Marmara University Social science institute PhD program of Accounting and finance Academic year 2011/2012

Accounting information system in Palestine an overview Gaza strip Prepared for accounting information system

Supervised by: Prof.Dr.: Cemal bi

Prepared by: Mohammed Al Ashi ID: 764211945

Contents: 1. Private companies sector a. The role of AIS in improvement decision making process at Palestinian firms b. The extent of dependence on accounting data while estimating the private companies' income tax 2. Banks sector a. Threats of computerized AIS at banks work in the Gaza strip b. Impact of Accounting information in determining the choice of strategic competition at commercial banks 3. Governmental sector a. A set of accounting books b. Records of control c. Central Records at the Ministry of Finance: 4. NGOs sector

1. Private companies sector The Companies Act 1929 The legislator obliged in Article (106) of the Companies Act 1929 and its amendments should be: Organize accounts and record-keeping and books under the internal regulations prepared by a private Board of Directors. The company should prepare accounts according to generally accepted accounting principles, as required Article (106) companies, Accounts should be subject to scrutiny by the examiner auditor, and required materials (109 ,110) companies to submit accounts examiners report to the members of the Board of Directors.

A. The role of AIS in improvement decision making process at Palestinian firms This study aimed to explain and analyze the role accounting information systems in producing an effective and efficient accounting information to meet the requested administrative needs to rationalize the administrative decisions of corporations in Gaza Strip. The study came to a group of results and recommendations that are related to accounting information systems in the Palestinian corporations of which the most important points are (bassam,2006) : A. The existence of some decrease in sitting the accounts manuals to identify the ways of verification and treatment of the operations. in addition to lack of requested interest to develop the staff skills in the Accounting field which requires the necessity that administration takes care of providing the needed components to operate the accounting system effectively and efficiently. B. Low effectiveness in utilizing accounting information systems in planning & interpretation of the goals, setting the policies to the company in addition of lack of needed control indicators & standards to define effectively the problem and decision making, which urge the necessity to consider providing the needed information for planning, control and rational decision taking. C. Low level in analyzing the environmental factors which influences the type of decision that might be taken. This highlights the necessity to take care of the factors that surround the company at the stage of preparing & developing the accounting information system to secure the effectiveness and efficiencies of those systems.

D. The corporations do not give high priority in dealing with the related organizational factors in forming the accounting information systems which requires to give high interests in such considerations especially the individual partnership in preparing and developing accounting information systems and the importance to define the organizational structure of the company in addition of obtaining the benefit from the modern information technology.

B. the extent of dependence on accounting data while estimating the private companies' income tax The private limited companies in the Gaza Strip possess the elements of good accounting systems. Those companies use disclosure depend on expert of accountant. There is a problem resulting from the fact that the data produced by these systems not have reliability. Identical companies do not carry out their accounts in the same way as a result of not adopting uniform accounting criteria. Local accounting programs utilized by private limited companies suffer from serious control defects. The income tax department does not check the control techniques employed in the accounting programs The organization of the accounting and auditing processes is weak. Accountants are not committed to ethical code of accounting. The professional communities are weak. There is gap of trust between the professional communities and tax department .the department does not trust the profession. Consequently, tax estimation would naturally take place as a result of agreement between private limited companies and the tax department, far away from the accounting systems or accounting data, or after crucial modification of the financial statements.

2. Banks sector A. Local Commercial Banks

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Bank of Palestine P.L.C Palestine Investment Bank Palestine Commercial Bank Al Quds Bank Al Rafah Microfinance Bank Arab Palestinian Investment Bank

B. Local Islamic Banks Arab Islamic Bank Palestine Islamic Bank C. Foreign Commercial Banks10 Cairo Amman Bank Arab Bank Jordan Kuwait Bank Jordan Ahli Bank Bank of Jordan HSBC Bank Middle East Limited Egyptian Arab Land Bank Union Bank The Housing Bank for Trade & Finance Jordan Commercial Bank

The Banking Supervision Department is responsible for the supervision of banks as well as non-bank financial institutions, drafting regulations, licensing, risk management, and cross-border supervision. Overall, the BSD is in charge of monitoring the health of the banking system as a whole, identifying and monitoring systemic risks; and strengthen relations with foreign supervisors ensuring that foreign-owned entities are effectively supervised, and, through its risk management function, help identify and deal with risks arising from the operations of banks and financial institutions under the PMA's supervision. a. threats of computerized AIS at banks (technical problem) There are a low number of information technology employees in the banks in the Gaza strip, and the branches depend only on one employee whose job is to keep the operation of information systems, while specialized employees work in the main branch. b. Impact of Accounting information in determining the choice of strategic competition at commercial banks (conceptual problem)
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The use of information systems operating on the efficiency of coordination between the branches and working to increase the revenues of banks and reduce the cost of banking services.

