Project of Accounting - Bank Alfalah

8/3/2019 Project of Accounting - Bank Alfalah

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Financial AccountingProject Bank Alfalah

1/15/2011

Section: M.Com B

Submitted To: Prof. Azfar Ali

Submitted By: Hammad Malik 0053

Ahmed Anwar Shah 0056

Ammarah Tariq 0084

Anam Aslam 0089

U N I V E R S I T Y O F C E N T R A L P U N J A B


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U N I V E R S I T Y O F C E N T R A L P U N J A BPage

Table of Contents

Sr. # Topic Page #

1 Commercial Banking Scenario in Pakistan 1

2 Introduction to Bank Alfalah 3

3 Board of Directors 4

4 Chairmans Message 5

5 Branches of Bank Alfalah 6

6 Auditors Report to Shareholders 7

7 Balance Sheet 10

8 Cash flow statements 12

9 Statement of Changes in Equity 15

10 Statement of Comprehensive Income 18

11 Accounting Policies 20

12 Conclusion 24



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COMMERCIAL BANKING SCENARIO IN PAKISTAN

At the time of independence in 1947, there were 38 scheduled banks with 195

offices in Pakistan but by December 31, 1973, there were 14 scheduled Pakistani

commercial banks with 3,233 offices all over Pakistan & 74 offices in foreign

countries.

Nationalization of Banks took place on 1st January 1974 under the Nationalization

act 1974, due to certain objectives. But it had negative effects on efficiency of the

banking sector afterwards a privatization Commission was set up on January 22,

1991, the commission transferred many banks to the private sector i.e., MCB &

ABL. The government approved & permitted the establishment of 10 new private

banks in 1991; hence many new private banks have incorporated, since then,

BANK ALFALAH in one of the namely established private scheduled banks in

Pakistan.



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U N I V E R S I T Y O F C E N T R A L P U N J A BPageU N I V E R S I T Y O F C E N T R A L P U N J A B


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Bank Alfalah Limited was incorporated on June 21st, 1992 as a public limited

company under the Companies Ordinance 1984. Its banking operations

commenced from November 1st, 1997. The bank is engaged in commercial

banking and related services as defined in the Banking companies ordinance, 1962.

The Bank is currently operating through various branches in Pakistan, Bahrain,

Bangladesh & Afghanistan, with the registered office at B.A.Building,

I.I.Chundrigar,Karachi.

Since its inception, as the new identity of H.C.E.B after the privatization in 1997,

the management of the bank has implemented strategies and policies to carve a

distinct position for the bank in the market place. Strengthened with the banking of

the Abu Dhabi Group and driven by the strategic goals set out by its board of

management, the Bank has invested in revolutionary technology to have an

extensive range of products and services.

This facilitates our commitment to a culture of innovation and seeks out synergies

with clients and service providers to ensure uninterrupted services to its customers.

We perceive the requirements of our customers and match them with quality

products and service solutions. During the past five years, we have emerged as one

of the foremost financial institution in the region endeavoring to meet the needs of

tomorrow today.

BOARD OF DIRECTORS



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H.E. Sheikh Hamdan BinMubarak Al NahayanChairman

Mr. Abdulla Nasser HawalileelAl-MansooriDirector

Mr. Abdull Khalil Al MutawaDirector

Mr.Khalid Mana Saeed AlOtaibaDirector

Mr. Ikram Ul-Majeed SehgalDirector

Mr. Nadeem Iqbal SheikhDirector

Mr. Sirajuddin AzizDirector & CEO

CHAIRMANS MESSAGE



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"Our core philosophy of honesty, transparency in customer dealings,

product innovation, excellence in customer service and our commitment

to being a responsible corporate citizen pervades this website

Since the inception of Bank Alfalah, by the grace of The Almighty, we have moved rapidly in

expanding our branch network and deposit base, along with making profitable advances and

increasing the range of products and services. We have made a break-through in providing

premier services at an affordable cost to our customers.

Keeping in view our valued clients and the need for constant and effective communication of

information, we have designed this website to be as user friendly as possible.

As we pursue the path of excellence, customer satisfaction remains our priority. It is only

when we know our customers better, can we deliver a higher quality of services, thereby

adding synergy to our existing management expertise, financial strength and profitability.

This is yet another channel of communication for the delivery of quality products and services

that enhance value to our stakeholders.

H.E.Sheikh Hamdan Bin Mubarak Al Nahayan

BRANCHES OF BANK ALFALAH



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The bank is currently operating through more than 362 branches domestically and

an international presence in Afghanistan,

Bangladesh and Bahrain, with the registered

office at B.A.Building, I.I.Chundrigar, andKarachi.

