Accounting and Auditing
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Item The Impact of Information Technology in Audit Quality: In the Case of External Audit Firms in Addis Ababa(A.A.U, 2024-03-17) Abel Habtamu; Kelifa Sermolo (PhD)This study investigated the influence of information technology (IT) on audit quality, focusing on external audit firms in Addis Ababa. Data analysis employed a descriptive and inferential approach. Questionnaires were distributed to 98 external auditors to gather necessary information. IBM SPSS Statistics 2013 software (v22.0) was used to analyze the data, presented in tables and charts. The findings revealed that all independent variables had positive and significant coefficients. This indicates that as the value of an independent variable increased, the mean of the dependent variable (audit quality) also increased. Auditor competency had the strongest positive and significant effect on audit quality, followed by IT-based auditing, audit risk, and audit quality itself. The regression analysis indicated that the independent variables included in the model explained 52.3% of the variance in audit quality. Based on the findings, the study recommends that The Accounting and Auditing Board of Ethiopia should have prioritized evaluating the quality of audit firms and grading them based on their performance. Additionally, firms should provide Continuing Program Development (CPD) and prepare IT-based audit working papers that include audit procedures, rules, and regulations, as well as analysis working papers. This will help enhance the auditors' abilities and prevent the risk of material misstatement due to control risk.Item Assessment of E-Channels Practice & its Challenges in the Banking Sector in Ethiopia: The Case of Bank of Abyssinia(A.A,U,, 2023-11-03) Abeba Kifle; Habtamu Berhanu (PhD)This study aims to assess the practice and challenges of e-channels in the case study organization, Bank of Abyssinia (BOA), in Ethiopia. Embracing innovation in the banking sector is crucial for competitiveness and meeting customer needs. The research employed a mixed research approach, utilizing a semi-structured questionnaire distributed to 399 e-channel users and 43 managerial staff across selected branches in the east Addis district. Additionally, structured interviews were conducted with branch managers. Descriptive research design was employed, and data analysis involved both statistical analysis of the questionnaire data using SPSS version 25 and interpretative analysis of interview results. The study findings highlight several areas for improvement. Enhancing communication and coordination, improving accessibility and availability, and enhancing customer satisfaction were identified as crucial areas for enhancing the e channels experience for customers. Furthermore, the increasing demand for e-channel services and the commitment of the government to improve the policy framework present significant opportunities for adoption in the banking industry. Based on the major findings, the study suggests several recommendations. Addressing limitations, improving functionality and user experience, and streamlining transaction processes are essential steps to enhance customer convenience and efficiency. By addressing these challenges, BOA can capitalize on the opportunities presented by the growing demand for e-channel services and the supportive policy environmentItem Effect of Internal Audit on Organizational Performance: The Case Study of Goal Ethiopia(AAU, 2023-01-01) Selamawit Wondwosen; Takele Fufa (PhD)The main objective of the study was to examine the effect of internal auditing on organization's performance of GOAL Ethiopia in Addis Ababa. Descriptive study design was used for this study. Both qualitative and quantitative approaches are employed. Both primary data and secondary sources are used to collect the data. Primary data was collected using administered questionnaires from 40 respondents and interview was made with higher officials and auditors. secondary sources were collected from different existing documents and books. Descriptive statistical tools such as percentages, mean and standard deviations are used in analyzing the data collected. The descriptive analysis shows all except top management support were found to have high influence on audit performance of the organization. According to the study, it is confirmed that career and advancement, professional competence, quality of audit work, and lack of enough top management support, lack of periodic revision of the guideline, lack of independency of the auditors and non-compliance of auditors to some extent to the guideline were found to be the issues that are disturbing effectiveness of audit activity in the study area. Furthermore the correlation analysis shows there is a positive and significant association among the factors affecting auditing and audit performance of the organization. Finally, based on the findings some recommendations were forwarded to the organization.Item Excise Taxation in Ethiopia: Design, Revenue Performance and Challenges(A.A.U, 2024-06-02) Ayele Achalu; Wollela Abehodie (PhD)The thesis examines Ethiopia's excise taxation system, focusing on its design, revenue performance, and associated challenges. Despite its potential as a significant revenue source, excise tax currently contributes less than 1% to GDP, prompting this study to investigate further. Using a mixed-method approach, it analyses tax