FGE Chapter 3 To 5

Unit Three
Analysis of Transactions
3.1. Cash Transfers
Cash transfers are cash movements among government units. Cash transfers may be made
in the form of currency, checks or direct cash movement between bank accounts.
Cash Transfers: Between Bank Accounts at Public Bodies and MOF

Cash is transferred from MOF bank accounts to bank accounts of public Bodies, and cash
is transferred from bank accounts of public Bodies to MOF bank accounts. These transfers
are done in the form of Checks, and Direct bank transfers evidenced by bank advices.
Cash transfers from MOF bank accounts to bank accounts of public Bodies are recorded:
 By MOF, as a debit to the appropriate transfer code and a credit to 4105, and
 By the public Body, as debit cash at Bank 4103 and a credit to the appropriate
transfer code.
Example: Assume a public Body receives from MOF a transfer of Birr 100,000 for Capital
expenditure and also further assume that you are an accountant in both the PB and MOF
Transaction Register of MOF:

No Description TB Account Others Cash at bank
Number 4105
Dr Cr Dr Cr
1 Cash transfer to PB -- 4004 100,000 100,000
Transaction Register of Public Body:

Number 4103
Dr Cr Dr Cr
1 Cash transfer from MOF - 4004 100,000 100,000
At MOF, although a transfer authorization to one bank account may include funds for
more than one BI, the entire transfer is one. Therefore, only one entry should be made for
the total of the transfer in the Transaction Register maintained at MOF. The BI code for
the entry should be the BI code of the Reporting Entity.
If the bank charges a service charge for the transfer:

 The Service charge should be recorded as a debit to account code 6256.
 Cash at bank 4103 should be debited for the amount of cash actually received.
 The appropriate transfer account code should be credited for the gross amount of
the transfer.
Example: MOF transfers Birr 100,000 to a public body for capital expenditure. The bank
deducts 2000 birr as a service charge; the public body receives Birr 98,000.
No Description type of Account Others Cash at bank
budget Number 4105
Dr Cr Dr Cr
1 Cash transfer to PB 4004 100,000 100,000

No Description type of Account Others Cash at bank
budget Number 4103
Dr Cr Dr Cr
1 Bank Service Charge 02 6256 2000
Cash transfer from MOF 4004 100,000 98,000
Cash Transfers: Between Bank Accounts at Public Bodies and MOF: From Public
Bodies to MOF at federal level
Cash transfers from bank accounts of public Bodies to MOF bank accounts are recorded:
 By MOF, as a debit to Cash at Bank4105 and a credit to the appropriate transfer
code, and
 By the Public Body, as a debit to the appropriate transfer code and a credit to Cash
at Bank 4103.
Example: A Public Body collected revenue of Birr 60,000. The cash is transferred to
MOF.
Transaction Register of MOF

Number 4105
Dr Cr Dr Cr
1 Cash transfer from PB - 4009 60,000 60,000

Number 4103
Dr Cr Dr Cr
1 Cash transfer to MOF - 4009 60,000 60,000
Some public Bodies deposit cash directly into a MOF bank account when revenue is
collected. If revenue is deposited directly to a MOF bank account, the entry in the
Transaction Register of the public Body is a debit to the appropriate transfer account code
and a credit to the appropriate revenue account code.
Cash Transfers: Between MOF safe and Public Bodies

According to MOF and DSA Project manual, January 2002, the Treasury Department at
MOF maintains a safe. Public Bodies can withdraw a maximum of Birr 2,000 from the
safe with appropriate approval. MOF-CAD records the Cash payment Voucher as a
transfer in the Federal Transaction Register. The public Body records the Cash payment
Voucher as a transfer in its Transaction Register.
Example: A Public Body provides Ge/Be/We 11/2 to Treasury Department for payment of
Birr 1,000 from the safe at MOF.

No Description TB Account Others Cash in Safe
Number 4101
Dr Cr Dr Cr
1 Cash transfer - 4002 1,000 1,000
Transaction Register of public Body:

No Description TB Account Others Cash in Safe
Number 4101
Dr Cr Dr Cr
1 Cash transfer - 4002 1,000 1,000
Cash Transfers: Between Public Bodies

Cash may be transferred from a bank account of one public body to a bank account of
another public body. These transfers are done in the form of: Checks, and Direct bank
transfers evidenced by bank advices. Cash transfers from a bank account of one public
Body to a bank account of another public Body are recorded:
 By the public Body sending the cash, as a debit to transfer code 4008 and a credit
to cash at Bank 4103,and
 By the public Body receiving the cash, as a debit Cash at Bank 4103 and a credit to
transfer code 4008.
Example: Public Body #1 transfers Birr 90,000 to public Body #2.
Transaction Register of public Body #1:

Number 4103
Dr Cr Dr Cr
1 Cash transfer to PB #2 - 4008 90,000 90,000
Transaction Register of public Body #2:

