FGE ACCOUNTING CHAPTER FOUR MONTHLY REPORT

Set By: Tewodros E.

tewodros.engida@aau.edu.et

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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.
•

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The fourth section of this unit will describe about Transfer Report whose
function is to serve as a control tool to verify case transfers between
MOFED and an accounting unit and vice versa.
The fifth section of this unit deals with Receivables Report, which provides
information on the year - to_ date receivables owned to an accounting unit.
This report helps to facilitate consolidations of the actual receivables owned
to the FGE.
The sixth section of this unit will present about the Payables Report. The
payables report provides information on the year-to-date payables owed
by an accounting unit. This report facilitates consolidation of the actual
payables owed by the FGE.
The total of all the revenue/Assistance/loan reports, recurrent and capital
expenditure reports, receivables and payables reports will be carried
forward to the trial balance.

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The seventh section of this unit is about a trial balance, which is the
summary of the net cumulative year -to - date 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. It proves the arithmetical
accuracy of the general ledger. The total amount of debit column must be
equal with the total amount of the credit column in the trial balance. The
trial balance serves as a basis to produce financial statements.
Finally, the last section of this unit is about submitting monthly reports to
MOFED.

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• 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 Federal 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.

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Activity 1: preparing revenue/assistance/Loan Report with Opening Balance – Ginbot
2007 EC. The following general ledger balances were obtained from Ginbot 1, 2007
EC. Trial Balance of Ministry of Education (MOE).
Account Code Description Debit Credit
4101 Cash in Safe 450,000
4103 Cash at Bank 651,000
4203 Advance to Employees 60,000
4004 MOFED transfer to PB 1,000,000
5002 Income tax payables 31,000
6111 Salary expense 200,000
6212 Stationary expense 20,000
1415 Court fees 100,000
1101 Income tax revenue 50,000
1411 Visas revenue 200,000
Total 1,381,000 1,381,000
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During the month the following transactions performed:
1. Assume Ministry of Education (MOE) requests MOFED to pay
customs duty amounting to Birr1.6 million on its behalf to the
customs Authority (CA) for teaching materials from its recurrent
expenditure budget and further assuming that you are the
accountant in these institutions.

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MOFED

Transfer to MOE for customs duty(4054)……. 1.6m

Cash at Bank(4105)…………1.6m
Cash at Bank(4105)………1.6m
Transfer from custom duty PB(4055)…..1.6m
PB
Teaching materials (6115)….1.6m
Transfer from MOFED for custom duty(4054)….1.6m

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2. Ministry of Education (MOE) signed contract with Yottek Construction Company for
2,000,000 Br. Terms of contract are:
• Initial advance of 20% =400,000
• Advance adjusted proportionately with each payment certificate approval.
• Retention of 10% withheld from each payment certificate & paid after final
approval.
Steps in payment are:
1. Payment of 20% advance.
2. Payment certificate when 40% complete 800,000br.
3. Payment certificate when 80% complete 800,000br.
4. Payment certificate when 100% complete 400,000br.

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During the month…..
Transaction #1: payment of 20% advance:
Accountant prepares a check for 400,000 Birr.
Accountant prepares payment Voucher for 400,000 Birr:
Debit to 4251 & Credit to 4103
Transaction Register of public Body:

No Description TB Account Others Cash at bank 4103

Number

Dr Cr Dr Cr

1 Advance to contractor 4251 400,000 400,000

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After Ginbot …….

Transaction #2: payment certificate when 40% complete.

The payment voucher indicate Br.800,000.00 as per this it requires adjustment:

160,000 adjustment to advance and 80,000 retention will be deducted from 40%
completion payment. Br.560,000 is effected as net payment.

No Description TB Account Others Cash at bank 4103

Number
Dr Cr Dr Cr
2 Construction - Building 02 6323 800,000
Advance to contractor 4251 160,000
Retention on contract 5061 80,000 560,000

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When 80% completed:

No Description TB Account Others Cash at bank 4103

Number

Dr Cr Dr Cr

2 Construction - Building 6323 800,000

Advance to contractor 4251 160,000

Retention on contract 5061 80,000 560,000

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When 100% completed:

No Description TB Account Others Cash at bank 4103

Number

Dr Cr Dr Cr

4 Construction – Building 02 6323 400,000

Advance to contractor 4251 80,000

Retention on Contract 5061 40,000 280,000

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Accountant prepares payment voucher for 200,000 Birr:
Debit to 5061 & Credit to 4103
Transaction Register of public Body:

No Description TB Account Others Cash at bank 4103

Number

Dr Cr Dr Cr

5 Retention on contract 5061 200,000 200,000

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During initial budget release MOFED may not provide immediate fund
transfer and creditors will provide grace period which is a length of time
after the due date during which payment may be made without penalty. A
grace period, typically of 15 days.

