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Profile of The BRAC Bank Limited : The BRAC Bank is a scheduled commercial bank established under the Bank

Companies Act 1991 and incorporated as a public company limited in 1999 in Bangladesh. The primary objective of the bank is to carry on all kinds of banking businesses. At present BRAC Bank has 79 (Seventy Nine) branches, 68 (Sixty Eight) SME Services caters and 142(One Hundred and Forty Two) zonal office and 421( Four Hundred and Twenty One) unit office of SME. The fully operational commercial bank, BRAC Bank focuses on pursuing unexplored market niches in the Small and Medium Enterprises Business, which is untapped largely within the country. Significant percentage of BRAC Bank clients had no prior experience with formal banking. The bank operated under a triple bottom line agenda where profit and social responsibility go hand in hand as it strives toward a poverty- free enlightened Bangladesh. BRAC Bank focuses on empowering the dreams of the country and for a greener tomorrow. As a recognized sustainable bank it focuses on wider range of enlightening the mass generation of people .As such in its Corporate Social Responsibility it launched with association a national book fair Amar Ekushey Gronthomela ,moreover it partnered Digital Mongla Project. The bank passes its eventful year by holding 11th Annual General Meeting where 30% Stock Dividend (bonus share) was approved. The Bank also partnered with Muktijuddho Jadughor and upholded their national pride. For the first time the bank is providing in the country a one stop share investment solution and launched Probashi Binyog. The main focus of the bank is not just for the people but also for the nation.

Disclosure Techniques Used by BRAC Bank in the Financial Statement : The financial position of the BRAC Bank as at 31 December 2010 and the profit and loss account for the year end has been properly reflected in the financial statement of their annual report and the financial statements had been prepared in accordance with generally accepted accounting principles. The effects of various contingencies on financial condition and the methods of valuing their asset is disclosed quiet intelligently with the help of two of the disclosing techniques notes and parenthetical.

Notes: The BRAC Bank Limited used the notes to disclose the existence and amount of preferred stock dividends, the terms of or obligations imposed by purchase commitments, special financial arrangements, depreciation policies, existence of contingencies, etc.

Parenthetical Explanations: Parenthetical explanations are the second technique that has been used in the financial statement. In the Profit and Loss Account and in the Balance sheet there is two or three parenthetical disclosure. Unquoted securities whose fair value cannot reliably measured are carried at cost.

Cross reference and Contra Items: The BRAC Bank did not use the Cross reference and Contra items in their financial statements. But this technique should have been used as it is quiet normal for a bank to have inter related their transactions.

Supporting Schedule: The BRAC Bank did not present separate and more detailed information about certain assets or liabilities. No supportive document was attached to their financial statements and it was understandable that all related documents cannot be attached with the annual report.

Analysis of Disclosures of The BRAC Bank : A Detailed Disclosure: BRAC bank has used a detailed disclosure to enhance the quality of their financial statement. It contains almost all the information needed to clarify the financial information. The consolidated financial statements are prepared under the historical cost convention. The accompanying financial statements have been prepared on a going concern basis.

Basis of consolidation: Separate set of records has been disclosed by the BRAC Bank and their financial conditions can be viewed from their financial statements. The consolidated financial statements have been prepared in accordance with Bangladesh Accounting Standard. The consolidated statement includes the financial statements of: BRAC Bank Limited. BRAC EPL Stock Brokerage Limited ( its subsidiary) BRAC EPL Investment ( its subsidiary) BRAC Asset Management Company Limited ( its associate)

Provision for liability: As per Bangladesh Accounting Standard (BAS), the Bank recognizes provisions for liabilities only when it has the following cases: When it has present obligation as a result of a past event. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. When a reliable estimate of the obligation can be made.

Liability Aging: Throughout the whole financial statement, The BRAC Bank has not disclosed the aging schedule of its liability. The investors need to know when a particular liability has been taken. But BRAC bank has not fully disclosed the particular time when each or major portion of the liabilities have been taken in to account.

Lone Recovery: BRAC Bank has not disclosed what proportion of their loan has not been recovered. It is an important tool for the investor to know the actual recovery percentage of the loan that has been recovered and that has not been recovered.

