FGE Chapter 4,5, and 6

1
Chapter Four
Monthly Reports
2
Introduction
Monthly reports submitted by a reporting entity
to MOFED.
Revenue /Assistance/ Loan report
Recurrent expenditure report
Capital expenditure report
Transfer report
Receivables report
Payables report
Trial balance
3
Cont’d……
• The only monthly reports verified by MOFED
are the transfer report and the Trial Balance.
• The transfer Report is verified by MOFED to

ensure that all disbursements to an accounting
Unit by MOFED and all disbursements from an
Accounting Unit to MOFED are accounted for
within the accounting system to enhance control
over cash transfers.
4
• The Trial Balance is verified by MOFED to

ensure that the total debits and credits are equal
and that general Ledgers are balanced.
• MOFED also verify the cash balance for the

domestic source of finance from the trial Balance
to enhance cash management practices at federal
level.
• All other monthly reports that are submitted to

MOFED serve as input documents to consolidate
reports and produce financial statements at the
Federal Level.
5
• All monthly reports are prepared in two

copies. The original copy is sent to MOFED
and the second copy is retained as a
permanent record at the reporting entity.
6
 Revenue/Assistance/Loan Report
 provide information on the year to date
revenues of an accounting unit from each
source of finance.
 Its purpose is to facilitate consolidation of the

actual revenues, assistance and loan collected
by the FGE and Regional State to facilitate
comparison of budgeted revenues to actual
revenues by account category.
7
 The Accountant prepares a revenue/Assistance/Loan

report for the Accounting Unit.
 The source document to prepare the

revenue/Assistance/Loan report is the general Ledger.
 Each item of revenue, assistance or loan is identified by

account code.
 The amount from the balance column in the general
ledger card is transcribed into the
revenue/assistance/Loan Report.
 The grand totals from each revenue/Assistance/Loan
report are carried forward to the trial Balance.
 Balances in the Revenue/Assistance/Loan Report are
normally credits.
8
Figure 1.1: Revenue/Assistance/Loan report

Me/He 21
Month__________
Name of Public Body:________________________ code: _______
Name of Program:___________________________ code: _______
Name of Sub Agency:________________________ code: _______
Name of Sub Program: ________________________code: _______
Name of Project: _____________________________code: _______
Bank Account Number:_______________________
Account YEAR-TO-DATE
Code Account description Revenue
Debit Credit
1101 Tax on wages and salaries
1465 Interest on loans to government employees
1485 Other miscellaneous revenue
Total (To Trial Balance)
Prepared by Name and Signature

9
 Example 1:
You are provided with the following general
ledger balances as at May 31, 2010 for
Ethiopian Civil Service College with budget
category 319/01/07/00/000/1800 and bank
account Number 10645839.
Required: Based on the below data, you are

required to prepare the monthly reports for
the month of May, 2010. Begin with the
preparation of
revenue/assistance/loan report for example:
10
Account General Ledger

Code Debit Credit
1101 6750
1415 750
1429 1000
1485 500
4001 57550
4002 33450
4005 9600
4009 2750
4055 6750
4101 22850
4103 3100
4203 9600
5004 19850
611 67500
6131 4050
6213 7000
6217 15000
6241 1950
6257 1200
6258 600
6259 600
11
Solution:
Revenue/Assistance/Loan report
Me/He 21
Month __May ________
Name of Public Body:___ ECSC________________ code: __319_____
Name of Program:___________________________ code: ____01___
Name of Sub Agency:________________________ code: ___07____
Name of Sub Program: ________________________code: __00_____
Name of Project: _____________________________code: _000______
Bank Account Number:___10645839____________________
Code Account description Revenue
Debit Credit
1101 Tax on wages and salaries 6750
1415 Court fees 750
1429 Other fees and charges 1000
1465 Interest on loans to government employees
1485 Other miscellaneous revenue 500
Total (To Trial Balance) 9000

12
Recurrent Expenditure Report
• Provides information on the year-to-date

recurrent expenditures of each budgetary
Institution managed by an accounting Unit.
• Its Purpose is to facilitate consolidation of the

actual expenditures made by the FGE and to
facilitate comparison of budgeted expenditure to
actual expenditure.
• The Accountant prepares the recurrent

expenditure report for each BI.
13
• The source document to prepare the recurrent

expenditure report is the subsidiary ledger.
• The balance of each subsidiary ledger card is

transcribed to the appropriate account code in
the recurrent expenditure report.
• Balances in the recurrent expenditure Report

are normally debits.
14
Figure 1.2: Recurrent Expenditure Report

Me/He 22
Month___________
Name of Sub Program:________________________code: _______
Name of Project:_____________________________code: _______
Source of Finance:____________________________ code: _______
Bank Account Number:___ ____________________
Code Account Description Expenditure
Debit Credit
Preprinted Preprinted
Prepared by Name an Signature

15
Example 2:
Based on the data given on Example 1, prepare
the Recurrent Expenditure report
16
Solution:
Recurrent Expenditure Report

Me/He 22
Month___May________
Name of Public Body:____ECSC____________________ code: __319_____
Name of Program:___________________________ code: __01_____
Name of Sub Agency:________________________ code: __07_____
Name of Sub Program:________________________code: __00_____
Name of Project:_____________________________code: __000_____
Source of Finance:____________________________ code: _1800______
Debit Credit
6111 Salary to permanent staff 67500
6131 Gov’t contribution to perm. Staff-pension 4050
6241 Maintenance and repair of vehicles 1950
6257 Electricity charges 1200
6213 Printing 7000
6258 Telecommunication charges 600
6259 Water and other utilities 600
6217 Fuel and lubricants 15000
Prepared by Name an Signature

17
 Capital Expenditure Report
• Its purpose is to facilitate consolidation of the

actual capital expenditures made by the FGE and
state governments and to facilitate comparison
of budgeted expenditure to actual expenditure.
• The Accountant prepares the capital expenditure