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3. A public body pays Birr 150,000 for sport outfits that were

recorded as grace period payables from the previous year's

recurrent expenditure and paid during the first 30 days of the
fiscal year.

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PB

Sport outfits(6218)…….150,000

Grace period Payables(5001)….150,000

MOFED

Transfer for GPP(4007)……150,000

Cash at Bank(4105)……..150,000

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PB

Cash at bank(4103)……150,000

Transfer from MOFED for GPP(4007)….150,000

GPP(5001)….150,000

Cash at bank(4103)……150,000

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Adjusted Trial Balance and Financial Report:
Account Code Description Debit Credit
4101 Cash in Safe 450,000
4103 Cash at Bank 251,000
4203 Advance to Employees 60,000
4251 Advance to Contractor 400,000
4004 MOFED transfer to PB 1,000,000
4054 Transfer from MOFED to PB (Custom duties) 1,600,000
5002 Income tax payables 31,000
6111 Salary expense 200,000
6212 Stationary expense 20,000
6115 Teaching materials expense 1,600,000
1415 Court fees 100,000
1101 Income tax revenue 50,000
1411 Visas revenue 200,000
Total 2,981,000 2,981,000
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Revenue/Assistance/Loan report:
Month: Ginbot
Name of Public Body: MOE
Code: 203
Bank Account Number: XXX
Account Code Account description Current Revenue
Debit Credit
1415 Court fees 100,000
1101 Income tax revenue 50,000
1411 Visas revenue 200,000

Total R/A/L 250,000

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Recurrent Expenditure Report
Month: Ginbot
Name of Public Body: MOE
Code: 203
Bank Account Number: XXX
Account Code Account description Current Expenditure
Debit Credit
6111 Salary expense 200,000
• Salary expense
6212 Stationary expense 20,000

6115 Teaching materials expense 1,600,000

Total Expenditure 1,820,000

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Transfer Report
Month: Ginbot
Name of Public Body: MOE
Code: 203
Bank Account Number: XXX
Account Code Account description Current Transfer
Debit Credit
4004 MOFED transfer to PB 1,000,000
4054 Transfer from MOFED to PB (Custom duties) 1,600,000
Total transfer 2,600,000

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Receivable Report
Month: Ginbot
Name of Public Body: MOE
Code: 203
Bank Account Number: XXX
Account Code Account description Receivable
Debit Credit
4203 Advance to Employees 60,000
4251 Advance to Contractor 400,000

Total Receivable 460,000

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Payable Report
Month: Ginbot
Name of Public Body: MOE
Code: 203
Bank Account Number: XXX
Account Code Account description Payable
Debit Credit
5002 Income tax payables 31,000

Total Payable 31,000

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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.

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This activity is to show you the importance of reporting on time.
• Assume that you are a finance section head in a reporting entity. Your
section has to submit its monthly report to MOFED during the third week
after the end of the month. On one hand, your section did not finish
recording transactions of Hamle to Nehassie 20.
• On the other hand, your organization wants to get funds from MOFED for
operating expenditures. Do you decide to delay and complete the report
or submit the report on the deadline based on what is recorded?

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Feedback: The Transaction Register is closed on the last day of each month.
Transactions that occur during the month, but are not recorded in the
Transaction Register, are recorded in the next month’s Transaction Register.
In other words, reports are prepared each month based on the information
recorded by the end of that month in the Transaction Register.

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• Modified cash basis is an accounting method that
combines elements of the two primary bookkeeping
practices: cash and accrual accounting.

• It seeks to get the best of both worlds, recording sales

and expenses for long-term assets on an accrual basis
and those of short-term assets on a cash basis.

• The modified cash method may only be used for

internal purposes.

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ILLUSTRATION:4.2
PUBLIC BODY Opening Balance Hamle 13,2011 E.C
Account Code Descriptions Debit Credit
4101 Cash on hand 250,000
4103 Cash at Bank 1,050,000
4203 Advance to Staff 60,000
4004 1,350,00
5024 Balance Due to MOFED 75,000
5002 Income Tax Payables 25,000
6231 Per-diem 35,000
6271 Local training 55,000
Total 1,450,000 1,450,000

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During the month the following transactions were performed:-

1. A public body pays Birr250,000 for offices supplies that were

recorded as grace period payables from the previous year's

recurrent expenditure and paid during the first 30 days of the
fiscal year and received transfer from MOFED for settlement.

