ACCOUNTING PRACTICES UNDER CBS

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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
Your reactions / expectations?

What do you feel are drawbacks

with your existing systems?

What changes do you expect

with the new system?

Are you prepared to face and

accept the changes?

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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
Change management & acceptance –

Technology means increased pace of change;

the challenge is to :
* Gain user acceptance for technology
* Keep users up to date

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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
Change management & acceptance –

New software will change the existing

systems / functionality;

Hence, new functionality will require

training & reorientation.

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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
Change management & acceptance –

Be prepared to face the challenges

– a problem remains a “problem”
only till the time you come up with
its solution!!
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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
What benefits can be expected from core solution?

~ Centralised Data & Processing

~ Improved operational efficiency

~ Improved Delivery Channels

~ Value Addition to existing services

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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
What benefits can be expected from core solution?

~ Reduced paper work

~ On line inventory

~ MIS / DSS

~ Consolidated Reports

~ Uniform Accounting
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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
 A LIKELY SCENARIO AFTER CENTRALISATION

PO
PMG = MIS + DSS
Savings
Bank

Core

N.S.C, PLI
PPF etc.
Post Offices

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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
To achieve all the above benefits the system
needs a sound base and robust accounting
principles!

What does the accounting system ensure?

1. Accuracy in recording the transactions

2. A clear picture of the state of affairs

3. Enables the organisation to present its

financials as per well set standards
/ principles
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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
Fundamentals of accounting principles

There are two methods of book-keeping :

SINGLE ENTRY & DOUBLE ENTRY

SINGLE ENTRY SYSTEM

• Single entry system is used only by small

business

• Many items are kept on “memorandum” basis

and there are only basic records

• Errors / wrong recording are likely to occur

and may not be detected easily

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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
Fundamentals of accounting principles

DOUBLE ENTRY SYSTEM

1.Ensures that all the transactions are balanced

and accounted properly – system ensures
arithmetical as well as accounting accuracy

2.In case entries are passed wrongly,

corrections are made through “Adjustment
Entries”; which gives a clear record of the
errors and corrections thereof

3.No entry / head of account will be omitted

while finalising the accounts; balances will
not tally if any omission takes place

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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
Fundamentals of accounting principles

DOUBLE ENTRY SYSTEM

4. Makes available on daily basis the position of

various heads of accounts automatically; this
forms the base for consolidation and
preparation of Balance Sheet

5. All heads of accounts are well defined –

Assets, Liabilities, Income & Expenditure.

6. Daily position will reflect the balance of all

items as on that date

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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
Fundamentals of accounting principles

DOUBLE ENTRY SYSTEM

7. Enables accurate and quick consolidation of

accounts

8. Enables synopsis to be provided to the top

management for a quick overview of the
financials.

9. Permits and enables the comparison of data

across various periods of time.

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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
 Before we proceed further

----

Any point needs clarification ?

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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
 Main features of the system
1. A front end menu for all users to actually conduct the
various day-to-day activities
Each user will be uniquely identified

As and when various activities / transactions are

performed, system will release the necessary
accounting entries
For example –
When Postal Stamps worth Rs. 100/- are sold for cash,
system will release the following entries :
Debit Cash on Hand
Credit Postal Stamps on Hand A/c

2. A centralised database which stores all the

transactions
Thus, if say 2000 PO’s are on core and doing the above
business, the system will capture all these
transactions; system is capable of identifying the PO
from where this transaction has originated
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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
 Main features of the system

3. Additional modules can be integrated with the core

system – say a separate module is used for Mutual
Fund Business
PO is collecting application money from subscribers;
amount collected is remitted to the MF Company ; PO is
entitled to receive commission for collection.
In this case system can record and capture all the
various activities, as under:-
a. Debit Cash On Hand Rs. 10,000
Credit MF Collection A/c Rs. 10,000
(Being cash deposited by a customer)
b. Debit MF Collection A/c Rs. 1,00,000
Credit Bank A/c Rs. 1,00,000
(Being collection at end of the day remitted)
c. Debit Bank A/c Rs. 500
Credit Commission A/c Rs. 500
(Being commission received from MF Company)

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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
 Main features of the system
4. A separate module will take care of General Ledger
requirements
The front end system will enable the various
activities to happen and record / generate the
necessary transactions;
The actual accounting of these entries will happen
separately, in another module, which will be the
repository of the various GL accounts;
This type of record is termed as “Control Ledger”
in accounting parlance.

5. Data from front-end will be consolidated and uploaded

into GL module
There is process termed as “END OF DAY” for the
front end system; during this process the entire
data of all the transactions that took place during
the day will be consolidated; this data is then
uploaded in GL module for posting / processing.
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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
 Main features of the system
6. Subsequent processing will be done through GL
module
The consolidated data flowing from the front end
system is structured to capture the PO / Branch
from where the transaction has originated – hence
the posting in GL, though at central level, allows
individual unit level MIS

7. Daily reports pertaining to front-end transactions as

well as GL related reports will be available
Once “EOD” is complete in the front-end, branch
level reports are generated and sent to the
respective branches.
GL Module will generate the branch-wise reports
like Trial Balance, Profit & Loss A/c. which are also
sent to the branches.
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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
 Main features of the system
8. Consolidation of GL reports at various level
GL Module will allow the reports to be
consolidated at various levels – say for all Post
Offices in Pune City; or for all in Maharashtra; or
all those on core

9. GL module will support additional features like

budgeting, cost control etc.

10. GL module can also accept data from other sources, if

the input data can be structured

11. To conclude, not only will the working of all the units
be uniform, but the system will ensure that there will
be standarised reports and frequency of reporting –
which can be fixed as per the choice of organisation.

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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
 ANY QUESTIONS
OR
POINTS FOR DISCUSSION?

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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune
Best wishes to all of you!

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By V. Ramesh Prabhu, Senior Manage, FM&A Department, Bank of Maharashtra, Central Office, Pune