Report for each BI.
• The source document to prepare the Capital

expenditure Report is the subsidiary Ledger.
18
• The amount from the balance column in each

subsidiary Ledger card is transcribed to the
appropriate account code in the capital
expenditure Report.
• Balances in the Capital Expenditure Report are

normally debits, which are similar to the
recurrent expenditure.
• Each Accounting Unit prepares a capital

expenditure Report for each BI that it
manages.
19
Figure 1.3: Capital Expenditure Report

Me/He 23
Month___________
Name of Project: _____________________________code: _______
Source of Finance:____________________________ code: _______
Debit Credit
Preprinted Preprinted

20
 Transfer Report
• Its function is to serve as a control tool to verify
cash transfers between MOFED and an
accounting unit and vice versa
• The transfer report consists of two parts:

 Part 1 summarizes transfer account balances from the
general Ledger.
Part 2 provides information on each monthly
cash transfer between the accounting Unit and
MOFED.
• The Accountant prepares a transfer Report for
each accounting Unit
21
• The source documents to prepare the transfer report

are the General Ledger Cards.
• Balances in the transfer report are debits or credits

depending on the nature of the transfer account.
• One transfer report is prepared for each accounting

unit.
Part 1:
• The amount from the Balance Column in the General
Ledger Card is transcribed into the transfer report
• The grand totals from each Transfer report - Part 1
are carried forward to the trial Balance.
22
Figure 1.4 Transfer Report - Part 1
Me/He 24 Month__________
Name of Project :_____________________________code: _______
Code Account Description Balance
Debit Credit
4001 Recurrent salary and allowances
4002 Recurrent operating expenditure
4003 Capital salary and allowances
4004 Capital expenditure
4005 Staff advances
4006 SSDP funds
4007 Grace period payables
4008 Between BI and/or Region
4009 Other cash transfers
4010 Within BI or MOFED
4051 Recurrent salary and allowances: non-cash
4052 Recurrent operating expenditure: non-cash
4053 Capital salary and allowances: non-cash
4054 Capital expenditure: non-cash
4055 Other non-cash transfers

23
Example 3:
• Based on the data given in Example 1, you are
required to prepare the Transfer Report Part I.
24
Solution:
Transfer Report - Part 1
Me/He 24 Month___May_______
Name of Public Body:____ECSC________________ code: _319______
Name of Program:___________________________ code: ___01____
Name of Sub Program: ________________________code: _00______
Name of Project :_____________________________code: _000______
Code Account Description Balance
Debit Credit
4001 Recurrent salary and allowances 57550
4002 Recurrent operating expenditure 33450
4003 Capital salary and allowances
4004 Capital expenditure
4005 Staff advances 9600
4006 SSDP funds
4008 Between BI and/or Region
4009 Other cash transfers 2750
4010 Within BI or MOFED
4051 Recurrent salary and allowances: non-cash
4052 Recurrent operating expenditure: non-cash
4053 Capital salary and allowances: non-cash
4054 Capital expenditure: non-cash
4055 Other non-cash transfers 6750
Total (To Trial Balance) 2750 107350

25
Part 2
 Each cash transfer during the month between the
accounting unit and MOFED is listed individually in
Part 2 of the transfer report. The information
required for Part 2 is transcribed from the following
cash transfer account Ledger cards:
 4001: recurrent salary and allowances
 4002: Recurrent operating expenditure
 4003: capital salary and allowances
 4004: capital expenditure
 4005: Staff advances
 4006: SSDP funds
 4007: Grace period payables
 Any other transfer code used during the month to transfer
Funds to /from MOFED
26
 Columns are identified by account code.
 The date and amount of each transaction recorded in

the account code's Ledger card during the month are
transcribed in the corresponding sub-column of the
Transfer report.
 Each transaction is recorded in a separate row.
 Transfers received from MOFED are credits.
 Transfers of cash to MOFED are debits.
 Debit and credit sub-columns are totaled and the total

is recorded in the total row.
27
• The difference between the totals in the debit

and credit sub-columns for each account code
is calculated.
• If the total of debits is greater than the total of

credits, the difference is recorded in debit sub-
column of the Net activity row.
• If the total of credits is greater than the total

of debits, the difference is recorded in credit
sub-column of the Net activity row.
28
• The balance from the account code's Ledger Card

at the beginning of the month is recorded in the
beginning of month (BOM Balance) row.
• The amount in the Net Activity row is combined

with the amount in the BOM Balance row and
recorded in the end of month (EOM Balance)
row.
• The EOM Balance must equal the balance in the

account code's Ledger Card at the end of the
month, which equals the balance recorded for the
account code in Part 1 of the Transfer Report.
29
Transfer Report - Part 2 is shown in Figure 1.5
Figure 1.5: Transfer Report - Part 2

Me/He 24
4001 4002 4003 4004

D De Cre Dat De Cre Da De Cre Da De Cred
at bit dit e bit dit te bit dit te bit it
e
Total
Net
activity
BOM
Balance
EOM
Balance
30
Figure 1.5 (Continued)
4005 4006 4007

Da De Cre Dat De Cre Da De Cre Da De Cred
te bit dit e bit dit te bit dit te bit it
Total
Net
activity
BOM
Balance
EOM
Balance
31
 Receivables Report
Provides information on the year to date

receivables owed to an accounting unit.
Its purpose is to facilitate consolidations of the

actual receivables owed to the FGE.
The accountant prepares a receivables Report for

each accounting unit.
The source document to prepare the receivables

report is the General ledger.
32
• Each item of receivable is identified by account

code.
• The amount from the balance column in the

general ledger card is transcribed into the
receivables report.
• The grand totals from each receivable report

are carried forward to the trial balance.
• Balances in the receivables report are normally

debits..
33
Figure 1.6: Receivables Report

Me/He 25
Month__________
Name of Project :_____________________________code: _______
Code Account Description Receivables
Debit Credit
4201 Suspense
4202 Cash shortage
4203 Advance to staff
4204 Advance for SSDP
4205 Advance for staff from next year's budget
4206 Advance for recurrent expenditures from next year's budget
4207 Advance for capital expenditures from next year's budget
4208 Advance to regions
4209 Other advances to BI
4210 Other advances within government
4251 Advance to contractors
4252 Advance to consultants
4253 Advance to suppliers
4254 Other advances outside government
4271 Peasant associations
4272 Cooperatives
4273 Individuals and private organizations
4274 Others

34
Example 4:
• Based on the data provided in Example 1, you
are required to prepare receivable report.
35
Solution:
Receivables Report
Me/He 25
Month__May________
Name of Public Body: _________ECSC_____________ code: _319______
Name of Program:___________________________ code: ____01___
Name of Sub Program: ________________________code: __00_____
Name of Project :_____________________________code: __000_____
Code Account Description Receivables
Debit Credit
4201 Suspense
4202 Cash shortage
4203 Advance to staff 9600
4204 Advance for SSDP
4205 Advance for staff from next year's budget
4206 Advance for recurrent expenditures from next year's budget
4207 Advance for capital expenditures from next year's budget
4208 Advance to regions
4209 Other advances to BI
4210 Other advances within government
4251 Advance to contractors
4252 Advance to consultants
4253 Advance to suppliers
4254 Other advances outside government
4271 Peasant associations
4272 Cooperatives
4273 Individuals and private organizations
4274 Others

36
 Payables Report
• provides information on the year-to-date payables

owed by an accounting unit.
• Its purpose is to facilitates consolidation of the

actual payables owed by the FGE.
• The accountant prepares a payables report for the

accounting unit.
• The source document to prepare the payables

report is the general ledger.
37
Cont’d……
• Each payable item is identified by account code
and the amount from the balance column in the
general ledger card is transcribed into the
payables report.
• The grand totals from each payables report are

carried forward to the trial balance.
• Balances in the payables report are normally

credits.
38
Figure 1.7: Payables Report

Me/He 26 Month___________
Name of Public Body: ____________________ Code: _____
Name of Program: _______________________ Code: _____
Name of Sub Agency: ____________________ Code: _____
Name of Sub Program: ___________________ Code: _____
Name of Project: _______________________ Code: _____
Bank Account Number:___________________
YEAR-TO-
Account Account Description DATE
Code Payables
Debit Credit
5002 Sundry creditors
5003 Pension contribution payable
5004 Salary payable
5021 Due to staff
5022 Due to Ministry of Finance and Economic Development for
SSDP
staff from next year’s budget
recurrent expenditures from next year’s budget
capital expenditures from next year’s budget
5026 Due to regions
5027 Other payables to Ministry of Finance and Economic
Development
5028 Other payables within government
5051 Custom deposits
5052 Court deposits
5053 Hospital deposits
5054 Other deposits
5061 Retention on contract

39
Example 5:
Based on the information given in Example 1, you are required to prepare the Payables report.
Solution:
Payables Report
Me/He 26 Month__May_________
Name of Public Body: ______ECSC_________Code: _319____
Name of Program: _______________________ Code: __01___
Name of Sub Agency: ____________________ Code: _07____
Name of Sub Program: ___________________ Code: _00____
Name of Project: _______________________ Code: _000____
Bank Account Number_____10645839_____
YEAR-TO-
Account Account Description DATE Payables
Code
Debit Credit
5002 Sundry creditors
5003 Pension contribution payable
5004 Salary payable 19850
5021 Due to staff
5022 Due to Ministry of Finance and Economic Development for SSDP
5023 Due to Ministry of Finance and Economic Development for staff
from next year’s budget
recurrent expenditures from next year’s budget
5025 Due to Ministry of Finance and Economic Development for capital
expenditures from next year’s budget
5026 Due to regions
5027 Other payables to Ministry of Finance and Economic Development
5028 Other payables within government
5051 Custom deposits
5052 Court deposits
5053 Hospital deposits
5054 Other deposits
5061 Retention on contract

40
 Trial Balance
 It is the summary of the net cumulative debit and credit balances
contained in the general ledger at the end of each month for each
account code represented by a general ledger card.
 The trial balance proves the arithmetical accuracy of the general

ledger.

 The total amount of the debit column must equal the total
amount of the credit column in the trial balance.
 The trial balance serves as a basis to produce financial

statements.
 The accountant prepares the Trial balance for each Accounting

Unit.
41
 The source documents to prepare the Trial Balance are:

 Revenue/Assistance/Loan Report,
 Recurrent Expenditure Report,
 Capital Expenditure Report,
 Transfer Report,
 Receivables Report,
 Payable Report, and
 The General Ledger.
• Please note that in profit-making organizations, trial balances
are prepared directly form the general ledger accounts and
each account will be listed in the trial balance as long as it has
a balance.
• However, in FGE system of accounting, the trial balance is

prepared from the reports already produced for it facilitates
the process and provide pertinent figures for the period end
reports.
42
• In addition to the reports mentioned above,

some balance amounts are directly taken from
the general ledger accounts.
• The account codes that are taken from the
general ledger directly to the trial Balance are:
Letters of Credit - balances in each account should
be credits.
Net Assets/Equity - balance should be credit.
Cash and Cash Equivalents - balances in each
account should be debits.
43
Figure 1.8: Trail Balance

Me/He 27
Month________
Name of Public Body: ____________________ Code: ______
Name of Program: _______________________ Code: _____
Name of Sub Agency: ____________________ Code: _____
Name of Sub Program: ___________________ Code: _____
Name of Project: ________________________ Code: _____
Bank Account Number ___________________
Code Account Description Debit Credit

- Revenues/Assistance/Loan: (from Revenue/Assistance/Loan
Report)
- Expenditures:
- Recurrent expenditure (Total of Recurrent Expenditure
Reports)
- Capital expenditure (Total of Capital Expenditure Reports)
- Transfers: (from Transfer Report)
- Receivables: (from Receivables Report)
- Payables: (from Payables Report)
Letters of Credit: (by account code-from General Ledger)
5601 Net Assets/Equity (from General Ledger)
Cash and Cash Equivalents (by account code-from General

Ledger)
4101 Cash on hand
4102 Cash at bank in foreign currency
4103 Cash at bank
TOTAL
Prepared by Name & Sig. Checked by Name & Sig. Authorized by Name & Sig.
44
Example 6:
Based on the data given in activity 1, you are required to prepare the monthly trial balance.
Solution:
Trail Balance
Me/He 27
Month_ May_______
Name of Public Body: ____ECSC___________Code: __319____
Name of Program: _______________________ Code: ___01__
Name of Sub Agency: ____________________ Code: __07___
Name of Sub Program: ___________________ Code: ___00__
Name of Project: ________________________ Code: __000___
Bank Account Number __10645839_________________
Code Account Description Debit Credit
Revenues/Assistance/Loan: (from Revenue/Assistance/Loan report 9000
Expenditures:
Recurrent expenditure (Total of Recurrent Expenditure Reports) 97900
Capital expenditure (Total of Capital Expenditure Reports)
Transfers: (from Transfer Report) 2750 107350
Receivables: (from Receivables Report) 9600
Payables: (from Payables Report) 19850
Letters of Credit: (by account code-from General Ledger)
5601 Net Assets/Equity (from General Ledger)
Cash and Cash Equivalents (by account code-from General ledger
4101 Cash on hand 22850
4102 Cash at bank in foreign currency
4103 Cash at bank 3100
TOTAL 136200 136200
Prepared by Name & Sig. Checked by Name & Sig. Authorized by Name & Sig.
45
 Submitting Monthly Reports to the Ministry of

Finance and Economic Development
• Monthly reports will be prepared and submitted to
concerned body or Ministry of Finance and Economic
Development within two weeks of the last day of the
month by all Accounting Units.
• All transactions that occur during a month should be

recorded daily on the Transaction Register and into the
appropriate General and Subsidiary Ledgers.
• However, if some transactions for the month are not

entered into the Transaction Register by the end of the
month, they will not be included in the report of the
specified month.
46
• If there is accounting unit that is distinct from the

reporting entity, the reports must be sent to the
reporting entity before the end of the second week of
the month.
• The reporting entity should:

 Verify the mathematical accuracy of all reports.
 Verify that totals in the revenue/assistance/loan report,
recurrent expenditure report, capital expenditure report,
transfer report, receivables report, and payable report are
 Verify that the end of month balance in Part 2 of the transfer
report is carried forward to part 1 of the transfer report.
 Visit any accounting unit that does not report within two
weeks and assist in the preparation of monthly reports.
47
• The reporting entity does not consolidate reports.
• The reports from the accounting units are forwarded to

MOFED intact.
• The reporting entity is required to send their monthly

reports to the MoFED during the third week of the
month.
• Central Accounts Department at MOFED will:

 Verify the mathematical accuracy of all reports.
 Verify that totals in the revenue/assistance/loan report,
recurrent expenditure report, capital expenditure report,
transfer report, receivables report, and payable report are
48
Verify that the EOM Balance in Part 2 of the transfer

report is carried forward to part 1 of the transfer
report.
Reconcile individual transfers recorded on the
transfer report with its records.
Visit any reporting entity that does not report within
three weeks to identify and assist with monthly
reporting.
Prepare and distribute various reports for FGE.
Consolidate balances for each account into a FGE
Financial Statement.
49
Chapter Five
Financial Statements
50
Users of Financial Statement

The financial statements presented are intended
to meet the needs of users who are not in a
position to demand reports tailored to meet their
specific requirements.
These users include stakeholders such as:

members of the legislature,
donors,
lenders,
tax payers and
employees
51
Objectives of Financial Reporting in FGE

 The objective of the financial statements is to provide information
about :
 Financial position,
 Financial performance
 cash flows
That is useful in making and evaluating decisions about the
sources, allocation and uses of financial resources and about
how the activities were financed.
 In addition, the financial reporting also provides users with

information about whether resources were used in accordance with
the approved budget
52
Guiding Principles
Transparency in government begins with full
and fair disclosure of financial information.
The FGE uses the International Public Sector

Accounting Standards (IPSAS) issued by the
Public Sector Section of the International
Federation of Accountants as a basis for
establishing the financial statements.
53
Types of Financial Reports

The FGE accounting system can produce the following set of
financial statements:
1. A set of federal-level financial statements that includes:
▫ Statement of Financial Position

▫ Statement of Financial Performance
▫ Statement of Changes in Net Assets/Equity
▫ Cash Flow Statement
▫ Accounting Policies and Notes to Financial Statements
▫ Statement of Comparison of Budget and Actual Amounts – Domestic
Revenue
▫ Statement of Comparison of Budget and Actual Amounts – External
Assistance
▫ Statement of Comparison of Budget and Actual Amounts – Expenditure
▫ Comparison of Original and Adjusted Budget and Actual Amounts
▫ Statement of Expenditure by Functional Classification
54
2. A set of countrywide financial statements that

includes:
 Summary of Statement of Domestic and External
Revenues
 Summary Statement of Expenditure
 Summary Statement of Expenditure and its financing.
In addition to the above financial statements,
the accounting system also produces detailed
revenue and expenditure schedules that provide
detailed information and analysis of the
summary countrywide financial statements.
The remainder of this chapter describes the
format of each financial statement.
55
GOVERNMENT OF ETHIOPIA
Statement of Financial Position

As at 7 July 20X2
Ethiopian Birr '000

Notes 20X2 20X1
ASSETS (CURRENT)
Cash and cash equivalents 1 0 0
Receivables 2 0 0
Total Assets 0 0
LIABILITIES(CURRENT)
Current Liabilities - Payables 3 0 0
Total liabilities 0 0
Net Current
Assets/(Liabilities) 0 0
NET ASSETS/EQUITY
Accumulated surpluses/deficits 0 0
56
Statement of Financial Performance
For the year ended 7 July 20X2
Ethiopian Birr '000
Notes 20X2 20X1
OPERATING ACTIVITIES
Operating Revenue
Tax revenues 4 0 0
Non-tax revenues 5 0 0
Subsidies 6 0 0
Municipality revenues 7 0 0
Other revenue 8 0 0
Total operating revenue 0 0
Operating Expenses
Subsidies 0 0
Personnel services 9 0 0
Goods and services 10 0 0
Fixed assets and construction 11 0 0
Other expenses 12 0 0
Total operating expenses 0 0
Surplus/(defi cit) from operating activities 0 0
NON OPERATING ACTIVITIES

External assistance 13 0 0
External loans 14 0 0
Capital revenue 15 0 0
Debt repayments - principal 16 (0) (0)
Finance costs 17 (0) (0)
Surplus/(defi cit) from non operating activities 0 0
Surplus/(defi cit) for the year 0 0

57
Statement of Changes in Net Assets/Equity
Ethiopian Birr '000
Balance at 7 July 20X1 0
Changes in accounting
policy/Fundamental errors 0
Restated balance 0
Net surplus/(deficit) for the year 0
Balance as at 7 July 20X2 0

58
Cash Flow Statement
Ethiopian Birr '000 20X2 20X1
1 CASH FLOW FROM OPERATING ACTIVITIES
Tax revenues 0 0
Non tax revenues 0 0
Other income 0 0
Miscellaneous income 0 0
Municipality revenues 0 0
Regional subsidy 0 0
Total Receipts - A 0 0
Personnel services 0 0
Goods and services 0 0
Finance charges 0 0
Subsidies 0 0
Other expenses 0 0
Total Payments - B 0 0
Non Cash Movements
Increase/(Decrease) in payables 0 0
Increase/(Decrease) in receivables 0 0
Total Non Cash Movements - C 0 0
Net Cash Flow from Operating Activities 0 0

59
2 CASH FLOW FROM INVESTING ACTIVITIES

Sale of assets 0 0
Sale of equity 0 0
Repayment of borrowings to government 0 0
Privatization proceeds 0 0
Capital receipts from non government 0 0
Total Receipts (A) 0 0
Fixed Assets and Construction 0 0
Govt. lending or equity investments 0 0
Total Payments (B) 0 0
Net Cash Flow from Investing Activities 0 0

60
Cash Flow Statement
Ethiopian Birr '000
20X2 20X1
3 CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from external assistance 0 0
Proceeds from external loans 0 0
Total Receipts (A) 0 0
Debt repayments – external Total Payments (B) 0 0
Net Cash Flow from Financing Activities 0 0
4 NET INCREASE/(DECREASE) IN CASH &CASH EQUIVALENTS 0 0
5 Cash and Cash Equivalents at Beginning of Year 0 0
6 Net Increase/(Decrease) in Cash Equivalents During the Year 0 0
7 Cash and Cash Equivalents at End of Year 0 0

61
Accounting Policies and Notes to Financial Statements
Notes to Financial Statements
Ethiopian Birr ‘000

1 Cash and Cash Equivalents 20X2 20X1
Domestic currency
Foreign currency
Budget support
Counterpart funds
SSDP
Cash in transit
Sinking fund
Others
Domestic currency refers to local currency held in a safe as well as in a bank account. Foreign
currency is cash held in a bank account denominated in foreign currency. Budget support refers to
cash from a foreign source held in a bank account available for unrestricted general budgetary
support. Counterpart funds refer to grants held in a bank account reserved for specific program
support.
62
2 Receivables
Advances
Prepayments
Others ___________ ______
Advances represent amounts due from government entities and staff. Prepayments represent
amounts due from suppliers, contractors and consultants. Others represent amounts due from
peasant associations, cooperatives, individuals, private organizations and others.
63
Accounting Policies and Notes to Financial Statements
Notes to Financial Statements
3 Payables 20X2 20X1
Accounts Payable
Payables within Government
Direct advances
Treasury bills
Deposits
Retentions ___________ ______
Accounts payables represent grace period payables, sundry creditors, pension contributions
payable, salary payable and other payroll deductions. Payables within government represent
amounts due to government entities and staff. Deposits represent customs, court, hospital bid
bond, VAT and other deposits.
64
4. Tax Revenues
• Tax revenues are legally mandated payments to
government.
• Tax revenues represent taxes on income, profits
and capital gains, value added tax and sales
turnover tax on domestically manufactured goods
and services, excise tax and foreign trade taxes
which include excise tax, value added tax,
customs and export duties.
• The breakdown of tax revenues by revenue item is
provided in the statement of comparison of
budget and actual amounts – domestic revenue.
65
5 Non Tax Revenues

• Non-tax revenues represent administrative
fees and charges, sales of goods and services
and miscellaneous revenues.
• The breakdown of non tax revenues by
revenue item is provided in the statement of
comparison of budget and actual amounts –
domestic revenue.
66
6. Subsidies
• Subsidy revenue represents treasury funds
received by regions from the federal government
to execute their recurrent and capital budgets.
• subsidy expense represents treasury funds
transferred by the federal government to regions
to execute their recurrent and capital budgets.
7. Municipality Revenues
• Municipality revenue represents different types of
municipal taxes, municipal rents and service
charges and sale of goods and municipal services.
67
8. Other Revenues
Other revenue represents government
investment income including dividend income,
residual surplus and capital charges. The
breakdown of other revenues by revenue item is
budget and actual amounts – domestic revenue.
68
9. Personnel Services
• Personnel services represent government
pension contributions made to pension funds
and salaries, wages, allowances/benefits paid
to permanent, contracted, externally
contracted and casual staff.
• The breakdown of personnel services by
expense item is provided in the statement of
expenditure.
69
10. Goods and Services

• Goods and services represent expenditure
incurred on goods and supplies, traveling,
maintenance and repairs, training, stocks of
emergency and strategic goods and contracted
services.
• The breakdown of goods and services by
expense item is provided in the statement of
expenditure.
70
11. Fixed Assets and Construction

• Fixed assets and construction represent
expenditure incurred in the acquisition of fixed
assets and the pre-construction and
construction of buildings and infrastructure.
• The breakdown of fixed assets by expense item
is provided in the statement of comparison of
budget and actual amounts – expenditure.
71
12. Other Expenses

• Other expenses include contingency and
miscellaneous payments, compensation to
individuals and institutions, government
investments, grants to institutions, and
contributions to international organizations.
• The breakdown of other expenses by expense
item is provided in the statement of
expenditure.
72
13. External Assistance

• External assistance represents the amounts
contributed by donors as grants and are
recognized as revenue on receipt of funds.
• The breakdown of external assistance by donor
is provided in the statement of comparison of
budget and actual amounts – external
assistance.
73
14. External Loans

• External loans represent amounts received
from external lenders as loans during the fiscal
year and are recognized as revenue on receipt
of funds directly or payments to suppliers on
behalf of the government.
• The breakdown of external loans by lenders is
budget and actual amounts –external loans.
74
15. Capital Revenues

• Capital revenue represents proceeds from the
privatization of state owned enterprises, sale of
fixed assets, stocks and intangible assets and
amounts received from non-governmental
sources for capital purposes.
• The breakdown of capital revenues by item of
revenue is provided in the statement of
domestic revenue.
75
16. Debt Repayments

• Debt repayments to domestic and external
lenders represent the principal amounts repaid
during the year and are recognized as
expenditure.
• The breakdown of debt repayments by internal
and external debt is provided in the statement
of comparison of budget and actual amounts –
expenditure.
76
16 Finance Costs
Finance costs represent payments of bank charges and interest on external and domestic debt.
17 Long Term Foreign Loans

20X2 20X1
At the beginning of the year 0 0
Additions 0 0
Amounts written off 0 0
Repayments 0 0
Exchange Differences 0 0
At the end of the year 0 0
The amounts falling due for repayment within the next 12 months amount to Birr …..
Details of the lenders, date of obtaining loan, amount due in foreign currency and the period of
repayment are detailed below:
Name of Lender Date of loan Amount Due Period

77
16 Long Term Domestic Loans

20X2 20X1
At the beginning of the year 0 0

Additions 0 0
Repayments 0 0
At the end of the year 0 0
Maturity Analysis
Due within 1 year 0 0
Due within 2 to 5 years 0 0
Due after more than 5 years 0 0
The loans represent long term bonds issued.

78
20. Comparison of Budget and Actual

Amounts – Domestic Revenue
• The causes for material differences between
the actual amounts and the budget amounts
are detailed below by item of revenue:
21. Comparison of Budget and Actual
Amounts – Expenditure
• The causes for material differences between
the actual amounts and the budget amounts
are detailed below by item of expenditure:
79
22. Contingent Liabilities

• A list of contingent liabilities, explaining its
type, nature and circumstances should be
provided together with a reliable estimate of
the probable amount.
23. Other Notes
• Any other notes and disclosures that MOFED
may decide to include as part of the financial
statements.
80
Accounting Policies
• The principal accounting policies of the Government, which
are set out below, have been applied consistently throughout
the period.
BASIS OF ACCOUNTING
• The financial statements have been prepared on the
historical cost basis using a modified cash basis of
accounting that recognizes the following non-cash
transactions:
• Revenue is recognized when:
 Aid in kind is received.
 Payroll is processed (income tax and employee fines)
 Salary advance is made to an employee (interest on salary
advances)
 Withholding tax is deducted from the amount due to a supplier.
81
• Expenditure is recognized when:

 Payroll is processed (salary and pension expenses)
 Aid in kind is received
 Goods are received or services are rendered
 At the end of the year, a grace period payable is accounted for.
• Intergovernmental transfers are recognized without actual
cash movement
• Amounts borrowed using treasury bills and direct advances
from the National Bank of Ethiopia are recognized as
current liabilities
• REVENUE
• Revenues are recognized on receipt of amounts except as
stated above.
• FINANCE COSTS
• Finance costs are recognized as an expense in the period in
which they are paid.
82
• TRANSLATION OF FOREIGN CURRENCIES

• Transactions denominated in foreign currencies are
translated into Ethiopian Birr at the rates of
exchange ruling at the date of the transaction.
• Cash and bank balances that are denominated in
foreign currencies are translated at the rates of
exchange ruling at the year end and the exchange
gains/loss arising from such translation are
recognized as revenue/expenditure respectively.
• CONSOLIDATION
• The accounts of controlled entities are not
consolidated– for example Ethiopian Airlines and
Ethiopian Telecommunications Corporation.
83
Statement of Comparison of Budget and Actual Amounts - Domestic Revenue
for the year ended 7 July 20X2
Ethiopian Birr '000
20X2 20X1
Budget Actual Variance Budget Actual Variance
OPERATING REVENUE
Tax revenues
Tax on income, profit and capital gains
Value Added Tax on goods & services
Excise Tax
Sales turnover tax on goods & services
Stamp sales and duty
Customs Duty on imported goods
Excise Tax on imported goods
Value Added Tax on imported goods
Export Duties
Timber Tax
Municipality Tax revenue
Total tax revenues
Non-tax revenues
Administrative fees and charges
Sales of public goods and services
Miscellaneous revenue
Municipality revenues
Total non-tax revenues
Subsidies
External assistance
External loans
Total operating revenues
84
Statement of Comparison of Budget and Actual Amounts - Domestic Revenue
Ethiopian Birr '000
20X2 20X1
Other revenues
Government investment income
Dividend income
Residual surplus
Interest income and capital charges
Total government investment income
Contribution to pension funds
Capital revenue
Sale of properties, stock and intangible assets
Privatization proceeds
Capital transfers from non-governmental sources
Collection of principal from on-lending

Municipality capital and investment revenue
Total capital revenues
Total other revenues
TOTAL REVENUE
85
Statement of Comparison of Budget and Actual Amounts - External Assistance

Ethiopian Birr '000

20X2 20X1
Adjusted Adjusted
External Assistance
List of donors
0 0 0 0 0 0
Total 0 0 0 0 0 0
86
Statement of Comparison of Budget and Actual Amounts - External Loan

Ethiopian Birr '000

20X2 20X1
Adjusted Adjusted
External Loan
List of lenders
0 0 0 0 0 0
Total External Loan 0 0 0 0 0 0

87
Statement of Comparison of Budget and Actual Amounts - Expenditure
Ethiopian Birr '000
20X2 20X1
Adjusted Adjusted
PERSONNEL SERVICES Budget Actual Difference Budget Actual Difference
Emoluments
Salaries to permanent staff 0 0 0 0 0 0
Salaries to military staff 0 0 0 0 0 0
Wages to contract staff 0 0 0 0 0 0
Wages to casual staff 0 0 0 0 0 0
Wages to external contract staff 0 0 0 0 0 0
Miscellaneous payments to staff 0 0 0 0 0 0
Total 0 0 0 0 0 0
88
Comparison of Original and Adjusted and Actual Amounts
Ethiopian Birr '000

Original Adjusted
Variance Actual Variance
Budget Budget
6100 PERSONNEL SERVICES
6110 Emoluments
6120 Allowances/benefits
6130 Pension contribution
6200 GOODS AND SERVICES
6210 Goods and supplies

Traveling and official entertainment
6230
services
6240 Maintenance services
6250 Contracted services
6270 Training services

Stocks of emergency and strategic
6280
goods
FIXED ASSETS AND
6300
CONSTRUCTION
6310 Fixed assets
6320 Construction
6400 OTHER PAYMENTS
6410 Subsidies, investments and payments
6000 TOTAL
89
Statement of Expenditure by Functional Classification
Ethiopian Birr '000
Administration & General Services Economic Services Social Services Others

Total
100 200 300 400
Code Category and Sub-Category
Adjusted Adjusted Adjusted Adjusted

Actual Variance Actual Variance Actual Variance Actual Variance Budget Actual Variance
Budget Budget Budget Budget
6100 PERSONNEL SERVICES
6110 Emoluments
6120 Allowances/Benefits
6130 Pension Contributions
6200 GOODS AND SERVICES
6210-20 Goods and Supplies
6230 Travel & Entertainment
6240 Maintenance & Repair
6250 Contracted Services
6270 Training Services
Stocks of Emergency &

6280
Strategic Goods
90
Summary Statement of Domestic and External Revenues
ITEM OF REVENUE
A. ORDINARY REVENUE
Direct Tax
Indirect Tax
Taxes on Foreign Trade
Government Investment Income
Other Revenue
Total Ordinary Revenue
B. EXTERNAL ASSISTANCE
Counter Part Fund Grants
Technical Assistance
Total External Assistance
C. CAPITAL REVENUE
Domestic Sources
Counter Part Fund Credit
External Loan
Total Capital Revenue
D. DOMESTIC BORROWING
GRAND TOTAL
91
Summary Statement of Expenditure
Particulars Recurrent Expenditure Capital Expenditure Subsidies Total
Administrative & General Service: 100 series
Organs of State
Justice and Security
National Defense
General Services
Others:
Economic Services: 200 series

Agriculture & Rural Development
Water Resources
Trade and Industry
Mines and Energy
Transport and Communication
Construction
Others:
Social Services: 300 series

Education
Information and Communication
Culture and Sport
Health
Labor and Social Affairs
Prevention and Rehabilitation
Others:
Other Expenditures: 400 series

Transfers
Subsidies to regions
Debt
Contingencies and Bank Charges
Miscellaneous
Others:
Grand Total
92
Summary Statement of Expenditure and its Financing
1. EXPENDITURE
A. Recurrent Expenditure
Administrative and General Service
Economic Service
Social Service
Other Service
Total Recurrent Expenditure
B. Capital Expenditure
Economic Development
Social Development
General Development
Other Development
Total Capital Expenditure
C. Subsidy to Regions
Total Expenditure
2. FINANCING
A. Domestic Revenue:
Tax Revenue
Non Tax Revenue
Total Domestic Revenue
B. External Assistance:
Counter Part Fund Assistance
Technical Assistance
Total External Assistance
C. Borrowings:
External Loan & Credit
Counter Part Fund Credit
Project Loan
External Loan Total
Domestic Loan
Direct Advance N.B.E.
Treasury Bills
Deposit & Other Account Balances
Net Domestic Loan & Other Deposit Accounts
Grace Period Credits
Total Borrowing
Total Financing
93
Chapter 6
Financial Administration in
FGE Accounting System
94
• The financial administration in FGE mainly

involves Ministry of Finance and Economic
Development (MOFED) and Regional Finance
and planning offices and a Public Body.
Figure 1.2 Shown the structure of financial administration in the budget process.
Figure 1.2: SRTUCTURE OF FINANCIAL ADMINISTRATION IN

THE BUDGET PROCESS
Ministry of Finance and Economic Development
Public Body
Budgetary Institution: Project

ACCOUNTING UNIT
or Sub-Agency
95
FIGURE 1.1 shows this administrative structure.
FIGURE 3.1 STRUCTURE OF FINANCIAL ADMINISTRATION WITHIN A PUPLIC BODY
Head of Public Body
Head of Administration and Finance
Head of Budget and General Service

Accounts
Budget Section
Accounts Section
The remaining sections in this chapter include an overview of the roles and responsibility of
MoFED and PBs in the FGE accounting system.
Programs
Accountant Cashier
Programs
Planning is conceived in terms of programs and encompasses periods of up to three years. A
96
• The following are responsibilities of MOFED, Budgetary Institutions,

Accounting unit, Reporting Entity, Cashier and Accountant in the
financial administration in the Budget process and within the Public Body
• Ministry of Finance and Economic Development (MOFED)

• MOFED administers the financial system for the federal government and
has the highest level of administrative authority. MOFED consists of a:
 Budget Department that prepares and distributes notification of approved
federal budgets and administers the budget.
 Central Accounts Department that receives monthly repots and compiles
financial statements for the federal government.
 Central Treasury Department that receives and distributes cash from central
treasury.
 Credit and Investment Department that manages the federal government's
investments and debt.
• This is not a complete description of MOFED or its departments. This is
description of their roles and responsibilities within the accounting
system.
97
• Budgetary Institution (BI)

• Budgetary Institutions are defined as those
institutions that are fully or partially financed
by Government.
• The budget process assumes the appropriation
of budgets. The appropriated budget is the
budget approved by the Council of people's
Representatives (CPR).
• The appropriated budget is broken down by:
Recurrent and capital expenditure for the federal
government, and
Subsidy for each regional government
98
• Accounting Unit
• For cash management, another entity is created: the Bank Account
(BA).
• The BA is not coded in the chart of accounts and does not receive a
budget. However, it is important for cash Management and control.
• The FGE accounting system includes the BA in the accounting system.
• A PB may administer many BIs and many BAs, or a PB may have only
one BI and one BA. Each BA:
▫ Is managed by an accountant.
▫ May:
 Have its own cashier,
 Share a cashier with other BAs, or
 Have no cashier associated with it (like foreign currency bank
accounts)
▫ Handles cash flows:
 For one or more than one BI, and
 From one source of financing (domestic, assistance or loan).
 For more than one type of budget (capital/recurrent).

99
• An accounting unit is the unit that initially

captures and records transactions into the
accounting system.
• If a BA handles cash for only one BI(BI/BA),
the accounting unit:
Processes transactions for the BI/BA,
Maintains registers for the BI/BA,
Maintains a general ledger for the BI/BA.
Maintains subsidiary ledgers for:
Asset accounts.
Liability accounts.
Letters of credit.
Prepares a monthly report for the BI/BA.
100
• Reporting Entity
• A reporting entity is the entity that sends monthly
reports to MOFED.
• Although the accounting unit prepares monthly
reports, every accounting unit may not send monthly
reports directly to MOFED.
• Each of the following may apply to a reporting entity:
 A reporting entity may be an accounting unit, and an
accounting unit may consist of only one BI. Therefore, a single
BI may be a reporting entity.
 A reporting entity may be a PB that receives the monthly
reports from several accounting units.
• Whoever sends the reports to MOFED is the reporting
entity. Therefore, the reporting entity is not,
necessarily, an accounting unit.
101
• Cashier and Accountant

• In the FGE accounting system of cash control,
the cashier's function and the accountant's
function are distinct.
• Cash consists of currency and checks.
• The cashier's function is to maintain and
control cash in the safe.
• The accountant's function is to maintain and
control cash at the bank.
• Only the cashier can receive currency and
checks and make disbursements in currency.
• Daily, the cashier should count cash on hand
and reconcile ending cash on hand to the cash
102
• Public Bodies with Branch Bank Accounts

• Some PB s establishes operations or branches in more than one
location, and opens a bank account at each branch.
 These branch bank accounts do not receive or send
transfers directly to MOFED.
• The public Body uses Branch bank accounts for operations
within the Public Body. They are blocked at the end of the year.
• Some public Bodies maintain other types of bank accounts for
special purposes, such as deposits. These are not blocked at the
end of the year and are not considered branch bank accounts.
• Depending on the capacity of the PB, accounting for the branch
bank account can be handled in one of the two ways:
 If there is sufficient capacity, each branch bank account can
be treated as an accounting unit.
 If there is no sufficient capacity, each branch bank account
can be treated as a safe.
103
• Branch Bank Account treated as

Accounting Unit
• If the branch bank account is treated as an
accounting unit:
A general ledger is established for the branch bank
account
Cash movements between the main bank account of
the PB and the branch bank account are recorded as
transfers,
Subsidiary ledgers are established for each BI
receiving funds from the branch bank account, and
A monthly report is prepared and sent to the
accounting unit of the PB's main bank account
104
• Branch Bank Account treated as a Safe

• If the branch bank account is treated as a safe:
 A cash book is maintained for the branch bank
account, and
 Receipt and payment vouchers are given to the main
bank account's accounting unit.
• The accounting unit of the PB's main bank
account does the following:
 Cash movements between the main bank account of
the PB and the branch bank account are recorded as
advances, and
 Receipt and payment vouchers received from the
branch bank account are recorded in general and
subsidiary ledgers.
105
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FGE Chapter 4,5, and 6

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1

• The transfer Report is verified by MOFED to

• The Trial Balance is verified by MOFED to

• MOFED also verify the cash balance for the

• All other monthly reports that are submitted to

• All monthly reports are prepared in two

 Its purpose is to facilitate consolidation of the

 The Accountant prepares a revenue/Assistance/Loan

 The source document to prepare the

 Each item of revenue, assistance or loan is identified by

Figure 1.1: Revenue/Assistance/Loan report

Total (To Trial Balance)

Prepared by Name and Signature

Required: Based on the below data, you are

Account General Ledger

Prepared by Name and Signature

Recurrent Expenditure Report

• Provides information on the year-to-date

• Its Purpose is to facilitate consolidation of the

• The Accountant prepares the recurrent

• The source document to prepare the recurrent

• The balance of each subsidiary ledger card is

• Balances in the recurrent expenditure Report

Figure 1.2: Recurrent Expenditure Report

Total (To Trial Balance)

Prepared by Name an Signature

Recurrent Expenditure Report

Prepared by Name an Signature

 Capital Expenditure Report

• Its purpose is to facilitate consolidation of the

• The Accountant prepares the capital expenditure

• The source document to prepare the Capital

• The amount from the balance column in each

• Balances in the Capital Expenditure Report are

• Each Accounting Unit prepares a capital

Figure 1.3: Capital Expenditure Report

Total (To Trial Balance)

Prepared by Name and Signature

• The transfer report consists of two parts:

• The source documents to prepare the transfer report

• Balances in the transfer report are debits or credits

• One transfer report is prepared for each accounting

Figure 1.4 Transfer Report - Part 1

Prepared by Name and Signature

Prepared by Name and Signature

 Columns are identified by account code.

 The date and amount of each transaction recorded in

 Transfers received from MOFED are credits.

 Transfers of cash to MOFED are debits.

 Debit and credit sub-columns are totaled and the total

• The difference between the totals in the debit

• If the total of debits is greater than the total of

• If the total of credits is greater than the total

• The balance from the account code's Ledger Card

• The amount in the Net Activity row is combined

• The EOM Balance must equal the balance in the

Transfer Report - Part 2 is shown in Figure 1.5

Figure 1.5: Transfer Report - Part 2