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2. The public body signed contract with Sunshine Construction
Company for 3,000,000 Br. Terms of contract are:
Initial advance of 20% =600,000
Advance adjusted proportionately with each payment certificate
approval.
Retention of 10% withheld from each payment certificate & paid
after final approval.
Steps in payment are:
1. Payment of 20% advance.
2. Payment certificate indicate 10% completed(during the month of
Hamle) 300,000br.
3. Payment certificate when 80% completed 2,100,000br.
4. Payment certificate when 100% completed 600,000br.

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3. A public body establishes a restricted bank account to
open a letter of credit for the purchase of medical
supplies valued at birr 30,000.

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1. PB
Office supplies (6212)…….250,000

Grace period Payables(5001)….250,000

MOFED

Transfer for GPP(4007)……250,000

Cash at Bank(4105)……..250,000

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PB

Cash at bank(4103)……250,000

Transfer from MOFED for GPP(4007)….250,000

GPP(5001)….250,000

Cash at bank(4103)……250,000

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2.
No Description TB Account Others Cash at bank 4103
Number

01 Dr Cr Dr Cr

1 Advance to contractor 4251 600,000 600,000

No Description TB Account Others Cash at bank 4103

Number
Dr Cr Dr Cr
2. Construction - Building 02 6323 300,000
Advance to contractor 4251 60,000
Retention on contract 5061 30,000 210,000

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2.
No Description TB Account Others Cash at bank 4103
Number
Dr Cr Dr Cr
3. Construction - Building 02 6323 2,100,000
Advance to contractor 4251 420,000
Retention on contract 5061 210,000 1,470,000

No Description TB Account Others Cash at bank 4103

Number
Dr Cr Dr Cr
4. Construction - Building 02 6323 600,000
Advance to contractor 4251 120,000
Retention on contract 5061 60,000 420,000

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3.
Letter of credit (5500)……… 30,000
Cash at bank (4103)…………. 30,000

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end of month balance
Account Code Descriptions Debit Credit
4101 Cash on hand 250,000
4103 Cash at Bank 210,000
4203 Advance to Staff 60,000
4251 Advance to contractor 540,000
4004 Transfer from MOFED 1,350,00
4007 Transfer for GPP 250,000
5500 Letter of credit 30,000
5024 Balance Due to MOFED 75,000
5002 Income Tax Payables 25,000
5061 Retention 30,000
6231 Per-diem 35,000
6323 Building expenditure 300,000
6212 Office supplies 250,000
6271 Local training 55,000
Total 1,730,000 1,730,000

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 Recurrent Expenditure Report
Month: Hamle
Name of Public Body: MOE
Code: 203
Bank Account Number: XXX
Account Code Account description Current Expenditure
Debit Credit
6231 Per-diem 35,000
6323 Building expenditure 300,000
6271 Local training 55,000
6212 Office supplies 250,000
Total Expenditure 640,000

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Transfer Report
Month: Hamle
Name of Public Body: MOE
Code: 203
Bank Account Number: XXX
Account Code Account description Current Transfer
Debit Credit
4004 MOFED transfer to PB 1,350,000
4007 Transfer from MOFED to GGP 250,000
Total transfer 1,600,000

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Receivable Report
Month: Hamle
Name of Public Body: MOE
Code: 203
Bank Account Number: XXX
Account Code Account description Current Receivable
Debit Credit
4203 Advance to employee 60,000
4251 Advance to contractor 540,000
Total transfer 600,000

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Payable Report
Month: Hamle
Name of Public Body: MOE
Code: 203
Bank Account Number: XXX
Account Code Account description Current Payable
Debit Credit
5024 Balance Due to MOFED 75,000
5002 Income tax payable 25,000
5061 Retention 30,000
Total 130,000

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Interim Financial Reports
 In addition to standard government reporting, the projects should
prepare consolidated quarterly Interim unaudited Financial Report (IFR).
The format and the content, which are consistent with the World Bank’s
standards.
 IFR in general covers sources and uses of funds, transfer to regions,
expenditures incurred and proportion of donors’ funds, budget versus
actual expenditure comparison and status of ending balances.
Interim Financial Reports, prepared at MOFED level include all opening
balances of donors account & regions, sources or collection from donors
and government, expenditures total of the reporting period with
components and sub components, ending balance with sufficient
breakdown.
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All donors account balance kept in foreign currency are converted to Birr
using the prevailing exchange rate. The statements shall be prepared
every quarter and once in a year.

