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Accounting Systems and Controls (ACC 451) Project

Zahra Khadhair Mearaj

Shameem Ebrahim
Naveed Karim Baksh
Syed Sulaiman Shah
Hussain Salah Mohammed


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Table of Contents
1. Introduction ......................................................................................... 3
2. Accounting Information System used in Zain ........................................ 7
3. Accounting Cycles .............................................................................. 10
4. Strengths and Weaknesses ................................................................. 18
5. Recommendations ............................................................................. 19
6. Conclusion ......................................................................................... 19
7. References ......................................................................................... 19


1. Introduction
1.1 About Zain
Zain Bahrain B.S.C., formed in 2003 as MTC Vodafone, is a telecom operator in the Kingdom
having a market experience of more than a decade. It is a subsidiary of Zain Group and they
were the first to break Batelcos monopoly which had lasted for over two decades. Being a
highly regulated industry, they provide telecom services under various licenses issued by the
Telecommunications Regulatory Authority (TRA). They remained a closed joint stock
company for eleven years until it went public in 2014.The demand for Zains offerings comes
from two types of customers: consumer and business segments. Zains diverse product
portfolio includes post-paid and prepaid services, devices, broadband, enterprise solutions,
international roaming, mobile applications and Zains exclusive club membership. According
to Zains last annual report, 78.1% of total revenues were generated from the mobile, while
4.3% was generated from interconnection and 9% from fixed wireless services. Zains Net
Profit for the three months to September 2015 recorded an increase by 91%, compared to
the same period in 2014. The profit rise is attributed to the exponential growth in mobile
data subscribers, greater operational efficiencies along with increase in demand for
broadband services. By June 2014, they controlled 34.9 % of market share, second only to
Batelco. By October 2015, their customer base increased from 787,000 to 814,000, a yearon-year increase of 3%, indicated rising growth.

1.2 History
Zain Bahrain B.S.C. is a Bahraini Joint Stock Company Closed incorporated in the Kingdom of
Bahrain on April 19, 2003 under its former name, MTC-Vodafone Bahrain B.S.C and
registered with the Ministry of Industry and Commerce under Commercial Registration (CR)
number 50603. It was the first mobile telecommunications company to be started in the
Middle East. Chairman Board of Directors is Asaad Ahmed Al-Banwan is and Zain Groups
CEO is Nabeel Bin Salamah.
Zain grew speedily in both the Middle East and Africa in the course of the attainment of
several mobile operators across the region. In 2008, Zain grew to be the 4th largest mobile
operator on the planet. By 2010, Zain had taken tactical decision to focus on its highly cash
generative operations. The company is an auxiliary of Mobile Telecommunication Company
K.S.C, a Kuwaiti shareholding company listed on the Kuwait Stock Exchange. The Company
commenced its services on December 28, 2003. Zain, today, Operates in Bahrain, Jordan,
Kuwait, Iraq, Saudi Arabia, Sudan, South Sudan, and in Lebanon as well.
As of March 31, 2016 Kuwait Investment Authority is the largest shareholder with a stake of


Zain Bahrain has been representing to install, control and administer telecommunications
operations in accordance with the authorization granted to it by the TRA. The group is also
concerned in the transaction of handsets and accessories in the Kingdom of Bahrain.
The Company has go into an elite Management Agreement with its Parent Company, Mobile
Telecommunications Company K.S.C., which permits the Company to do good from the
Parent Companys technical expertise and commercial know-how in establishing, building
and managing mobile telecommunications networks over the last 30 years.

1.3 Vision and Mission

Zain aims to become the Kingdoms telecom leader by offering care to all its stakeholders
and supporting their lifestyle. Their mission is to provide Bahraini market quality services
based on excellent customer care and to develop people centric organisation which cares
about others.