Number 4103
Dr Cr Dr Cr
1 Cash transfer to PB #1 - 4008 90,000 90,000
Cash Transfers: Within Public Body
In the same Manual prepared by MOF&DSDA Project, it is indicated that some public
Bodies maintain branch bank accounts. The public Body may transfer cash from one bank
account to another bank account of its branch. These transfers are done in form of: Checks,
and Direct bank transfers evidenced by bank advices. Cash transfers within a public body
from bank Account #1 to bank Account #2 are recorded:
 By the accounting unit for bank Account #1, as a debit to transfer code (transfer
between financial bureau and wereda finance/ district finance/ office) 4011 and a
credit to cash at Bank 4103, and
 By the accounting unit for bank account #2, as a debit cash at bank 4103 and a
credit to transfer code 4011.
After both transactions are recorded in the consolidated general ledger of the public body,
the net effect of the internal transfer is zero (the balance in transfer code 4011 is zero).
For control purposes, if the public body transfers to more than one branch bank account, a
subsidiary ledger should be maintained by the main bank account. Each branch bank
account that receives or sends a transfer using account code 4011 should have its own
subsidiary ledger card under transfer code 4011. This will aid consolidation in the general
ledger of the public body and improve cash control within the public Body.
Example: Bank Account #1 transfers Birr 80,000 to Bank Account #2
Transaction Register of Bank Account #1:

Number 4103
Dr Cr Dr Cr
1 Cash transfer to BA #2 - 4011 80,000 80,000
Transaction Register of Bank Account #2:

No Description TB Account Other Cash at bank
Number 4103
Dr Cr Dr Cr
1 Cash transfer BA #1 - 4011 80,000 80,000
3.2 Non - Cash Transfers
Non-Cash transfers are used to record a transfer when cash does not actually move. The
authorization for a non-cash transfer usually is a letter from MOF.
Example: Assume Ministry of Health (MOH) requests MOF to pay customs duty
amounting to Birr 250,000 on its behalf to the customs Authority (CA) for motor vehicles
from its capital expenditure budget and further assuming that you are the accountant in
these institutions.
Solution:
Number 4105
Dr Cr Dr Cr
1 Transfer to MOH - Customs - 4054 250,000
duty
Transfer from CA-Customs - 4055 250,000
duty
Transaction Register of Ministry of Health:

Number 4103
Dr Cr Dr Cr
1 Purchase of motor 02 6311 250,000
vehicles
Transfer from MOF- - 4054 250,000
Customs duty
Transaction Register of Customs Authority:

Number 4103
Dr Cr Dr Cr
1 Transfer to MOF - 4055 250,000
Duty on Motor vehicles - 1301 250,000
3.3. Receipt of Revenue /Assistance/ Loan
Public Bodies are authorized to collect revenue on behalf of the FGE. In addition, Public
Bodies may receive funds for assistance and loan directly from donors and lenders.
Receipts are collected in the form of currency, checks and direct bank transfers. Receipts
are recorded as a debit to cash at Bank 4103 and a credit to the appropriate revenue
/assistance/ loan account code.
Example:Assume you are the accountant of Ministry of foreign affairs and that you
collected birr 10,000 in fees for visas.
Transaction Register of Ministry of Foreign Affairs:

No Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
1 Revenue - 1411 10,000 10,000
Transfer of collections Directly to MOF
In some public bodies, revenue collectors make deposits directly to a MOF bank account.
It is important that the collector adequately identify the public body for which the deposit
is made.
 When MOF receives the bank advice, MOF records a debit to cash in Bank 4105
and a credit to transfer account code 4009.
 When the public body receives the Receipt voucher from revenue collectors, the
public body records a debit to transfer account code 4009 and a credit to the
appropriate revenue account code.
Example: MOF receives a deposit from Internal Revenue for Birr 40,000. The deposit is
from the collection of agricultural income tax.

Number 4105
Dr Cr Dr Cr
1 Transfer from IR - 4009 40,000 40,000
Transaction Register of Internal Revenue:

Number 4103
Dr Cr Dr Cr
1 Agricultural Revenue 4009 40,000
Transfer 1107 40,000
3.4. Cash Expenditures
Public Bodies are authorized to make cash expenditures from funds budgeted for that
purpose. Cash expenditures are made using currency, checks and direct bank transfers.
Cash Expenditures: Payments to Regions/Transfer Recipients by MOF

Payments by MOF to regions and transfer recipients (Functional classification 4000 -
4099, are budgeted expenditures of the federal government. When MOF makes these
payments, MOF records the expenditure in the federal Transaction Register.
Example:Assume a subsidy payment of Birr 300,000 is made to a region by MOF where

you are an accountant.
Transaction Register of MOF

No Description TB Account Others Cash at bank 4105
Number
Dr Cr Dr Cr
1 Region subsidy 6411 300,000 300,000
Cash Expenditures: Check Payments by Accountants
Only accountants are allowed to make payments using checks.
Example: Assume that an accountant pays by check an amount of Birr 50,000 for office
supplies.

Number 4103
Dr Cr Dr Cr
1 Office supplies paid in 6212 50,000 50,000
cash
Cash Expenditures: Cash payment By MOF on Behalf of Public Bodies

MOF can make cash payments on behalf of a public body. The transaction begins with a
letter from the public Body to MOF requesting that the payment be made on its behalf.
Cash payments made by MOF on behalf of Public Bodies are recorded:
 By MOF, as a debit to the appropriate transfer code and a credit to Cash at Bank
4105, and
 By the public Body, as a debit to the appropriate expenditure code and a credit to
the appropriate transfer code.
Example: The Ministry of Health (MOH) requests MOF to pay for a motor vehicle on its
behalf amounting to Birr 280,000 from its capital expenditure budget.