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 The financial recording and reporting system processed using IBEX,
designed for budgetary control purpose and reporting of PB’s
expenditure on a standalone basis.
Consolidation of IBEX records at MOFED level will be done on a
standalone procedure without mixing with the main treasury database.
 The timely submission of quality financial reports is a must to ensuring
that cash resources transferred to the PB’s are employed as required
by the annual Plan.
 Financial reports trigger the replenishment or deductions will be made
to transfers from Federal to Regional account for carry-over balances.
Because of this, it is vital that WOFEDs, BOFEDs, and MOFED work
diligently to submit quality reports on time.

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 If financial reports are not received on or before the due date and are
of insufficient quality, disbursements from the Development Partners
may be delayed to MoFED, which ultimately affects all regions, until
reports of adequate quality are received.
 This means the entire programme and its million clients will be affected.

 At MOFED, Central government account directorate prepares and

consolidates financial statements into the main FGE account to get a
consolidated financial report at Federal level which include project
accounts and treasury.

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AUDITING
 This section elaborates the different types of audit to be conducted on
under each program. These are internal audit and external audit
(including interim and final audit).
 According to the Ethiopian Constitution, the Office of Federal Auditor
General (OFAG) is responsible for carrying out the audit of all the
financial transactions of the federal government and subsidies to the
Regions.
 Responsibility of Head of Public Body: The heads of public body at all
levels are responsible to ensure that the appropriate numbers of
internal auditors with the required qualifications are staffed.

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 Responsibility of Internal Audit:
The Internal Audit is responsible for an independent, objective
assurance and consulting activity designed to add value and improve
the PB operations.

 It helps the public body accomplish its objectives by bringing a

systematic, disciplined approach to evaluate and improve the
effectiveness of risk management, control and governance processes.

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Scope of Work for Internal Audit
Internal audit should fulfil its duty by systematic review and evaluation of
risk management, control and governance which comprises the policies,
procedures and operations.
1. monitor the achievement of the PB’S objectives;
2. Identify, asses and manage the risks in achieving the PB’S objectives;
3. Ensure the economical, effective and efficient use of resources;
4. Ensure compliance with established policies (including behavioural and
ethical expectations), procedures, laws and regulations;
5. Safeguard the Program’s assets and interests from losses of all kinds,
including those arising from fraud, irregularity or corruption;
6. Ensure the integrity and reliability of financial reports.
7. Ensure that adequate internal controls are in place.

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Internal audit should devote particular attention to any aspects of the risk
management, control and governance affected by material changes to the
Program’s risk environment. The following areas are among the priority
concern in the PB’S program.

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 Independence: Internal audit should be sufficiently independent of the
activities, during audits to enable auditors to perform their duties in a
manner, which facilitates impartial and effective professional judgments
and recommendations.

 Internal audit should report directly to the relevant Head of the Public
Body and Audit Committee of the Public Body.

 A copy of annual internal audit report, which will be addressed to the

head of the public body, should be submitted to the MoFED for follow
up on reported audit findings and recommendations.

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 Internal audit should seek to meet regularly with the external auditor
to consult on audit plans, discuss matters of mutual interest, discuss
common understanding of audit techniques, methods and terminology
and seek opportunities to rely on their work where appropriate,
provided this does not affect internal audit’s independence.

 The internal auditors need to plan and accomplish internal audit so that they
could have prior findings of audit so that they can share to external
auditors.

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 External Audit – Audit of Project Financial Report
The Auditor
MOFED will have the project financial statements audited by the Office of
the Federal Auditor General (OFAG) or an auditor assigned by OFAG.
Should OFAG decide to assign an independent audit firm to handle the
financial audit, efforts should be made to ensure that the eligible auditors
are recruited or appointed within two months of effectiveness.
Timing of Audit Reports
Financial Audit
The Interim Audit covers six months ending on January 7, and reports
are submitted by MOFED to Development Partners within 90 days.

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True /False Questions
1. The source document to prepare the recurrent expenditure report is
the general ledger.
2. Balances in the Capital Expenditure Report are normally credits.
3. The purpose of the capital expenditure 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.
4. The payables report provides information on the year-to-date
payables owed by an accounting unit.
5. 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.

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Short Answer
1. Specify the responsible body over interim financial reporting.
2. What makes interim financial reporting unique from common financial
reporting?
3. Discuss the overall and specific objectives of interim and common
financial reports.
4. Is there any possibility over hiring private certified auditors for public
sector performance audit?
5. Discuss end audit finding reporting procedure for internal and
external auditors under public sectors.

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