3. Governmental sector: A. A set of accounting books B. records of control C. Central Records at the Ministry of Finance: The impact of the shift in accounting information systems applied study in the Palestinian Ministry of Finance a. A set of accounting books: 1. General Journal (daily Fund) Book, which is a record of all financial transactions daily, and is one of the most important elements of systems Accounting information, and ordered the Ministry of Finance, all government departments use.

2. Journal petty cash fund: Book is a record of all petty cash daily.

3. the general ledger: This is a book of the most important accounting books, and it is under all the financial operations that have been Recorded in the journal, which helps in the process of sorting and classification of accounts.

4. Book of subsidiary ledger of revenue: Is a sub-notebook which is running all the financial transactions that indicate the collection of money.

5. book of subsidiary ledger of expenditure: Is a special sub-notebook, a record of all financial transactions that indicate the payment or exchange The money.

6. Safety Deposit ledger: Book is a record of all financial transactions that indicate the secretariats. 7. ledger of advances: Book a subsidiary record of all advances.

8. Assistant ledger accounts and other intermediates: The books of accounts, a record of all operations relating to these accounts, such as Safety Deposit ledger, and account book purchases. b. Records of control: - Monitoring allocations. - Record of licenses and bonds receivable and securities with a value. - Record of projects. - Record the trial balance. - Record of public debt - Record grants and aid. - Record of returned checks. - Record of cancelled receipts. - Any other records approved by the ministry. c. Central Records at the Ministry of Finance: - record of central ledger of revenue. - The central general ledger. - record of central ledger of expenditure. - record of staff salaries. - record of the retirees salaries. - record of taxpayers. - record of the final accounts. Accounting information systems used in the Ministry of Finance. Manual system processing of accounting data:Is the traditional method simplified, works in all departments in the ministry, using the Books, records and manual models.

Automated system processing of accounting data: Is the central accounting

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systems and these systems are available in the accounting departments Some general systems such as: salary system, system expenditures, collection system, the system costs, and the system Overtime wages. Uniform guide of procedures

4.

NGOs sector Evaluate AIS at NGOs Most of them apply IFRS no.1 when they prepare annual financial reports. Most of them has budget system. Budgets prepared by budget committee at the organization Used systems: SYSTEM MANUAL COMPUTERIZED MIXED % 13.2 51.5 35.3

NIS is the functional currency, USD & JD are accepted. Accrual base must apply.

* (adjusted accrual base is allowed to use) Uniform chart of accounts (prepared by internal ministry)

Fixed assets furniture equipment vehicle Current assets banks bank A bank B cash Other assets General revenue Membership fee charity banks interest

1000 1100 1200 1300 2000 2100 2101 2102 2200 3000 7000 7001 7002 7003

Gen. surplus Gen surplus Inc or dec. in revenue

4000 4100 4200

Current liab. Other liab.

5000 6000

Gen. exp. salaries

8000 8001

rent exp. Tel. exp

8002 8003

Automated used system System %

Alaseal Excellent accountant Smart accountant others

49.3 17.3 14.7 18.7

ALASEAL accounting information system criticism : 1. The ability to adjust the entries and document 2. The ability to cancelling the entries and document 3. The ability to renumbering the entries and transactions 4. The ability to print more than one copy of original document 5. The ability to enter sales invoice with the same number

Standard and presentation at different countries:

country

Standards & presentation

authority

Belgium, France, Italy

Governor Highly secret Governor Highly secret Optimistic Transparent Optimistic Transparent

official

Germany

official

United kingdom

Flexible

Denmark

Flexible

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Holland

Optimistic Transparent Governor Highly secret

Flexible Officiallylegal control

Portugal, Greece

References: 1. Bassam Ahmad (May, 2006), The role accounting information systems in producing an effective and efficient accounting information to meet the requested administrative needs to rationalize the administrative decisions of corporations in Gaza Strip. Master's thesis. 2. Hurya Sharef (2006), Threats of electronic accounting information systems in the working banks in the Gaza strip, Master's thesis. 3. Khaled Husseiny (2007), The extent of dependence on accounting data while estimating the private companies' income tax in the Gaza Strip. Master's thesis 4. Monther Daia (2009), Evaluate the effect of using accounting information systems on quality of financial information for service sector company in Gaza strip. Master's thesis. 5. Mmosleh Salah (2010), evaluate the nongovernmental institutions accounting information systems, Master's thesis. 6. Emad Ismael (2011), Identify the characteristics of information systems and their impact in determining the choice of strategic competition in the upper and middle departments of commercial banks operating in the Gaza Strip. Master's thesis. 7. Ola Zaanen(july,2007), Examine the effect of electronic data processing system in the accounting information system in a functional research at the Palestinian Ministry of Treasury. Master's thesis.

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