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Kale Heywet Church Development Program
Addis Abeba, Ethiopia

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Date __
To: Taddesse Woldegabriel

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'_'_AP_R_2_0_14

& Co.

Addis Ababa
It.is.to be recalled that.vou haze been.requesting us.to giv_e_o_ur
suggestion_on the findijJgs of the audit
draft report. We have forwarded

1.

the following

points accordingly.

The funds received under review were not placed into an interest-bearing

account as per the Sub-

agreement terms and of the USAID Guidelines No 4.5, a.I (2009 Version).
The EKHC head office commonly uses non-interest bearing accounts at the Commercial Bank of
Ethiopia for all its projects, including those which are financed by USAID. Since these bank
accounts are a medium of transfer from donors to our office and from our office to project sites,
no larger cash balance remains idle for a long time in order for it to gain additional interest or.
deposit. As the money doesn't remain idle for a long time, it is believed that using an interest
bearing account is not necessary and/or beneficial. And besides that, all donors who transfer
USAID funds to us have not so far instructed us to use an interest bearing account

2.

2% withholding taxes have not been deducted from payments aggregating to USD 24,723.00 ( Birr
482538.47) as per the Ethiopian Income tax Proclamation No. 286/2002.
Apart from very few instances, most withholding tax has been deducted from payments and
subsequently paid to the tax authority in the usual way. The problem regarding withholding tax i"
that, accountants withdraw the total cash for purchase of goods & services, deduct the withhek,
amount from the total amount, and simply pay later on to the tax authority together with other
payments. We have planned to create awareness among our accountants in regard to this
problem and some other issues to avoid similar misunderstandings in the future .

PBX -5158 44; Rural Development - 52 92 28/53 9991; Urban Development - 50 13 94; Water Program - 50 59 06;
Kuriftu Center -33 86 80; Health &HIVfAids - 66 98 30; FGM- 50 10 93 r.o, Box 5829.Addis Abeba, Ethiopia Fax- 002511512763

E-mail-khedp@ethionet.et

; khe-dgsd@ethionet.etwebsite

-www.ekhc.or&.et