Number 4105
Dr Cr Dr Cr
1 Transfer to MOH - 4004 280,000 280,000
Transaction Register of Ministry of Health:

Number 4103
Dr Cr Dr Cr
1 Purchase of motor vehicles 02 6311 280,000
Transfer from MOF - 4004 280,000
Cash Expenditures: Letter of Credit

A Public Body may need to open a Letter of Credit as part of an international purchase
agreement. Opening a letter of credit means putting cash in a restricted bank account
dedicated to payment of the purchase price when appropriate conditions are met. There are
two processes for opening a letter of credit:
 If the letter of credit is for Birr 50,000 or less, the public body can open the letter of
credit.
 If the letter of credit is for more than Birr 50,000, the public body must request that
MOF open the letter of credit.
Cash Expenditures: Letter of Credit: Opened by Public Body

When a public Body opens a Letter of Credit, cash is paid, using a Bank payment
Voucher, from the bank account of the public Body to a restricted bank account at the
national bank of Ethiopia. In the transaction register for the public body's bank account,
expenditure is recorded. The public body uses another transaction register for the restricted
bank account. The public body must combine the monthly report of the restricted account
with the monthly report of the regular bank account for reporting to MOF.
Example: The ministry of Health (MOH) establishes a restricted bank account to open a
letter of credit for the purchase of medical supplies valued at birr 30,000.
Transaction Register - Regular Bank Account of Ministry of Health:

Number 4103
Dr Cr Dr Cr
1 Purchase of medical supplies 02 6214 30,000 30,000
Transaction Register - Restricted Bank Account of Ministry of Health:

Number 4103
Dr Cr Dr Cr
1 Letter of credit #xxxx - 5500 30,000 30,000
Cash Expenditures: Letter of Credit: Opened by MOF on behalf of Public Body

A Public Body requests that MOF open a letter of credit on its behalf.
MOF: Transfers cash to restricted bank account at national bank of Ethiopia on behalf of
the public body, Records a cash transfer to the public body, and Notifies the public body of
the transaction.
The Public Body: Records the cash transfer as expenditure in the transaction Register for
the public Body's bank account, and Records the Letter of Credit in another Transaction
Register for the restricted bank account.
Example: The Ministry of Health (MOH) requests MOF to open a letter of credit on its
behalf amounting to Birr 700,000 for motor vehicles from its capital expenditure budget.
Transaction Register:
Number 4105
Dr Cr Dr Cr
1 Transfer to MOH - 4054 700,000 700,000
Transaction Register bank account MOH:

Number 4103
Dr Cr Dr Cr
1 Purchase of Motor vehicle 02 6311 700,000 700,000
2 Transfer from MOF - 4054 700,000
Transaction Register - Restricted Bank Account of Ministry of Health:

Number 4103
Dr Cr Dr Cr
1 Letter of Credit #xxxx - 5531 700,000 700,000
Cash Expenditures: Cash Payment by Public Body to Region

Occasionally, public Bodies make cash payments to regions.Some of the funds are
intended for sector bureaus in the regions. The sector line ministry acts as a treasury
department by distributing the cash to the region sector bureaus directly.
All payments to the regions from the federal level are budgeted as part of the region's
subsidy. When a public body pays cash to regions, the payment is part of the regions
subsidy. The public body should record the payment as a subsidy payment.
Example: The ministry of Health (MOH) sends Birr 53,000 to a region as part of a sector
development plan.
Transaction Register - Ministry of Health:

Number 4103
Dr Cr Dr Cr
1 Region Subsidy - 6411 53,000 53,000
Cash Expenditures: Cash Payment Requiring Withholding of Tax

The tax authority requires that a tax must be paid on specified purchases over a certain
amount. The purchaser collects the tax as a withholding from the purchase price. The
threshold amount and the tax rate may vary each year. The tax is paid to the appropriate
authority, federal or regional government, depending on the location of the supplier.
The supplier can reclaim the withholding tax. The tax authority creates a special tax
receipt that should be issued to the supplier when the tax is withheld. This receipt is not an
accounting document and should not be referenced in any accounting record. If a regional
tax authority has not issued a special tax receipt, the federal special tax receipt should be
used .The withholding tax does not reduce the cost of the goods to the public body. The
withholding tax is a reduction to the payment made to the supplier. The payment is made
to the appropriated government instead. When a purchase is made that requires the
withholding of tax, a bank payment voucher is prepared that indicates, in the space
provided for accounting use only.
The expenditure account code with a debit for the full purchase price. If the tax is federal,
withholding tax revenue code 1103 or 1104 (depending of whether the supplier is an
individual or a corporation) with a credit for the amount of the tax. The only exception is if
the payment is made with retained revenue. If retained revenue is the source of funds for
the payment, payable account code 5028 is credited for the amount of the tax.If the tax is
regional, payable account code 5026 with a credit for the amount of the tax.Cash at bank
4,103 with a credit for the actual amount paid to the supplier.
Cash Expenditures: Cash Payment Requiring Withholding of Tax: Federal Tax

When federal tax is withheld from a purchase, the tax is recorded as revenue immediately
subsequently; an amount of cash equal to the tax is transferred to MOF.
Example: A public body buys office supplies from a corporation for Birr 200,000 from its
recurrent expenditure budget - Birr 198,000 relates to the cost of the office supplies and
Birr 2,000 is the withholding tax.
Transaction #1: Payment effected to supplier