design elements, compares them internationally, and highlights the need for policy reforms. Recommendations include periodic adjustments of specific tax rates to account for inflation, the introduction of excise stamps, expansion of the tax base to encompass emerging sectors like selective financial services, lottery operations, and betting services, as well as enhancements to centralized control mechanisms. The study aims to inform policymakers and stakeholders to enhance Ethiopia's excise tax system for economic and social benefits.Item Determinants of Net Interest Margins: Empirical Study in Ethiopian Commercial Banks(A.A.U, 2024-06-03) Diress Alamirew; Degefa Duressa (PhD)Abstract This study investigates the net interest margins (NIM) within Ethiopia's commercial banking sector from 2013 to 2022. It operates under the assumption that macroeconomic factors and bank-specific variables influence Ethiopian banks' net interest margins (NIM). The research draws on various theories and empirical findings to elucidate these factors. Through a quantitative research strategy and employing an explanatory research design, secondary data was collected and eight commercial banks out of twenty-seven were purposively selected. Panel data estimation techniques, primarily using fixed effects models, were applied to analyze the impact of banks specific and macroeconomic factors on CFI. STATA 14 software was utilized for model estimation. The results indicate that NIM is positively and significantly affected by credit risk, loan size, liquidity, gross domestic product (GDP), and inflation. Specifically, credit risk, loan size, liquidity risk, inflation, and GDP have a detrimental and positive effect on NIM, while profitability, capital adequacy, and operating costs do not play a significant role. Recommendations include enhancing credit risk management practices within banks and policymakers fostering a conducive economic environment. Future research may consider additional factors and incorporate newly emerging banks for a more comprehensive analysis.Item Determinants Influencing Access to Finance For Small and Medium Enterprises in Addis Ababa(A.A.U, 2024-06-03) Eyerus Mekonen; Degefe Duressa(PhD)Most economies rely on Small and Medium-Sized Enterprises (SMEs) for their operations. Despite the fact that SMEs are vital to a nation's financial prosperity, one of the largest barriers to their growth and daily operations is still finding funding. Investigating factors influencing SMEs' access to financing in three sub-cities—Yeka, Nifas Silk, and Kolfe Keraniyo—of Addis Ababa was the aim of this study. The study included both descriptive and explanatory research designs.Simple correlation and regression analysis, ANOVA, and descriptive statistics like frequency, percentage, tables, and graphs were used to analyze the research. The findings indicate that, on average, 55.5% of the selected SMEs wanted financing but were unable to obtain it, whereas just 15.1% of the studied enterprises had access to financing and 29.3% of them asked for loans but were only granted a portion of them. Furthermore, the data indicates that the bulk of financing (47.6%) is utilized to support personal savings. In the Addis Ababa sub city, the size of the company, the need for collateral, awareness, and the cost of borrowing all have a statistically significant impact on SMEs' access to financing (yeka, Nifas silk, and kolfe keraniyo).Item Assessment of Internal Audit Practices the Case of Bank of Abyssinia(A.A.U, 2024-06-11) Mesafint Mulugeta; Advisor Abebaw Kassie (PhD)Internal audit has an important role in helping a firm to achieve its objective, providing independent and objective assurance on risk management, control, and governance processes. This paper aims to explore practices in internal audit, focusing on key areas such as risk management, independency, internal control, compliances. The study adopts both quantitative and qualitative data analysis methods. Data collected through the questionnaires were analysed with descriptive statistics and qualitative method. Purposive sampling method used from the selected district and head office those are supervisor and branch internal auditors and the sample for this study focused on 45 respondent. Data derived from questionnaires that have been analysed using the statically package (SPSS) version 22 computer package for analysis. According to the research findings, the internal auditor function is not completely independent and internal auditor cannot freely to determine scope, length and do not frequently evaluate the design and efficiency of key internal control Challenges like, shortage of skilled staff, lack of technological skill and advancement and high experienced employee turnover rate are the most significant challenges. The bank will enhance the skill and knowledge of internal auditor by using both on the job training and off the job training Key words: Internal auditors, Internal audit practice, independency, compliances, internal control, risk managementItem Assessment of Lease Financing Repayment Practices: A Case of Small and Medium Enterprises (SME) Financed by Development Bank of Ethiopia (DBE)(A.A.U, 2023-06-06) Heaven Abebe; Abebaw Kassie (PhD)This study was conducted to assess lease financing repayment practices. In particular, the study has assessed effectiveness of the skill training, identified lease finance management practices, and assessed challenges to lease finance. The study has