1.4 Product and Services

The Company has urbanized and commenced a series of products and services and tariff
strategies which have been designed with suitable consumer segmentation. The Company
proposes tailored consumer and business packages or collection in relation to voice,
messaging (SMS and MMS), high-speed data connectivity and VAS services as well as
roaming services. The beginning of fresh and inventive products and services alongside the
Companys uninterrupted efforts to place itself as the finest value scheme for its customers
has been solitary of the key success aspects behind the development of the Companys
mobile customer foundation.
Zain Bahrain provides a varied range of Prepaid, Post-paid, broadband and enterprise
services whilst keeping in mind the wide-ranging telecommunication service requirements
of its residential and business customers in Bahrain. An abstract of the product compilation
and services is set out below
Smart Phones
Zain Bahrain place forward Post-paid packages, bagged with products from the leading
global Smart phone producers to make sure that its customers in Bahrain have access to the
cutting-edge global advancement at reasonably priced services. These packages comprise
the following:

Smart Plan
Zain Bahrain offers the users of smart phones with a package including free bundled
minutes and unlimited use of date making it very competitive among the other
existing telecommunication industries in the Bahraini market.
IPhone plans


Zain Bahrain in partnership with the Apply company ensures that they are the first to
provide their customers the latest iPhone as well as other iOS devices along with
better-quality packages involved making them superior among other competitors
Easy talk
Offering prepaid customers, a rich communication experience at the same time
retaining control and flexibility. Customers having access to unlimited data,
unlimited blackberry and unlimited calling add ons facilitating them to have the
benefit of browsing, chatting, downloading limitlessly.

The Hewar voice plans, Blackberry and voice add-ons, Blife and signature plans are
certainly varied packages provided by Zain Bahrain ensuring to deliver its consumers the
best of what they intend to provide
Zain Bahrain offers inclusive internet connectivity products and services by means of its
home broadband guaranteeing that its customers are connected at home and on the go.

Home Broadband
Zain Bahrain offers matchless value in catering for household internet as well as for
unchanging connectivity needs. It is the breaking new ground operator in Bahrain
contributing truly unbeatable home internet packages with no usage thresholds and
speed downgrades. By means of home broadband, customers are presented with
on- net calls free of charge.
4G LTE Broadband
Zain Bahrain provides its customers with whopping high speed Home Broadband
products appreciably enhancing the users experience with video streaming and
other online applications.
Postpaid Mobile Broadband
Zain Bahrain presents to its consumers post-paid e-GO packages with unlimited
supply of data by granting them free tablets, USB dongles, Portable Wi-Fi devices.
Prepaid Mobile Broadband
Zain Bahrain was the first telecommunication company in the country to offer
unlimited mobile broadband packages. It offers customer more control over their
mobile broadband usage.
International Roaming
Zain Bahrain customers travelling abroad have a good quality access to all the
services provided in Bahrain because they reached a service agreement with more
than 450 partner operators in over 160 countries.
Content Services Portal
Zain Bahrain with the help of this Service offers ring-back tunes, information
channels and games.
Zain wallet

Zain Bahrain is the foremost and the only operator in Bahrain that offers full finance
resolution via its wallet services whereby customers have access to a fully
functioning mobile wallet with transactions counting international money transfer,
peer to peer transfer.

Shaikh Ahmed Bin A.

Al khalifa


Assad Ahmed Al
Deputy Chairman

Bader Nasser Al
Vice Chairman

Jamal Shaker Al

Abdulaziz Yaqoub
Al Nafisi

Shaikh Rashid Bin

A. Al Khalifa

Waleed Abdullah Al

Board Member

Board Member

Board Member

Board Member

Figure 1 Board of Directors


2. Accounting Information System at Zain

In general, Accounting Information Systems (AIS) refer to the process of collecting data,
processing or transforming them into information and distributing processed information to
the users that are both internal and external to the organisation. Such systems are used by
the companies with a purpose to collect and store data and process the collected data into
useful information which can be used by managers and other users to the organisation to
make decisions. Most companies, these days, maintain computerised accounting system.
Elements of AIS includes:

People which includes managers, accountants, sales staff and analysts.

