of the study are as maintained below:
 To identify the factor affecting accounting system in the bank.