Number 4103
Dr Cr Dr Cr
1 Office supplies 01 6212 200,000
Withholding tax revenue 1104 2,000 198,000
Transaction #2: Transfer to MOF

Number 4103
Dr Cr Dr Cr
2 Transfer to MOF 4009 2,000 2,000

Number 4105
Dr Cr Dr Cr
1 Transfer to MOF 4009 2,000 2,000
Cash Expenditures: Cash Payment Requiring Withholding of Tax: Regional Tax

When regional tax is withheld from a purchase, the tax is recorded as a payable to the
region. Subsequently, an amount of cash equal to the tax is transferred to MOF. MOF pays
the tax amount to the region. A subsidiary ledger should be maintained for payable to
region account code 5026 if tax is collected for more than one region. Each region should
be a separate account in the subsidiary ledger.
Example: A public body buys office supplies for Birr 200,000 from its recurrent
expenditure budget - Birr 198,000 relates to the cost of the office supplies and Birr 2,000 is
the regional withholding tax.
Transaction #1: Payment effected to supplier
Transaction Register of public Body:

Number 4103
Dr Cr Dr Cr
1 Office Supplies 01 6212 200,000
Tax payable to Region 5026 2,000 198,000
Transaction #2: Transfer to MOF

Number 4103
Dr Cr Dr Cr
2 Payable to MOF 5026 2,000 2,000

Number 4105
Dr Cr Dr Cr
1 Tax payable to region 5026 2,000 2,000
Transaction #3: MOF pays tax to region

Number 4105
Dr Cr Dr Cr
2 Payable to region 5026 2,000 2,000
3.5. Salary
Public Bodies pay salaries to employees every month. This section describes the
accounting for:
Payment of salary
Unpaid salary
Unearned salary
Payment of Salary
The salary payment transaction is complex. The public body must record the gross salary
amount and government's portion of pension as expenditure to maintain budget control,
but only the net salary amount is transferred to, and paid by the public body.
After the salary request is approved, MOF transfers the net salary amount to the public
body and the total pension amount, employee and government contribution, to the pension
Authority. Although cash for pension is transferred directly to the pension authority, MOF
records the cash transfer as if the cash was transferred to the public body. At MOF, two
transfer entries to the public body are recorded in the transaction register:
 A debit to transfer coder 4001 and a credit to cash at bank 4105 for the net salary
amount.
 A debit to transfer coder 4001 and a credit to cash at bank 4105 for the total
pension amount sent to the pension Authority.
Each transfer amount is reported to the public Body separately on Ge/Be/We 12/1 with
Model 33. When the public Body receives Ge/Be/We 12/1, the public Body prepares:
 A receipt voucher for the total amount of cash received. The entry is a debit to cash
at bank 4103, a debit to pension payable account code 5003 for the amount of cash
paid to the pension Authority and a credit to transfer code 4001.
 A journal voucher to record salary and pension expense. The entry is a debit to
salary expense code 6111 (6112 for military) for the gross salary amount, a debit to
pension expense code 6131 (6132 for military) for the government’s portion of the
pension contribution, a credit to salary payable code 5004 for the net salary
amount, a credit to pension payable code 5003 for the amount of each paid to the
pension Authority, a credit to income tax code 1101 for tax withheld from salary,
and a credit to any other withholding amounts.
Example:Assume the Ministry of Agriculture (MOA) requests salary for the month of July
2001 with the following details and also assume that you are the accountant in MOA and
MOF.
Gross salary 40,000
Deduction: salary advance 1,200
Pension expense - 6% 2,400
Penalty for absenteeism 500
Employee pension - 4% 1,600
Net Salary payable 32,700
Income tax 4,000

Number 4105
Dr Cr Dr Cr
1 Transfer for 4001 32,700 32,700
MOF
2 Transfer to PB 4001 4,000 4,000
Transaction Register of MOA:

Number 4103
Dr Cr Dr Cr
1 Transfer to PB 4001 36,700
Pension payable 5003 4,000 32,700
2 Salary Expense 01 6111 40,000
Pension Expense 01 6131 2,400
Salary payable 5004 32,700
Income Tax 1101 4,000
Staff Advance 4203
1,200
Fines 1485 500
Pension Payable 5003 4,000
Unpaid Salary
Net salary amount is recorded as salary payable when salary expense is recorded (see
above). When salary is paid, salary payable is debited for the amount paid. Any unpaid
salary is the amount remaining in the salary payable account code 5004 after salary is paid.
When unpaid salary is paid, the entry is a debit the salary payable code 5004 and a credit
to cash. After salary is paid, a subsidiary ledger for salary payable account should be
maintained. Each unpaid employee should be an account in the subsidiary ledger.
Unearned Salary
Occasionally, salary is requested and received, but the employee is not entitled to the
entire salary amount received. For some reason, the employee quits working for the public
Body during the month. When this happens, the salary entry explained above must be
reversed for that employee, and the pension transfer must be corrected. In addition, MOF
must be notified so that the pension transfer and subsequent months salary can be adjusted.
Example: Suppose an employee in the Ministry of Agriculture worked only half of July
instead of the whole month. This is discovered after the salary expense entry in the
example above. The amounts of overpayment are:
Gross Salary 1000 Income tax 70
Pension expense - 6% 60 Salary Payable 890
Employee pension - 4% 40
Transaction #1: Reverse salary expense

