Commercial Bank AccountingSummary Financial institutions differ in many ways from traditional nonfinancial organizations. For many people, the inner workings of financial institutions are complex and difficult to understand. For accountants, traditional rules and procedures used in non-financial institutions must be modified and expanded when a financial institution is involved. In this article, we focus on a specific financial institution, the commercial bank. In this introductory textbook, we will discuss the many reasons why bank accounting differs in an attempt to give you, the accountant, a better understanding of the accounting issues in this unique industry. In preparing this introduction to commercial bank accounting, we researched a number of sources, including a real bank controller's handbook. Our extensive research of this manual, a banking manual, and a number of journal articles and websites revealed many differences between the accounting methods of commercial banks and those of other institutions. We have compiled our results into two main sections. Firstly, Section 1 deals with the financial statements of the commercial bank. We analyzed each section of the balance sheet to discover where the differences lie between the bank and the traditional business. Next, we discuss the income statement to discover which transactions allow a bank to earn income or incur an expense. We also briefly discuss the other two financial statements, the statement of cash flows and the statement of stockholders' equity. Second, in Section 2, we discuss the regulatory agencies and reporting requirements that apply to commercial bank accounting. We discover the...... middle of paper......nk Controller¡¦s Manual.¡¨ Sheshunoff Information Services, Inc. 1992.Federal Reserve System. http://www.federalreserve.gov/Gunther, Jeffery, ¡§Financial Statements and Reality: Do Troubled Banks Tell It All?¡¨ Economic and Financial Review. Third Quarter 2000, p. 30-35.Kane, Edward J., ¡§Taxpayer Loss Exposure in the Bank Insurance Fund.¡¨ Challenge. March/April 1993, p. 43.Linder, Wayne, ¡§Ensuring Adequacy of Loan Loss Reserves: Principles for Community Financial Institutions.¡¨Commercial Lending Review. Summer 2000, p. 44-52Miller, Roger, ¡§Modern Money and Banking.¡¨ McGraw-Hill, Inc. New York, 1993. Money: what it is, how it works. http://wfhummel.cnchost.com/capitalrequirements.htmlOffice of the Comptroller of the Currency. http://www.occ.treas.gov/aboutocc.htmSecurity Industry Association. http://www.sia.com/gramm_leach_bliley/