Procedures: set of instructions on how to collect and store data, process them and
Data i.e. raw or unprocessed information
Software that is used for processing data
Information technology and
Internal control

At Zain, Oracle accounting software is used to collect, store, process and distribute
information. Ever since Zains formation in 2003, the company has been using Oracle. Not
only Zain Bahrain, but the entire Zain group and its subsidiaries relies on oracle for processing
their accounting information. It is a database management system which have been
developed by Oracle Corporation. It creates efficient, detailed, reconcilable and auditable
accounting information for its users.
Information is stored in the form of tablespaces in Oracle Database Management System
(DBMS). These tablespaces are further exploded into segments and segments are broken
down into extents. Extents comprises of data blocks which are the basic unit of data storage
in oracle DBMS.
Advantages of using Oracle include:

It is very reliable and users find it easy to use. A new staff can easily learn how to use
the system in hours.
It helps in creating accounting for multiple source systems. Its helps the users to create
accounting methods and events at once and then use it many times,
Whenever there is a change in accounting rules, it is quickly updates to meet the new
It integrates new systems rapidly. The rules engine allows the users to define and
reuse setups separately for each component such as journal lines, summarisation
criteria, etc.
It enhances internal controls and auditability. Oracles centralised system provides
numerous enhancements to ensure successful audit and compliance reviews.

The two main oracle modules used are Fixed Asset (FA) and Project Module.
1. Fixed Asset (FA) module
FA module is an oracle module that keeps the track of fixed assets at Zain. It identifies all
applicable transaction and events that happens during its useful life. Fixed assets are
those assets used by the company for long period and cannot be liquidised easily. The FA
module lets the user to update details regarding fixed assets, copy existing details for new
fixed asset, etc. In order to process fixed assets using the module, the following
information needs to be maintained:

Category of Assets: assets that are of similar nature are grouped together
which makes it easier for charging depreciation rates that is common. Assets
useful life is also defined for each category.
Location codes: a unique code is used to represent location where assets
physically exist.
Branch parameters: functions such as depreciation period, residual value, etc.
are defined in branch parameters.
Location restrictions: restrictions for certain classes are defined
Asset category restrictions: restrictions for each asset categories are
Asset Rule Definition: for each category and location combination,
depreciation rates can be recorded.

Figure 2 Fixed Asset Module in Oracle


2. Project Module: Projects module in oracle provides a single and accurate view of
projects that the organisation undertakes. Project module can be further broken down
into project costing, project billing, resource management and project management.
3. Financial Module: includes Oracle Assets, General Ledger, Payables, Receivables, Cash
management and tabs. The financial applications enable Zain to conduct procure to
pay business as well as order to cash business.
Other modules include supply chain management (SCM), customer relationship
management (CRM), human resource management (HRMS) and Procurement. All the
modules in oracle are integrated thus making it easier for Zain to process data and provide
information. Users have restricted access to the system based on the needs. For eg: the
accounts staff can access the accounts receivable module whereas the sales staff is denied
access to them.
Zain recently updated oracle to its latest version in 2016. The update process is done every
five years making it more reliable.
The American Institute of Certified Public Accountant (AICPA) defined the five most
important principles that makes an organizations accounting system more reliable. They
are listed as follows:
a. Security: Zain restricts users access to AIS by means of password. Each employee or
users who use AIS have their own password which provides access to only what is
required to them. The password is changed every 3-4 weeks.
b. Confidentiality: just like other companies, whether listed or not, Zain doesnt not
provide its sensitive information to its third party.
c. Privacy: Confidentiality of customer and other details are maintained properly.
d. Processing integrity: appropriate authority authorisation is maintained at Zain when
there are transactions involving huge amounts
e. Availability: The system is made available to meet their operational and contractual


3. Accounting Cycles at Zain

The major accounting cycles in any company includes: revenue cycle, expenditure cycle,
production cycle, human resource management and payroll cycle and financing cycle.
Since Zain is a service company, all expect production cycle are applicable.