Number 4103
Dr Cr Dr Cr
1 Salary Expense 01 6111 1000
Pension Expense 01 6131 60
Salary Payable 5004 890
Income Tax 1101 70
Pension Payable 5003 100
Transaction #2: Adjust Pension transfer

Number 4103
Dr Cr Dr Cr
2 Transfer - Salary 4001 100
Pension payable 5003 100

Number 4105
Dr Cr Dr Cr
1 Advance to pension 4210 100
2 Transfer - Salary 4001 100
Transaction #3: Next month's salary transfer

The Ministry of Agriculture (MOA) requests salary for the month of August 2001 with the
following details:
Gross salary 38,000
Income tax 3,800
Pension expense - 6% 2,280
Deduction: salary advance 1,200
Employee pension - 4% 1,520
Net Salary payable 31,480

Number 4103
Dr Cr Dr Cr
1 Transfer to PB 4001 31,480 31,480
Advance to Pension 4210 100 3,700

Number 4103
Dr Cr Dr Cr
Pension payable 5003 3,800 31,480
2 Salary Expense 01 6111 38,000
Pension Expense 01 6131 2280
Salary payable 5004 31,480
Income Tax 1101 3,800
Staff Advance 4203 1200
Pension Payable 5003 3,800
3.6. Receivables and Payables
A receivable is an amount owed to a public Body that does not have terms of repayment
detailed in a signed agreement. Receivables usually are created when:
 Cash is transferred but must be returned unless certain conditions are met.
 Advances are given with the understanding that the amount must be repaid or
otherwise accounted for, or goods or services must be delivered.
A payable is amount owed by a public body that is due within one year. Payables usually
are created when:
 Cash is received but must be returned unless certain conditions are met.
 Goods or services are delivered but payment is not yet made.
Receivables and Payables: With MOF
In some situations, MOF advances cash to public Bodies. MOF records the advance as a
receivable, and the public Body records the advance as a payable. Cash movements
between MOF and a public Body are recorded as a receivable and a payable, rather than a
transfer, if the funds were not requested by Ge/Be/We 11/xx. Advances must be repaid to
MOF or otherwise accounted for.
Example Prior to receipt of its budget notification, a public Body requests funds in June
to pay recurrent expenditures. MOF sends Birr 7,000

No Description TB Account Others Cash at
Number bank 4105
Dr Cr Dr Cr
1 Advance for Recurrent 4206 7,000 7,000
Number 4103
Dr Cr Dr Cr
1 Due to MOF 5024 7,000 7,000
When the public Body receives its budget notification, a Ge/Be/We 11/2 is sent to MOF
for Birr 14,000. This requests includes the 7,000 Birr received as an advance. MOF
approves the request, reduces the cash transfer by 7,000 Birr, and transfers Birr 7,000 in
cash.

Number 4105
Dr Cr Dr Cr
1 Advance Recurrent 4206 7,000
Transfer - Recurrent 4002 14,000 7,000

Number 4103
Dr Cr Dr Cr
1 Due to MOF 5024 7,000
Transfer - Recurrent 4002 14,000 7,000
Receivables and Payables: with Employees

Three situations are described here:
 Long - term salary advances.
 Amounts due from employees as reimbursement for use of government property.
 Handling of funds held by a public body on behalf of an employee
Receivables and payables: with Employees: Long - Term Salary Advance

An employee can receive a long-term advance on salary (longer than one month) under
appropriate conditions. When a long-term salary advance is processed, interest is charged
and withheld from the advance. The public body is responsible for repayment of salary
advances to its employees.
Example: A long -term salary advance of Birr 2,000 is requested and approved. MOF
transfers the net amount to the public body after deducting the applicable interest on the
advance amounting to Birr 200.
Transaction #1: cash transfer from MOF

Number 4105
Dr Cr Dr Cr
1 Transfer 4005 1,800 1,800

Number 4103
Dr Cr Dr Cr
1 Transfer 4005 1,800 1,800
Transaction #2: Payment of Advance

Number 4103
Dr Cr Dr Cr
1 Staff Advance 4203 2,000
Interest 1465 200 1,800
Receivables and Payables: With Suppliers

In the process of procurement, the payment of cash and the receipt of goods and services
do not occur simultaneously. When there is a timing difference, a receivable or a payable
is created.
Receivables and Payables: With Suppliers: Receivables from Suppliers

Receivables are created when a supplier is paid for goods or services prior to their
delivery. In this case, the supplier owes to the public body: Goods and services equal to the
cash provided, or Return of the cash.
Example: A public Body pays an advance of Birr 500 to a supplier for procurement of
office supplies. The supplier delivers the office supplies after 30 days and the actual
invoice amounts to Birr 2,500.
Transaction #1: payment of advance.

Number 4103
Dr Cr Dr Cr
1 Advance to - 4253 500 500
Supplier
Transaction #2: Delivery of supplies.

Number 4103
Dr Cr Dr Cr
Advance to Supplier - 4253 500 2,000
Receivables and Payables: With Suppliers: Payables to suppliers

Payables are created when a supplier delivers goods or services prior to receiving payment.
In this case, the public body owes to the supplier: Payment for the cost of the goods and
services, or Return of the goods.
Example: A public body receives office supplies amounting to Birr 2,500 on credit from a
supplier. Payment is made after 30 days.
Transaction #1: Receipt of office supplies
Number 4103
Dr Cr Dr Cr
Sundry creditors 5002 2,500
Transaction #2: Payment is made.