Retirement Benefits to the Employees: BRAC Bank had perfectly disclosed their employee benefit according to Bangladesh Accounting Standards (BAS). The various benefits the bank offers are as:

Provident Fund: Provident fund benefits are given to the employees in accordance with the registered Provident fund rules. The fund is operated by a Board of Trustees consisting of 11(Eleven) members of the bank. All confirmed employees of the Bank are contributing 10% of their basic salary as subscription of the fund. Gratuity fund: The BRAC Bank gratuity fund is calculated on the basis of last basic pay is payable at the rate of one months basic pay for every completed year of service. Annual leave: According to Bangladesh Bank Policy all permanent employees have to avail 15 consecutive days of mandatory leave and BRAC Bank correctly follows the policy. Security Fund: BRAC Bank provides permanent disability benefits to its confirmed employees with a sum equal to 36 times of its last drawn basic salary to the nominee.

Disclosure of CRR and SLR : According to the banking law, every bank has to maintain a certain percentage of their deposit as Cash Reserve Ratio CRR) and Statutory Liquidity Ratio (SLR). BRAC Bank calculated and maintained its CRR & SLR in accordance with section 33 of Bank Companies Act, 1991. The Statutory Cash Reserve Requirements on the Banks time and demand liabilities at the rate 6 % has been calculated and maintained with the Bangladesh Bank in current account and 19% Statutory requirements including CRR on the same liabilities has been maintained and shown. Thus the BRAC bank has given a very good
disclosure of their CRR and SLR. It has been shown in details with different relevant accounts.

Valuation Process of Fixed Asset : To make the financial statement more reliable to the investors and the readers of the financial statement, BRAC Bank had mentioned their internal valuation of their fixed asset. The fixed assets have been presented as following:

Assets Cash And Cash Equivalents Held to Maturity Investment Held for Trading Investment Interest On Loan Property, Plants & Equipments Sales of fixed Asset Stocks

Basis of valuation Presented in Direct method Measured at amortized cost Measured at present value Calculated on daily product basis Accounted for cost less accumulated depreciation

Determined on the basis for fair value of asset Valued at net realizable value and determined by weighted average method

Financial Statement by Geographic Location : BRAC bank has reported its business segments within the geographical territory of Bangladesh as such, Dhaka, Sylhet, Rangpur, Barisal, Chittagong, Khulna and Rajshahi. The Bank has the most detailed financial statement by geographic location. It has its operation across the world. So, a financial statement by geographic location in the disclosure section will make its financial condition more specific.

Balance with Other Banks and Financial Institute:

In its disclosure, BRAC bank has shown its various like current deposit, short term deposits, savings deposits and fixed deposits, which are kept in different banks and financial institutes in two major categories. They are in Bangladesh and outside Bangladesh.

Earnings per share : The BRAC Bank had computed its EPS by dividing the basic earnings by the weighted average number of Ordinary shares as per Bangladesh Accounting Standards (BAS). No diluted Earning for share was calculated for the year as there was no scope for dilution during the year.

Bad Debt Estimator: In the particulars of loan and advances section of the disclosure AB bank has written off some of its unrecoverable loans. But they did not disclose at what percentage they have written off those and who has determined the rate of percentage.

Disclosure of Other Liabilities: The BRAC Bank has disclosed its other liabilities in its notes section and it clearly shows their transparency. In particularly in this account they have included some important elements like audit fee, payroll tax and income tax.

Quantitative Disclosure:

BRAC Bank has included the quantitative disclosure in its notes. Quantitative disclosure is in important tool for the investors to compare the financial statement of different companies. The Quantitative Disclosure of BRAC bank can be a role model for the other banks. It has summed all the information needed to support and explain the financial statements.

Depreciation Rate: The Depreciation is charged on straight line method in BRAC Bank. The bank has even shown Asset category wise depreciation rates. In case of acquisition of fixed assets, the bank has charged depreciation from the following month of acquisition whereas no depreciation on assets disposed of has been charged from the month of disposal. Thus BRAC bank has separately disclosed the rate for each fixed depreciations. In addition they also have clarified the reason for taking the particular rates for each of the fixed assets.

Auditors Comments : According to Bangladesh Accounting Standards (BAS 560), the auditor firm of a corporations financial statement should comment on the overall financial condition of that corporation in the notes section. BRAC bank has included that report only for the shareholders before the financial statements. But they should have been a comment for the readers also.

Corporate Governance:

Like every other corporation BRAC bank also have corporate governance which affects their financial statements. But AB bank has not completely disclosed its corporate governance.

Managements Note: As per the principles of GAAP, a managements note should be included in the annual report to support the financial statement. BRAC bank has only included the message of the management team but has not given a note in the notes section to clarify their financial condition.