Development and installment of the new financial ratio analysis system

Abstract

Since January 1998 all Armenian commercial banks have adopted International Accounting Standards (IAS). Financial statements are prepared and presented to interested users and regulators (mainly Central Bank of Armenia) in accordance with IAS. The Central Bank itself has been employing IAS since January 1997. After the transition to IAS, Central Bank found the existing information systems for asset/liability management inadequate for newly adopted accounting practices. Subsequently, there was an importance of applying effective information management tools to competently manage its activities. The feasibility study is aimed to resolve the problem that Armenian banks have confronted during the transition to IAS standards. The task is to adapt existing information systems to better confirm with the newly adopted accounting practices. The basis for his feasibility study is the current situation of the Armenian banking system. The study is to identify means to improve asset/liability management of an Armenian bank. The information generating system employed in this feasibility study is the World Bank’s Asset/Liability Management System (hereinafter referred as W.B. system) that helps to monitor and evaluate the financial position of a bank. This system was found to be appropriate fit for Armenian banks, however, problems were encountered with the existing financial data which resulted in difficulty in forecasting financial performance. Savings Bank of Armenia (hereinafter referred as to SBA) has been selected to be the one of the first banks where the feasibility of the World Bank’s asset/liability management system is to be evaluated.