Number 4103
Dr Cr Dr Cr
1 Sundry Creditors - 5002 2,500 2,500
Receivables and Payables: With Suppliers: Grace Period Payables

The first 30 days of the fiscal year are called the grace period. The financial Law permits
public Bodies to expend funds from their prior year's recurrent and capital budgets during
the grace period for goods and services delivered before the end of the fiscal year.
Amounts due to suppliers on the last day of the fiscal year, that are paid during the grace
period from the prior year's budget, are called grace period payables (account code 5001).
Transfers of funds from MOF to public Bodies, that are used to pay grace period payables,
are given account code 4007.
Example: In the first 30 days of the fiscal year, a public body pays Birr 12,000 for office
supplies that were recorded as grace period payables from the prior year's capital
expenditure.
Transaction #1: Provision for grace period payables last year.

Last Year's Transaction Register of Public Body:
Number 4105
Dr Cr Dr Cr
1 Office supplies 02 6212 12,000
Grace period payables 5001 12,000
Transaction #2: Transfer of funds for grace period payables this year.
This year's Transaction Register MOF:
Number 4103
Dr Cr Dr Cr
1 Transfer - GPP - 4007 12,000 12,000
This year's Transaction Register of Public Body:

Number 4103
Dr Cr Dr Cr
1 Transfer - GPP - 4007 12,000 12,000
Transaction #3: Payment of grace period payables this year.

This year's Transaction Register of Public Body:
Number 4103
Dr Cr Dr Cr
1 Grace period payables 5001 12,000 12,000
Receivables and Payables: with Regions

Occasionally, public Bodies make cash payments to regions. Payments to the regions from
the federal level are budgeted as part of the region's subsidy. The public Body should
record the payment as a subsidy payment. A rare exception occurs when the funds are part
of the approved budget for the public Body and in this rare case, the item of expenditure is
part of the approved budget for the public body, the region is simply action as a purchasing
agent for the ministry. The responsibility for the budgeted expenditure cash remains with
the public body, although the expenditure is executed in the regional since a settling of the
funds is expected, the transaction is recorded as a receivable By MOE at Federal level.
Example: The Ministry of Education (MOE) sends Birr 55,000 to Amhara Regional
Education Bureau (AREB). The Amhara Regional Education Bureau returns invoices for
the book totaling Birr 47,000 and cash totaling Birr 8,000 to the Ministry of Education.
Transaction #1: Cash is sent to AREB

Transaction Register MoE:
Number 4103
Dr Cr Dr Cr
1 Advance to region - 4208 55,000 55,000
Transaction #2: Cash and invoices are received from AREB.

Transaction Register of MOE:
Number 4103
Dr Cr Dr Cr
1 Books 02 6215 47,000
Advance to region 4208 55,000 8,000
Receivable and Payables: Deposits

Some public bodies collect and return deposits. Deposits are not budgeted. The receipt and
return of deposits may be documented using special forms (Models 85 and 86 or Models
185 and 186). Deposits may be kept in the safe, in the main bank account of the public
body, or in a separate bank account.
A deposit is a payable for a public body. A public body must return the deposit upon
demand of the depositor. A public body should not spend deposit funds. When the deposit
is returned, the payable is cancelled.
Receivable and Payables: Deposits: Receipt and Return of Deposit

Example: A public body collects a deposit of Birr 40,000 as bid security. The bid is
unsuccessful and the deposit is returned at a later date.
Transaction #1: Receipt of Deposit.

Number 4103
Dr Cr Dr Cr
1 Bid security Deposit - 5054 40,000 40,000
Transaction #2: Refund of Deposit.

No Description TB Account Other Cash at bank 4103
Number
Dr Cr Dr Cr
1 Bid Security Deposit - 5054 40,000 40,000
3.7 Aid in Kind

Aid in kind is goods or services (such as technical assistance) provided to a public body by
donors. Aid in kind is received when goods are received or services are rendered, and no
payment is expected. Aid in kind represents two transactions simultaneously: the receipt of
assistance and the expenditure of assistance. Aid in kind should be budgeted and recorded
as both revenue and expenditure. The expenditure should be recorded in the subsidiary
ledger for the budgeted project, using the 4-digit source of funding code assigned to the
project.
Example: Assume aid in kind is received by a public body in which you are working as an
accountant in the form of a motor vehicle with a cost of Birr 200,000 from USAID under
the capital expenditure budget for project code 2356.
Transaction Register of the public Body:

Number 4103
Dr Cr Dr Cr
1 Motor vehicles 02 6311 200,000
Assistance 2084 200,000
All aid in kind entries are recorded in local currency only.