3.1Revenue Cycle:
Revenue cycle consist of transactions that involves customers and the company. The
company provides products or services to customers and get cash in return. The
information from revenue cycle is used in other cycles such as expenditure cycle and
payroll. Revenue Cycle can be exploded into sales, billing and cash collection. Sales start
with customer enquiry followed by checking customers credit limit and then delivering
product or rendering service. Sales is then followed by billing stage and ends with cash
Zains main source of revenue comes from billing and cash sales. Billing consist of contract
payments. Cash Sales mainly consist of prepaid and post-paid packages.
Prepaid services require customers to pay in advance and are charged according to their
usage. On the other hand, post-paid customers pay for their usage on a monthly basis.
For prepaid customers, it is similar to cash basis of accounting. Customers pay first and
recharge the balance for the same amount. Once it is recharged, cash is credited in their
accounting system and a liability recorded for prepaid revenue. Amount is deducted from
prepaid revenue as it is used by the customer and is recognised as revenue.
When a new customer arrives, the sale staff first checks the national ID to check that the
required information is valid and to suggest an appropriate plan. The amount the
customer will have to pay as down payment is based on the employment status. Those
with low employment status will have to pay high amount as down payment compared to
customers with high employment status. This suggest the credit limit for customers. The
down payment is advance payment of bills for certain number of months depending on
their credit limit. This reduces the risk of bad debts.
Once the credit limit or down payment is agreed, the sales staff then checks for the
availability of inventory on the system. Once the inventory is made available, the
customer then signs the contract for certain number of months. Each customer is assigned
with a contract number. The contract number acts as a primary key and provides
information regarding customers details, contract details, type of package, etc.
Since, all Zain outlets have their oracle database centralised and integrated, it enables
them to access any customers information from any outlets or location. When the sales
staff inputs the required information regarding a new customer, an update is
automatically made to the database.
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When the customer makes a call or uses data package, the information regarding the
usage, that includes customer data, location, time and date of usage are recorded in their
billing system. The billing system collects usage data for all customers together. The data
is then pooled on the basis of contract number that is mapped to each customer. It is then
summarised into one invoice that is sent to the customers on a monthly basis.
For a post -paid customer, each month the customers accounts receivable is debited for
the services provided and used. Once the accounts receivable is updated, a bill is issued
to the customer specifying the amount to be paid and the due date. This is when the
revenue is recognised in the income statement. Customers can pay their bills through
various channels including Quick Pay, Sadad, or through their sales agents. Once the
payment is made the accounts receivable is debited and cash is debited.
Zain has 4 billing cycles.

1-30th of a month
16th to 15th of a month
10-9th of a month
23rd to 22nd of a month

Suppose a customer signs a contract in the middle of the month for one of their services,
the contract amount will be distributed among two months using pro rata basis.
The down payment that customer pays for a certain number of months is recorded as
prepaid revenue and then allocated equally to the specified period. When the customer
exceeds the usage limit within the down payment period, extra charges will be taken from
the remaining period or charged to their bill in the very next month.
Cash collected for billing services and other services via sales agents are deposited on a
daily basis to Zains bank account. Zain maintains their bank account with National Bank
of Kuwait. A daily and monthly sales report is prepared by the sales agent using excel and
then sent to the accountant. Sales report is used to reconcile the amounts that have been
automatically updated on their database.

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Figure 3 Copy of Daily Sales Report

3.2 Expenditure Cycle:

Expenditure cycle involves transactions the occur between the company and their
supplier. This results in outflow of cash and inflow of good or services.
Main sources of expenses for Zain are classified as: Direct Payables and Purchase Order
Direct Payables: any invoice that is entered manually has a direct effect on gross margin.
For e.g.: Zain sponsors E-Learning at UOB. If the amount is paid in advance for a contract
period of 12 months, allocate the amount over 12 months and then amortize it. its done
using Microsoft Excel.
Accruals mainly arise for general expenses. Each year the company forecasts their
contracts and their approximate amount. Accruals are credited and expenses are debited.
It goes directly to the income statement. When the contract is signed, contract balance
up to that date is taken from accruals and additional amount is adjusted for.
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Sales commission and outsourcing: Zain outsources most of their retail branches in order
to reduce their costs. They pay supplier/contractor a fees which is based on monthly
achievement. The sales department contacts the accounting department to inform about
the sales achieved.
When a department identifies that an asset is required, a purchase request (PR) is made.
PR is a paper or an electronic document that consist of information regarding the
department that has requested and the items they had requested for. The purchase
request must be authorised by appropriate level of management based on the amount
involved. The purchase request is sent to the purchase department. Once the purchasing
department validates the request, it then draws a purchase order which is sent to the
supplier. Zains purchasing department maintains a list of verified suppliers so that they
can ensure they get quality goods at the right time at the right price and place. When the
good are received, a staff at the purchasing department checks the purchase request note
and verifies the order. A Goods Received Note (GRN) is drawn which is moved to Project
A report is pulled from project module, which mentions the items received or purchased.
For any asset, theres a category assigned to it which is mapped to depreciation expense
and to the department that uses the asset.
System transfers it to Capital in Process account. The capital in process account is like a
work in progress account. Assets are classified into two:
1. Non-CIP: where assets are capitalised when theyre received.
2. CIP assets: till the asset is placed for service, it is not capitalised or depreciated.
Depreciation only starts when the asset is placed for service.
FA module is then used to run depreciation and then transfer it to the general ledger and
post it directly to the financial statements.
Salaries and Wages:
Another major expense that Zain incurs is that related to wages and salaries of Zain
employees. it comes under operating and administration expenses in the statement of
profit or loss and other comprehensive income. How the salaries are processed by the
accounting system is explained in detail in the payroll section.

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Enter requisition data

from other departments


Issue purchase order

Copy to the

Supplier copy


Enter PO number

Shipping document

Compare quantities with PO



Figure 4 Context diagram of Purchasing an asset at Zain

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3.3 Human resource management and payroll cycle:

Human resource management and payroll cycle are interrelated. Human resource cycle
involves getting labour, while payroll cycle focuses on paying them. Recruiting and hiring
employee, training and assigning job, paying compensation and evaluation are the
activities involved in this cycle.
Any candidate who is interested in working with Zain has to register his details on Zains
applicant centre which is powered by Cazar, which is a popular online recruitment service
used by clients worldwide. The candidate registers using a valid email id. Cazar uses their
smart technology and helps Zain to achieve their recruitment objective.

Figure 5 Applicant Centre powered by Cazar

The candidate then fills the required information including their name, job agent,
qualifications, locations preferred and other personal details. Whenever there is a need
for labour Zain, the human resource department first checks for the appropriate
candidate internally. When they are not able to find an appropriate candidate, a vacancy
is posted on Zains career site.
When the user logs into his account, he will be able to see a notification for the same and
will be able to apply. Once he applies for the vacancy, an automated acknowledgement is
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sent to his email ensuring that the application has been sent to the department or if there
is any mismatch in the details that he has given.
Once the HR department ensures that he/she is an appropriate candidate, an interview is
conducted and the person is employed. He/she will sign a contract and a copy of it is
maintained by the HR department, the department that hires him and the employee. The
information regarding the new employee is stored in their payroll system. The information
includes the name of the employee, the department that hires him, contract length,
International Bank Account Number (IBAN), etc. The above information is input manually
by the HR manager to the system and updates the payroll list.
The HR department maintains a master file that contains employee information. They also
maintain an excel file which records the attendance of employees. Employees swipe their
ID cards to record in and out which is mapped to the payroll database.
Every department and outlets are given time sheets are used to record employees start
time, end time and break time. It also calculates the total hours worked on a weekly and
monthly basis. The time sheets are send to the HR department on a weekly basis so as to
update the excel file.
At the end of each month, time sheets are reconciled with the payroll system in order to
check if theres any employee whose attendance wasnt recorded but was present. The
excel file is also updated accordingly.
At the end of the month, the HR department sends the updated and final list of employees
to the payroll department. The payroll personnel then send letters containing information
regarding the employees and their salaries to National Bank of Kuwait (NBK). The bank
then transfers their salaries to the employees bank accounts. And a payment slip is sent
bank to the payroll division who then updates the system to show that salaries are paid.
The employees receive a message regarding the deposit. The HR department reconciles
the bank payment with the list in order to ensure that genuine employees are paid the
right amount.
Employees at Zain are assessed on a monthly basis especially at the sales and service
centres. For selling a particular number of sims and packages, employees are entitled to
receive a small percentage of the total sales he/she made during that month. Zain also
maintains a minimum and maximum salary to ensure all employees are paid equally and
are not overpaid or underpaid.

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3.4 Financing Cycle:

Financing cycle involves selling the shares of the company to investors or creditors. Its
the interaction with investors and creditors. Zain obtain funds to run the company, repay
the creditors, and distribute all the surplus funds as dividends to the investors. This cycle
interacts mainly with the bondholders, lenders and stockholders.
The transactions that occur in the financing cycle may involve more money than the other
cycles. The main transactions in are forecasting the cash needs, selling securities to the
investors, borrowing funds from the lenders, paying dividends and interest to the lenders,
retirement of the debt, and preparing management reports.
In addition, the financing cycle interacts with the other cycles of the company. The
revenue cycle provides funds the financing cycle whereas the expenditure cycle and the
Human Resource and payroll cycle gets funds from the financing cycle.
In the beginning, Zain was a private company, not publicly shared. Shareholders
contributed with a percentage and took this percentage and got capital and invested it in
network outlets in laptops for financing loans. Take a loan and invest it in their capital
expense. Presently, the company has taken 3 loans to meet its capital expenditure.

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4. Strengths and Weaknesses of Accounting Information system

at Zain

The accounting information system is simple and easy to use for its users.
The system is password protected. Only authorised users have access to master
files. The password is changed every three to four weeks.
The database is integrated and centralised making it easier for the users to access
them from any location.
Effective Internal controls
Segregation of duties: No individual performs two tasks at a time. Different tasks
are assigned to each individual.
Appropriate authorisation: when it comes to expense, their purchase request has
to be first authorised by appropriate level of management. For amounts exceeding
B.D. 10000, the general manager has to authorise the request. This ensure that
only valid requests are processed.
All transactions are processed only when they are evidenced by their respective
source documents which is authorised.


The process of updating oracle is time consuming and costly. When updating, all
the information has to be transferred from the old system to the new system. This
could also result in loss of data due to human negligence.
Once the system is updated, it takes time for the users to get used to the latest
We are not sure if the systems are tested for virus. If a virus exists and is
undetected, the entire system could be damaged as there are no backup for the
centralised data.
There is no testing for human errors. If an immaterial error is made and
undetected, the errors could be material when aggregated with numerous
immaterial errors.
Oracle is updated only once in 5 years. This reduces the reliability of the system
with rapidly changing business environment.

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5. Recommendations

AIS needs to be updated more frequently in an easy manner such that it will not
require much time to set up and get used to it.
Antivirus software needs to be installed in all systems. They should also be updated
on a regular basis.
Regular back up of database needs to be carried out. The backup should be secured.
Staffs need to be properly trained. They can also be asked to do Oracle certification
course. This helps them to be more efficient and effective.
In order to make sure no fraud or attempt to fraud takes place, staffs could be rotated
on a yearly basis.

6. Conclusion
This project examined the efficiency and usefulness of the accounting information system
used at Zain Bahrain. Three employees from Zain were interviewed for the purpose of our
project. Zain uses Oracle for all of its accounting solution. It maintains a centralised and
integrated oracle RDBMS. The centralisation helps all Zain outlets and head office to
access the required data. Application of accounting information system lead to enhanced
quality of the financial reports of the company, better decision-making by managers and
smoothing the transaction processes.

Interviews and multiple email exchanges with Mohammed A. Karim (accounts
department), Abdulla Saeed Alhawaj (revenue department) and Fahad Bin Abubacker
(branch manager)

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