used 107 SME in Addis Ababa that received lease finance from DBE. The study has applied descriptive and explanatory research designs and it has followed quantitative research approach. The study has collected primary and secondary data from the enterprises by using structured questionnaire and the data was analyzed by using descriptive statistics. The study has identified that lease finance skill training failed to meet expectation of the bank and the enterprises perceived that the training has no role for the enterprises. In addition, it was identified that there is weak lease finance management from the side of the enterprises and the bank. As a result, there is late repayment practice of the lease finance in different enterprises. Moreover, it was identified that the enterprises are facing different challenges including challenges from the bank.Item Determinants of Financial Stability of Commercial Banks in Ethiopia(A.A.U, 2024-05-02) Hermella Mesfin; Dakito Alemu (PhD)This study examined the factors affecting commercial banks' financial stability in Ethiopia over a year (2015-2023). The study focuses on commercial banks in Ethiopia, established before the year 2015 including one state-owned bank and the remaining private banks. Purposive sampling was used to acquire data on nine commercial banks' audited financial accounts. Data were analyzed using balanced panel data and a quantitative research technique. Results are computed using fixed effect regression models. The study found a substantial positive correlation between bank capital adequacy ratio, asset quality, competition and financial stability. The study also found that bank financial stability was negatively correlated with earning capacity, however this association was not statistically significant. The management efficiency, and liquidity has a positive and statistically insignificant correlation with the financial stability of commercial banks in Ethiopia. This study suggests that banks, regulators, and policymakers prioritize capital adequacy ratio, asset quality, and competition to ensure financial stability of commercial banks in Ethiopia.Item Factors Affecting Adoption of Mobile Money Services in Addis Ababa: The Case of Tele Birr.(A.A.U, 2024-06-08) Hizibayen Legesse; Kelifa Srmolo Kemal (PhD)Mobile money has aided several low- and middle-income nations in overcoming the difficulties associated with traditional banking, as well as promoting financial inclusion and economic progress. This study aimed to identify the factors that affect the adoption of telebirr mobile money service in Addis Ababa, Ethiopia. For this study, a quantitative research approach was employed used to analyze and collect data from all sampled respondents. The samples were taken by using convenient sampling technique. To analyze the factors that may affect the adoption of Tele birr mobile money service, on this study a descriptive and explanatory research design was used. Multiple regression model were used to examine the relationship and to identify the effect of explanatory variables on the adoption of telebirr mobile money service. The analysis was conducted by using SPSS V.26. This study result shows, the independent variables Perceived Risk, Perceived Usefulness, Perceived Ease of Use and Technology Awareness have a significant effect on adoption of tele birr mobile money service. The variable Perceived Risk has a negative impact on adoption of tele birr mobile money service, whereas the other independent variables have a positive influence on adoption of tele birr mobile money service. The study recommends that telebirr service providers and marketers should concentrate on the four determinant variables that have the greatest influence on the adoption of telebirr service.Item Auditors Professional Responsibility and Legal Liabilities With Regard to External Audit Firms in Ethiopia(A.A.U, 2024-06-12) Mesfine Birhanu; Takele Fufa (PhD)This Project examines the professional responsibility and legal liabilities of auditors within the context of external audit firms in Ethiopia. The study delves into the intricate Contractual agreement and explores the extent to which these professionals are held accountable for their actions. By analyzing relevant laws, regulations, and professional standards, the research highlights the expectations placed on auditors to uphold integrity, objectivity, and competence. Furthermore, the Project investigates the legal consequences auditors face when failing to meet these standards, Violating Contractual agreement. Through a combination of qualitative and quantitative methods, including case studies and interviews with industry experts, the research provides a comprehensive understanding of the current state of auditors' professional responsibility and legal liabilities in Ethiopia. The findings underscore the need for robust regulatory mechanisms and continuous professional development to enhance auditors' adherence to ethical standards and mitigate legal risks. This study contributes to the broader discourse on audit quality and accountability, offering valuable insights for policymakers, audit firms, and practitioners in the Ethiopian context. Keywords: Professional Responsibility, Legal Liabilities, External Audit Firms, Accountability, Ethical StandardsItem Assessment of Credit Risk Management Practice in Case of Bunna Bank(A.A.U, 2022-06-05) Kidist Derese; Sewale Abate (PhD)Credit risk management becomes major discussion issue in the