Unit 4
Monthly Reports
Introduction
The purpose of this unit is to describe the monthly reports submitted by a reporting entity
to ministry of finance and Economic development. The reports are highly interrelated. The
first section of this unit deals with Revenue /Assistance/ Loan report which is prepared to
provide information on the year to date revenues of an accounting unit from each source of
finance. It also helps to facilitate consolidation of the actual revenues, assistance and loan
collected by the FGE and to facilitate comparison of budgeted revenues to actual revenues
by account category. The second and third section of this unit deals with Recurrent
Expenditure Report, Capital Expenditure Report respectively and these reports provide
information on the year - to - date expenditures of each BI managed by an accounting unit.
Its function is to facilitate consolidation of the actual expenditures made by the FGE and to
facilitate comparison of budgeted expenditure to actual expenditure.
1.1 Revenue/Assistance/Loan Report
According to MOF and DSA Project manual, December 2002, the only monthly reports
verified by Ministry of Finance and Economic Development are the transfer report and the
Trial Balance. The transfer Report is verified by Ministry of Finance and Economic
Development to ensure that all disbursements to an accounting Unit by Ministry of
Finance and Economic Development and all disbursements from an Accounting Unit to
Ministry of Finance and Economic Development are accounted for within the accounting
system to enhance control over cash transfers.
The Trial Balance is verified by Ministry of Finance and Economic Development to ensure
that the total debits and credits are equal and that general Ledgers are balanced. Also,
Ministry of Finance and Economic Development 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 Ministry of Finance and Economic
Development serve as input documents to consolidate reports and produce financial
statements at the Federal Level. The Inspection Department and the Office of The Auditor
General verify these reports. All monthly reports are prepared in two copies. The original
copy is sent to Ministry of Finance and Economic Development and the second copy is
retained as a permanent record at the reporting entity. The Revenue/Assistance/Loan
Report provides information on the year-to-date revenues of an accounting unit from each
source of finance. The purpose of the revenue/Assistance/Loan Report 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 (MOF and DSA Project manual, January, 2002).
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. Each accounting Unit prepares one revenue/assistance/Loan
Report as indicated in figure 1.1 below.
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

(Source: MOF AND DSA Project manual, December 2002)
Activity 1: preparing revenue/assistance/Loan Report

Allow about 3 minutes.
This activity is meant to enable you to prepare Revenue/Assistance/Loan Report.
You are provided with the following general ledger balances as at May 31, 2004 for
Ethiopian Civil Service College with budget category 319/01/07/00/000/1800 and bank
account 10645839.Further, assume also that you are the accountant of the college.
General Ledger
Account 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
Required: Based on the above data, you are required to prepare the monthly reports for the
month of May, 2004 except capital expenditure and transfer report part II. Begin with the
preparation of revenue/assistance/loan report for activity1.
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
1.2. Recurrent Expenditure Report

The recurrent expenditure report provides information on the year-to-date recurrent
expenditures of each budgetary Institution managed by an accounting Unit. The purpose of
the recurrent expenditure report is to facilitate consolidation of the actual recurrent
expenditures made by the FGE and regional state to facilitate comparison of budgeted
expenditure to actual expenditure. The Accountant prepares the recurrent expenditure
report for each BI. 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 or in the recurrent expenditure report. Balances in the recurrent
expenditure Report are normally debits. Each accounting unit prepares a recurrent
expenditure Report for each BI that it manages (MOF and DSA Project manual, December
2002). The format of the report is indicated below
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:___ ____________________
Account Code YEAR-TO-DATE
Account Description Expenditure
Debit Credit
Preprinted Preprinted
Prepared by Name an Signature

(Source: MOF and DSA Project, December 2002)
Activity 2: preparing Recurrent Expenditure Report.
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
1.3 Capital Expenditure Report

In Manual 3 volume I, Accounting for modified cash basis transactions, which is prepared
by MOF &DSA Project, in December 2002, the Capital expenditure Report, provides
information on the year-to-date capital expenditures of each BI managed by an Accounting
Unit. The purpose of the capital expenditure report 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. The amount from the balance column in each
subsidiary Ledger card is transcribed to the appropriate account code in the recurrent
expenditure Report. Balances in the Capital Expenditure Report are normally debits, which
are similar to the capital expenditure. Each Accounting Unit prepares a capital expenditure
Report for each BI that it manages. The format of the report is indicated below.
Figure 1.3: Capital Expenditure Report
Me/He 23
Month___________
Name of Project: _____________________________code: _______
Source of Finance:____________________________ code: _______
Debit Credit
Preprinted Preprinted

(Source: MOF and DSA Project manual, December 2002)
1.4 Transfer Report

Transfer report delivers information of cash flow made between the accounting unit and
MOF/State year-to-date and during the month. 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 Ministry of Finance and Economic Development.
The purpose of the transfer report is to serve as a control tool to verify cash transfers
between Ministry of Finance and Economic Development and an accounting Unit and vice
versa. The Accountant prepares a transfer Report for each accounting Unit. 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 (MOF AND DSA Project, December,
2002)
Part 1
The amount from the Balance Column in the General Ledger Card is transcribed into the
transfer report - Part 1as indicated in figure 1.4. The grand totals from each Transfer report
- Part 1 are carried forward to the trial Balance.
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 MOF
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

(Source: MOF AND DSA project, December 2002)
Activity 3: Preparing Transfer Report Part I.
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 MOF
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

Part 2
Each cash transfer during the month between the accounting Unit and Ministry of Finance
and Economic Development 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 MOF
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 Ministry of Finance and Economic Development
are credits. Transfers of cash to Ministry of Finance and Economic Development are
debits. Debit and credit sub-columns are totaled and the total is recorded in the total row
(MOF and DSA Project, January 2002).
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.
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 (MOF and DSA Project manual, January
2002).
Transfer Report - Part 2 is shown in Figure 1.5
Figure 1.5: Transfer Report - Part 2
Me/He 24
4001 4002 4003 4004