Some of the main branches are located in all of

the major cities including: Bahawalnagar,

Hyderabad, Lahore, Kasur, Islamabad, Gawadar, Peshawar, Faisalabad, Quetta,

D.I.Khan, Rawalpindi, Sargodha, Sukkur, Sialkot, Multan,Dera Ghazi Khan,

Murree, Attock District, Gujranwala, Pirmahal, Mirpur Khas, Mandi Bahauddin,

Lodhran etc.

Vision

To be the premier organization operating locally & internationality that provides

the complete range of financial services to all segments under one roof.

Mission

To develop & deliver the most innovative products, manage customer experience,

deliver quality services that contributes to brand strength, establishes a competitive

advantage and enhances profitability, thus providing value to the stakeholders of

the bank.

Slogan THE CARING BANK

AUDITORS REPORT TO THE SHAREHOLDERS

We have audited the annexed balance sheet of Bank Alfalah Limited as at

December 31, 2009 and the related profit and loss account, statement of



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comprehensive income statement, cash flow statement and statement of changes in

equity together with the notes forming part thereof (here-in-after referred to as the

financial statements) for the year then ended, in which are incorporated the un

audited certified returns from the branches except for thirty eight branches whichhave been audited all the information and explanations which, to the best of our

knowledge and belief, were necessary for the purposes of our audit.

It is the responsibility of the banks management to establish and maintain a

system of internal control, and prepare and present the financial statements in

conformity with the approve accounting standards and the requirement of the

Banking Companies Ordinance,1962, and the Companies Ordinance, 1984. Our

responsibility is to express an opinion on these statements base on our audit.

We conducted our audit in accordance with the international Standards on Auditing

as applicable in Pakistan. These standards require that we plan and perform the

audit to obtain reasonable assurance about whether the financial statements are free

of any material misstatement. An audit includes examining, on a test basis,evidence supporting the amount s and disclosures in the financial statements. An

audit also includes assessing the accounting policies and significant estimates

made by management, as well as, evaluating the overall presentation of the

financial statements. We believe that our audit provides a reasonable basis for our

opinion and after due verification, which in the case of loans and advances covered

more than sixty percent of the total loans and advances of the bank, we report that:

(a) In our opinion, proper books of account have been kept by the Bank as

required by the Companies Ordinance ,1984, and the returns referred to

above received from the branches have been found adequate for the purpose

of our audit;



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(b) In our opinion:

The balance sheet and profit and loss account together with the notes thereonhave been drawn up in conformity with the banking Companies Ordinance,

1962 and the Companies Ordinance, 1984, and are in agreement with the

books of account and are further in accordance with accounting policies

consistently applied, except for the changes as stated in note 3.2 to the

financial statements, with which we concur;

The expenditure incurred during the year was for the purpose of the banks

business; and

The business conducted, investments made and the expenditure incurred

during the year were in accordance with the objects of the bank and the

transactions of the bank which have come to our notice have been within the

powers of the bank.

(c) In our opinion and to the best of our information and according to the

explanations given to us the balance sheet, profit and loss account, statement

of comprehensive income, cash flow statement and statement of changes in

equity together with the notes forming part thereof conform with the

approved accounting standards as applicable in Pakistan and given the

information required by the Banking Companies Ordinance 1962 and the

Companies Ordinance 1984 in the manner so required and give a true and

fair view of the state of the banks affairs as at December 31, 2009, and its



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true balance of profit, its cash flows and changes in equity for the year then

ended; and

(d) In our opinion Zakat deducted at source under the Zakat and Ushr

Ordinance 1980 was deducted by the bank and deposited in the Central

Zakat fund established under section 7 of that ordinance.

Ferguson & Co.

Chartered Accountants

Engagement Partner: Salman Hussain

Dated: March 16, 2010

Karachi.

BANK ALFALAH LIMITED

BALANCE SHEET

AS AT DECEMBER 31, 2009

ASSETS NOTE (RUPEES IN 000)

2009Cash and balance with treasury banks 6 35056012Balance with other banks 7 22722639

Lending to financial institutions 8 14947435

Investments 9 99159957

Advances 10 188042438

Fixed Assets 11 14492194

Deferred tax assets - -



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Other assets 12 14649380

TOTAL ASSETS 389070055

LIABILITIES NOTE (RUPEES IN OOO)

Bills Payable 13 3766144

Borrowings 14 20653921

Deposits and other accounts 15 324759752

Sub-ordinate loans 16 7570181

Liabilities against assets subject to financial

lease

- -

Deferred tax liabilities 17 179851

Other liabilities 18 10006786

TOTAL LIABILITIES 366936635

NET ASSETS 22133420

REPRESENTED BY NOTE (RUPEES IN OOO)Share capital

Reserves

Inappropriate profit

19

20

13491563

3587969

2690728TOTAL 19770260

2363160Surplus on revaluation of assets net of tax

TOTAL 22133420

CONTINGENCIES AND COMMITMENTS:

The annexed notes 1 to 44 and Annexure I and II from an integral part of these financial

statements.



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CASH FLOW STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2009

CASH FLOWS FROM OPERATING

ACTIVITIES

NOTE (RUPEES 000)

Profit before tax

Less: Dividend income

1016316

(248217)

768099

(+)ADJUSTMENTS:Depreciation 1467784

64999

3694546

317164

(1419)

(2849)

59817

(43521)

Amortization

Provision against loans and advances

Provision for diminution in value of

investments

Provision against off balance sheet obligations

Loss on revaluation of investments classified

as held for trading

Bad debts written off directly

Gain on sale of fixed assets

Provision for gratuity



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189352

5745873

6513972

(INCREASE)/DECREASE IN

OPERATING ASSETSLess: Lending to financial institutions (11237039)

Less: Held for trading securities (242172)

Less: Advances (5813)

Less: Other Assets (4785364)

(16270388)

INCREASE/DECREASE IN

OPERATING LIABILITES

Bills payable 314113

Borrowings 6963699

Deposits and other accounts 24026894

Other liabilities 144034

Gratuity paid (189352)

Income tax paid (1557045)

Net cash flow from operating activities 19945927

CASH FLOWS FROM INVESTING

ACTIVITIESNet investments in available for sale securities (16255052)

Net investments in held to maturity securities (7487002)

Investments in associated companies -Dividend income received 253568

Investments in fixed assets (1903456)

Proceeds from sale of fixed assets 112166

Net cash generated from investing activities (25279776)

CASH FLOW FROM FINANCING

ACTIVITIESIssuance of subordinate loans 5000000

Redemption of subordinate loans (988)

Issuance of right shares 3997500

Dividend Paid -Net cash generated from financing activities 8996512Exchange difference on translation of the net

investments in foreign branches

242506

Increase in cash and cash equivalents 3905169

Cash and cash equivalent at beginning of the

year

57583878



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CASH AND CASH EQUIVALENT AT THE

END OF THE YEAR

31 61489047

The annexed notes 1 to 44 and Annexure I and II from an integral part of these financial

statements.


STATEMENT OF CHANGES IN EQUITY


(Rupees000)

articulars Share

Capital

Share

Premium

Statutory

Reserve

Reserve for

issue of

Bonus

Shares

Exchange

Translation

Reserve

Inappropriate

Profit

Tot

alance at Jan

2008

6500000 - 2327775 - 87058 4851840 137

3

hanges in



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ransfer from

urplus on

evaluation of

xed assets

- - - - - 24696 2469

ransfer to

atutory

eserve

- - 179407 - - (179407) -

sue of right

hares

3997500 - - - - - 399

ransfer to

eserve for

sue of bonus

hares

- - - 1499063 - (1499063) -

sue of bonus

hares for year

nded Dec

1,[email protected]

%

1499063 - - (1499063) - - -

alance at

Dec31, 2009

134915

63

- 2767442 - 820527 2690728 197

60

(a) This represents reserve created under section 21(i)(a) of the Banking

Companies Ordinance,1962

(b)As more fully explained in note 10.5.1 of these financial statements balance

of Rs. 1562.488 million (2008: Rs. 404.459 million) as at Dec 31,2009

representing additional profit arising from availing FSV benefit for

determining provision requirements is not available to the bank for the

purpose of distribution of dividend to shareholders

The annexed notes 1 to 44 and Annexure I and II from an integral part of these

financial statements.



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BANK ALFALAH LIMITEDSTATEMENT OF COMPREHENSIVE INCOME


Particulars Note 2009

Interest earned

Less: Interest expensed

23

24

35561312

24654180

Net interest income 10907132

Less: Provision against loans and advances

Less: Provision for diminution in value of

investments

Less: Bad debts written off directly

10.5

9.21

10.6

3694546

317164

59817

Interest income after provision 6835605

Non mark up/ Interest income

Add: fee, commission and brokerage income

Add: Dividend income

Add: Income from dealing in foreign currencies

Add: Gain on sale of securities

Add: Unrealized Gain

Add: Other income

25

9.23

26

1913004

248217

1019732

688924

2849

1309527

12017858

Non mark up/ interest expenses

Less: Administrative expenses

Less: Provision against off balance sheet oblige

Less: other charges

27

18.2

28

10923507

(1419)

79454

PROFIT BEFORE TAXATION 1016316

Less: Taxation 119281

PROFIT AFTER TAXATION 897035

Add: Other incomes 242506

TOTAL COMPREHENSIVE INCOME FOR THE 1139541



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YEAR

The annexed notes 1 to 44 and Annexure I and II from an integral part of these

financial statements.