financial institutions because of uncertainty related to borrowers business. The aim of this study is to assess the practice of credit risk management of b unna bank. In order to address this objective, the study targeted credit and loan department and district officers who currently work at the head office and of the bank and collected primary data. The primary data were collected through questionnaires. The study distributed 69 questionnaires from which 47 questionnaires were collect filled and returned. The collected data was analyzed using descriptive statically tools. The findings showed that there is the well-designed credit risk strategy and policy that clearly indicated and recognized areas of credit engagement and the risk inherent in these engagements. The findings also indicated that respondent employs believed there is a good level of credit appraisals and granting process at the bank that check borrower’s history, financial condition and collateral requirements. Before granting loans furthermore the study showed that b unna bank was appropriate internal risk scoring system. Employee risk based scientific pricing and has an independent risk management function but results also indicated there is a room for improvement with regarding to monitoring activities undertaken at b unna bank. In line with the findings of the study, it was suggested to the bank to enhance its monitoring process by regularly inspecting the business of clients after granting credits, develop different type of credit facilities to the borrowers as per the potential borrower preference and assess borrowers past financial history, credit worthiness.Item Assessment of the Impact of the Effectiveness of Internal Control Systems on Fraud Prevention and Detection in Global Bank Ethiopia S.C(A.A.U, 2024-06-03) Masresha Endalew; Alem Hagos (PhD)This research aimed to evaluate the effect of Global Bank Ethiopia's S.C (GBE) internal control system in deterring fraud. Specifically, the research investigated the primary causes of fraud within GBE, assessed the implementation of internal control mechanisms, and evaluated their success in detecting and preventing fraudulent activities. A structured questionnaire was used as a primary data collection instrument to select employees of GBE by purposive and convenient means. Items of the questionnaire were measured on the ranking scale. 57 employees from ten branches and audit department of the bank were sampled. The research investigated various components of GBE's internal control framework, including the control environment, risk assessment procedures, implemented control activities, information flow and communication protocols, and monitoring practices. Data analysis was done using descriptive and inferential statistics. The research found that employees of the bank perceived that; poor internal control system, presence of unqualified staff, inadequate staffing, poor record-keeping practices, and inadequate training and re-training of staff among others were the main causes of fraud. All aspects of internal control system were strongly implemented and practiced by the bank. Internal control system was effective in controlling fraud in the bank in various forms. Fraud had negative and insignificant effect on the performance of the bank. The research recommends the continuous practice of the internal control system to ensure that fraud of any form is reduced to the barest minimum.Item The Effect of Women Entrepreneur Development (WEDP) on growth of Women-owned Entrepreneurs Business in Addis Ababa, Ethiopia: The Case of Vision Fund Microfinance Institution(A.A.U, 2024-06-04) Menbere Gedamu; Ethiopia Legesse (PhD)This study assesses the effect of the Women Entrepreneurship Development Project (WEDP) on the growth of women-owned enterprises in Addis Ababa, Ethiopia, specifically through Vision Fund Microfinance Institution. Data was collected from a population of 586 women entrepreneurs, with a sample of 180 respondents selected via structured questionnaires using random and proportionate sampling techniques. Descriptive statistics such as frequency and simple percentage were used to analyze demographic characteristics and the effects of the WEDP, while multiple regression analysis examined relationships between variables. The findings indicate significant positive effects of access to finance, WEDP training, and initial investment on the growth of women-owned enterprises, particularly in increasing income, creating employment opportunities, and enhancing social status. However, the WEDP did not significantly affect decision-making among women entrepreneurs. Recommendations include adopting strategies for improved loan quality and financial literacy programs at microfinance institutions, enhancing WEDP training to empower women in decision-making roles, and establishing robust monitoring and evaluation frameworks. These efforts aim to strengthen support for women entrepreneurs, foster sustainable business growth, and advocate for supportive policies to advance gender equality in entrepreneurship.Item The Implication of the upcoming capital market on Ethiopian Commercial Banks(A.A.U, 2024-06-07) Melktu Geremew; Degefa Duressa (PhD)This thesis explores the potential implications of the upcoming capital market on Ethiopiancommercial banks. The research aims to identify the potential benefits and challenges that canarise from the introduction of the capital market for these banks. Using descriptive research