Da De Cred Date Deb Cred Dat De Cred Dat De Credit
te bit it it it e bit it e bit
Total
Net activity
BOM
Balance
EOM
Balance
Figure 1.5 (Continued)
4005 4006 4007
Dat De Cred Date Deb Cred Dat De Cred Dat De Credit
e bit it it it e bit it e bit
Total
Net activity
BOM
Balance
EOM
Balance
(Source: MOF AND DSA Project, January 2002)

1.5. Receivables Report
The receivables report provides information on the year-to-date receivables owed to an
accounting unit. The purpose of the receivables Report is to facilitate consolidation 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. 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. One receivables report is prepared for each
accounting unit (MOF and DSA, Project manual, January 2002).
Figure 1.6 Receivables Repo
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

(Source: MOF and DSA Project Manual, January 2002)
Activity 4: Preparing Receivable Report.
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

1.6. Payables Report
The payables report provides information on the year-to-date payables owed by an
accounting unit. The purpose of the payables report is to facilitate consolidation of the
actual payables owed by the FGE or regional state. The accountant prepares a payables
report for the accounting unit. The source document to prepare the payables report is the
general ledger. 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. One payable report is prepared for each
accounting unit (MOF and DSA Project manual, December 2002).
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-DATE
Account Account Description Payables
Code
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
5023 Due to Ministry of Finance and Economic Development for staff from next
year’s budget
5024 Due to Ministry of Finance and Economic Development for 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
(Source: MOF and DSA Project, December 2002)
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-DATE
Account Account Description 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
5024 Due to Ministry of Finance and Economic Development for 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
1.7. Trial Balance

The trial balance 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 (MOF and
DSA Project, December 2002).
According to MOF and DSA Project also, 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. 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.
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.
(Source: MOF and DSA ProjectDecember, 2002)
Activity 6: Preparing Monthly Trial Balance.

Allow about 10 minutes.
The intent of this activity is to make you familiar with the preparation of the monthly trial
balance.
Based on the data given in activity 1, you are required to prepare the monthly trial balance.
Feedback:
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.
CHAPTER 5
FINANCIAL STATEMENTS
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.
The objective of the financial statements is to provide information about the financial
position, performance and 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.
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.
The FGE accounting system can produce the following set of financial statements:
 A set of federal-level financial statements that includes:

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

o Summary Statement of Domestic and External Revenues
o Summary Statement of Expenditure
o Summary Statement of Expenditure and its Statement.
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.
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
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/(deficit) 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/(deficit) from non operating activities 0 0
Surplus/(deficit) for the year 0 0

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

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

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

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

FGE Chapter 3 To 5

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FGE Chapter 3 To 5

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Unit Three

3.1. Cash Transfers

Cash Transfers: Between Bank Accounts at Public Bodies and MOF

Transaction Register of MOF:

Transaction Register of Public Body:

If the bank charges a service charge for the transfer:

Transaction Register of Public Body:

Transaction Register of MOF

Transaction Register of Public Body:

Cash Transfers: Between MOF safe and Public Bodies

Transaction Register of MOF:

Transaction Register of public Body:

Cash Transfers: Between Public Bodies

Example: Public Body #1 transfers Birr 90,000 to public Body #2.

Transaction Register of public Body #1:

Transaction Register of public Body #2:

Example: Bank Account #1 transfers Birr 80,000 to Bank Account #2

Transaction Register of Bank Account #1:

Transaction Register of Bank Account #2:

3.2 Non - Cash Transfers

Transaction Register of Ministry of Health:

Transaction Register of Customs Authority:

3.3. Receipt of Revenue /Assistance/ Loan

Transaction Register of Ministry of Foreign Affairs:

Transaction Register of MOF:

Transaction Register of Internal Revenue:

Cash Expenditures: Payments to Regions/Transfer Recipients by MOF

Example:Assume a subsidy payment of Birr 300,000 is made to a region by MOF where

Transaction Register of MOF

Transaction Register of Public Body:

Cash Expenditures: Cash payment By MOF on Behalf of Public Bodies

Transaction Register of MOF:

Transaction Register of Ministry of Health:

Cash Expenditures: Letter of Credit

Cash Expenditures: Letter of Credit: Opened by Public Body

Transaction Register - Regular Bank Account of Ministry of Health:

Transaction Register - Restricted Bank Account of Ministry of Health:

Cash Expenditures: Letter of Credit: Opened by MOF on behalf of Public Body

Transaction Register bank account MOH:

Transaction Register - Restricted Bank Account of Ministry of Health:

Cash Expenditures: Cash Payment by Public Body to Region

Transaction Register - Ministry of Health:

Cash Expenditures: Cash Payment Requiring Withholding of Tax

Cash Expenditures: Cash Payment Requiring Withholding of Tax: Federal Tax

Transaction #1: Payment effected to supplier

Transaction Register of Public Body:

Transaction #2: Transfer to MOF

Transaction Register of Public Body:

Transaction Register of MOF:

Cash Expenditures: Cash Payment Requiring Withholding of Tax: Regional Tax

Transaction #1: Payment effected to supplier

Transaction Register of public Body:

Transaction #2: Transfer to MOF

Transaction Register of Public Body:

Transaction Register of MOF:

Transaction #3: MOF pays tax to region

Transaction Register of MOF:

Transaction Register of MOF:

Transaction Register of MOA:

Transaction #1: Reverse salary expense

Transaction #2: Adjust Pension transfer

Transaction Register of MOF: