Bank regulatory boards Essay
Institutions like banks, unions and savings association require regulatory compliances, especially in areas that demand confidentiality, however, non- compliance to these regulations results in severe damage for these institutions (Bonnette 20).
A financial officer from the regulatory board checks these financial institutions to ensure that they are in accordance to the agreement. The regulatory board takes the institutions through an examination to determine the institution’s safety in monetary terms, the management of the information systems in terms of auditing and finally, the examination checks whether the institutions are following laws and regulations (Goodhart 15).
Saudi Arabian institution SAMA inspects financial institutions, local banks and foreign bank branches that exist in its area of control. SAMA checks the performance of the banks, the management of the banks, while ensuring that there is a certain extent of compliance with its regulations and there is an effective management of risks.
The Qatar national bank and the Qatar central bank have a special relationship such that combined they are known and operate as a group; this has led them to operating in investments in associates and joint ventures.
Both banks prepare the financial statements in accordance with the regulations of their external regulatory authorities, and this is declared at the end of the financial statements.
The Saudi Arabian bank presents its currency in the Saudi Arabian Riyals, and the Qatar National Bank records its currency in the Qatar Riyals, they both round off figures to the nearest thousand.
Both banks include subsidiaries in their financial statements in the same reporting year, and they eliminate any transactions taking place within the firm.
Both banks’ statements are prepared on past costs except for the fair value that they both treat as derivative.
The banks treat the impairment of financial assets in slightly different ways, the impairment could be written off if it is regarded as uncollectible, and it is held at amortised costs or treated as fair value.
Investments are treated in the same way as impairment of financial assets for the Saudi Arabian bank and there is an option for investment available for sale. While the Qatar national bank treats the financial investments as available for sale and held at amortised costs only.
Both banks include transactions conducted in foreign currency and the currency is changed using the exchange rates at the time of the balance sheet preparation, the exchange losses and gains are included in the statement of income.
Property and equipment is calculated at the cost less the depreciation and the impairment, given a certain number of years for each item when calculating the depreciation.
The Qatar national bank has an entry of the pension funds, these benefits accumulate during the employment period, while the Saudi Arabian Bank has no such provision.
There is a restricted account of share of profits accounted for in the Qatar National bank that has not been reflected in the Saudi Arabia Bank.
The Qatar National bank has Islamic banking that complies with the Islamic shari’a control board.
The Qatar national Bank writes off loans and advances and charges them against specific provisions, while the Saudi Arabian bank holds the loans and advances as amortised costs and reduces any provisions and impairments.
The Qatar national bank has an agreement of repurchase goods that is accounted, the selling of goods with an agreement of repurchasing.
The Saudi Arabian bank uses financial instruments such as forwards and futures, options, swaps and forward rate agreements to trade and hedge. While the Qatar national bank measures derivatives at fair value, and the loss or gain is accounted.
Bonnette Cynthia A. Regulatory compliance white Paper New York.Harper.2003
Goodhart Charles A.E. The Central bank and the financial system.
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