design and content analysis method was employed, the study focused on five purposively selected banks:Awash Bank, Dashen Bank, Abyssinia Bank, Hibret Bank, and Zemen Bank. The findings suggest that the capital market can bring about several benefits, including improved risk management, access to long-term financing, and a wider range of funding sources. Additionally, it can lead to operational streamlining, innovation, and the evolution of commercial banks into comprehensive financial institutions. However, the introduction of the capital market also poses challenges, such as exposing skill and technological gaps, and introducing new risks associated with new financial instruments. To capitalize on the opportunities presented by the capital market, the researcher recommends that commercial banks invest in staff training, technological advancement, and diversification of their services to meet the needs of the capital market.Item Factors Contributing to Tax Evasion: The Case of Small and Medium Enterprises in Addis Ababa City Administration(A.A.U, 2022-06-06) Firehiwot Kebede; Degefa Duresa (PhD)The main objective of this study was to identify the factors contributing to tax evasion, focusing on Small and Medium enterprises operating in the sub-cities of Addis Ababa. The researcher outlined a detailed literature review and identified seven variables for the study, four from the economic deterrence theory elements (i.e., tax penalties and enforcements, tax audits, tax authority’s efficiency, tax compliance cost) and three from psychological theory factors (i.e., tax fairness, tax awareness and taxpayers’ attitude towards tax). Descriptive research designs and a mixed research approach were used in this study to answer the research questions. The taxpayers were stratified into small and medium enterprises. The primary data was collected from 353 owners or managers of SMEs by using questionnaires and from 20 auditors of Ministry of Revenue through structured interviews and analyzed using descriptive statistics. The result of the study showed that negative taxpayers’ attitude towards tax and tax compliance costs have positive effect on tax evasion. But tax audit, tax awareness, tax authority’s efficiency, tax fairness and tax penalties & enforcements have negative effect on tax evasion respectively. From the seven predictor variables included in this study negative taxpayers’ attitude towards tax has the largest positive effect on tax evasion. The study recommended that in order to reduce tax evasion of small and medium enterprises by changing the negative attitude developed by taxpayers toward tax, the tax authority might be able to raise taxpayers awareness through training, improve the behavior of the tax collectors or assessors, and also provide a clear procedures to the taxpayers how tax system works and how their tax is calculated and by how much tax rate.Item Assessment of tax audit practice in Ethiopia The case of Ministry of Revenue East Addis Ababa Branch Office(A.A.U, 2024-05-25) Huda Ali; Abebaw Kassie (Assistant Professor)The study's goal was to assess the Ministry of Revenue's tax audit practice: The Case of the Eastern Addis Ababa Small Taxpayers' Branch Office. Descriptive research design was adopted in the study. Using a combined research approach, information was gathered from all 80 tax auditors in order to meet the goal. Data was gathered via an in-depth interview and a questionnaire. Descriptive statistical analysis was employed by the researcher to examine the information gathered. This study uses a sample size of 80 tax auditors to examine the difficulties and efficacy of tax audits in a particular setting. The study sought to determine the standards by which tax audit cases are chosen, investigate the usage of tax automation, and evaluate the expertise of tax auditors. The results provide some important new insights. First off, most respondents questioned the competence of tax auditors, raising issues with the selection of suitable and knowledgeable officers, the effectiveness of the tax audit handbook, and the amount of training offered.. Second, although all respondents agreed that tax automation improved revenue collection and compliance, several expressed concerns about the current auditors' lack of training in using automation software. Furthermore, the participants emphasized obstacles including network malfunctions, problems with the quality of data, and opposition from auditors that impeded the effective execution of tax automation. Even though SIGTAS tax automation supports the audit selection process, the data entered into the system is not accurate or dependable enough to be used efficiently. Several recommendations are made in light of these findings, including strengthening tax auditor competency through extensive training programs, guaranteeing sufficient funding for tax audits, advancing the use of tax automation through technological support and training, and developing transparent and unambiguous standards for choosing tax audit cases. These recommendations aim to improve the effectiveness and efficiency of tax audits, enhance tax compliance, and increase revenue collectionItem Effect of Business Risk on Financial Performance of Insurance Business: A Case Study of Ethiopian insurance Corporation(A.Au., 2024-06-01) Tamrat Assefa; Alem Hagos(PhD)This study aims to explore the effects of business risks on the financial performance of insurance company specifically to evaluate the trend of the financial performance of Ethiopian Insurance Corporation. Bearing the objective to explore the effect of credit risk, under-writing risk, liquidity risk, and re-insurance risk, to analyze the effect of macro-economic variables including inflation, interest, and exchange rate on EIC’s financial performance. To accomplish these objectives, the study used primary annual data from Ethiopian Insurance Corporation audited annual financial statement and from National Bank of Ethiopia spanning from 2008/09 to 2022/23 G.C, to analyze the data the study used STATA software, descriptive and inferential statistics, graphical exploration, and time series model including Vector error correction model. By doing this, the result indicates that the financial performance of Ethiopian Insurance Corporation in decreasing patterns after 2020 contrast to the liquidity and credit risk, credit risk, liquidity risk, under-writing risk, re-insurance risk has not been managed well, credit, liquidity, underwriting, and re-insurance risks have long run effects on the performance of the insurance corporation. Furthermore, the results indicate that all the business risks considered for the study and included macro variables have long run effects on the performance of the corporation. Based on the above findings the researcher recommend that the corporation should provide continuous evaluation of claims, creating, recording and putting in to practice efficient procedures for managing products, and manage the types and attributes of insurance risks taken on or claims authorized, needs to create risk management plans to lessen the adverse effects of volatility, revise or induce a robust credit policy to minimize the corporations’ bad debt, and the board of management and the corporation’s management should induce risk aware culture across the corporation to manage business risks.Item Determinants of operational and financial sustainability of microfinance institution in Ethiopia(A.A.U, 2024-06-25) Bayew Gebirie Silie; Degefe Duressa (PhD)In Ethiopia, where access to financial services is limited, microfinance institutions (MFIs) play a crucial role in poverty reduction. However, achieving financial and operational sustainability remains a persistent challenge for these institutions. This study aims to identify and analyze the determinants influencing the operational and financial sustainability of MFIs in Ethiopia. Employing a quantitative research approach and an explanatory research design, secondary data from the annual bulletin of AEMFI and mix market database were utilized for 10 years on 14 selected MFIs. The random effect regression model was chosen based on Hausman specification and Breush Pagan's LM tests, revealing its suitability for both operational self sufficiency (OSS) and financial self sufficiency (FSS) models. The analysis of the OSS model identified debt equity ratio, operating expense ratio (OER), depth of outreach (lndepth) and percentage of female borrowers (pfemb) as significant variables at 5%. Similarly, the FSS model indicated debt equity ratio (DER), depth of outreach (lndepth), return on equity (ROE), and breadth of outreach (lnbreadth) as significant determinants. Consequently, MFIs are recommended to consider these factors DER, OER, pfemb, lndepth, lnbreadth, and ROE in their decision making processes to enhance operational and financial self sufficiency, thereby contributing to sustainable poverty reduction efforts in Ethiopia.Item An Assessment of Credit Risk Management Practice: The Case of Abay Bank S.C(A.A.U, 2024-05-03) Workneh Lashetew; Abebaw K.(PhD)Credit risk is an essential factor that needs to be managed. Credit risk is the possibility that a borrower or counter party will fail to meet its obligations in accordance with agreed terms. Credit risk is one of the most vital risks for any commercial bank. Credit risk arises from nonperformance by a borrower. Among the risks that face bank’s credit risk is one of great concerns to bank authorities and banking regulators. This is because credit risk is that can easily and most likely prompts bank failure. Managing credit risk is not a simple task comprehensive consideration and practices are needed for identifying, granting, controlling and evaluating and monitoring credit risk. This research asses the practice of credit risk management in Abay Bank S.C. Therefore, the main objective of undertaking this study is to assess the credit risk management practice of Abay Bank S.C. For the study primary data is used. Primary data is collected using questionnaire and interviews. Regarding to the nature of the study, the research design is descriptive and quantitative study approach is adopted to assess credit risk management practice of bank. The research found that, credit risk monitoring procedure is not reviewed and updated regularly, the bank’s credit professionals do not conduct a formal meeting to discuss the customer’s history and future plans and there is lack of adequate training to credit management staffs and there is lack of adequate staff in credit management department of the bank. Finally based on the findings of the study, the following recommendations are given. Credit monitoring procedure should be reviewed and updated on regular basis; the bank should be adequately staffed the credit management department and the bank should arrange short term and long-term training to update and enhance the employees understanding about credit risk management.