ACCOUNTING POLICIES OF BANK ALFALAH

Statement of Compliance



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These financial statements have been prepared in accordance with approve

accounting standards as applicable in Pakistan. Approved accounting standards

comprise of such International Financial Standards issued by the International

Accounting Standards Boards as are notified under the CompaniesOrdinance,1984, provision of and directives idled under the companies Ordinance ,

1984 Banking Companies Ordinance,1962 and the directives issued by State Bank

of Pakistan. In case the requirements differ, the provisions of and directives issued

under the companies Ordinance 1984, Banking Ordinance, 1962 and the directive

issued by SBP prevail.

Early adoption of standards

The bank did not early adopt new or amended standards in 2009.

Accounting Convention

These financial statements have been prepared under the historical cost convention

except that certain fixed assets are stated at revalued amounts, and held for trading

and available for sale investments and derivative financial instruments are

measured at fair value. The financial statements are presented in Pakistani Rupees,

which is the Banks functional and presentation currency. The amount is rounded

to nearest thousand.

Tangible Fixed Assets

Fixed assets except office premises are shown at historical cost less accumulated

depreciation and accumulated impairment losses, if any. Depreciation is charged to



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income applying the straight line. The depreciation charged for the year is

calculated after taking into account residual value, if any.

Intangible Fixed Assets

Intangible assets having a finite useful life are stated at cost less accumulated

amortization and accumulated impairment losses, if any. Such intangible assets are

amortized using the straight line method over their estimated useful lives

Capital work in progress

Capital work in progress is stated at cost less impairment losses, if any.

Current Taxation

Current tax is the expected tax payable on the taxable income for the year using tax

rates enacted at the balance sheet date and any adjustment to tax payable in respect

of previous years.

Defined Contribution Plan

The Bank operates a recognized provident fund scheme for all its permanent

employees to which equal monthly contributions are made both by the Bank and

employees at the rate of 8.33 percent of basic salary. The Bank has no further

payment obligations once the contributions have been paid.

Acceptance

Acceptance comprises undertakings by the Bank to pay bills of exchange drawn on

customers. The Bank expects most acceptances to be simultaneously settled with

the reimbursement from the customers.



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Foreign Operation

Assets and Liabilities of foreign operations are translated into rupees at the

exchange rate prevailing at the balance sheet date. The results of foreign operations

are translated at average rate of exchange for the year.

Earnings per Share

The Bank presents basic and diluted earnings per share for its shareholders. Basic

EPS is calculated by dividing the profit or loss attributable to ordinary shareholders

of the bank by the weighted average number of ordinary share outstanding during

the year

Ijarah Arrangements

Ijarah contracts entered into by the bank essentially arrangements whereby the

bank (being the owner of assets) transfer its usufruct to its customers for an agreed

period at an agreed consideration. The significant ijarah contracts entered into by

the bank are with respect to vehicles plant and machinery and equipments and are

for periods ranging from3 to 5 years.

Fee, Commission and brokerageFee, commission and brokerage income except income from guarantees are

accounted for on receipt basis. Commission on guarantees is recognized on time

period basis.



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Functional and Presentation currency

Items included in the financial statements are measured using the currency of the

primary economic environment which the bank operates.

Workers welfare Fund

The workers welfare Ordinance ,1971 has been amended vide Finance Act 2008 by

virtue of which the bank is now liable to pay WWF @2% of profit before tax as

per accounts or declared income as per income tax return, whichever is higher.

Dividend and appropriation to reserves

Dividend and appropriation to reserves, except appropriations which are required

under the law, after the balance sheet date are recognized as a liability in the

banks financial statements in the year in which these are approved.

CONCLUSION

The Bank Al-Falah has a significant progress in the banking sector, and it has

achieved this position in a very short time period, just in 3 years in Pakistan.the

Bank Al-Falah has a great share in market as well as high growth rate as compared

to all other banks, due to its best Customer dealing, Compensations to Customers



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and Employees as well and Organizational Control due to the best and powerful

Planning, Leading and Controlling sectors.

As there is no doubt that Bank Al-Falah is best in its field , but it has also someweak points like some of resources are still un-utilized and the political pressure of

references regarding the posts in the organization.

Over all the Bank Al-Falah has proved to be the best bank in the whole banking

sector, due to the fact that its weaknesses are not more than its strengths.

REFERENCES

Visit of Bank Alfalah, College Road Branch

www.bankalfalah.com

www.en.wikipedia.org

http://www.bankalfalah.com/http://www.en.wikipedia.org/http://www.en.wikipedia.org/http://www.bankalfalah.com/

Project of Accounting - Bank Alfalah

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