THE ASSESSMENT OF THE PRACTICE OF GOVERNMENTAL

ACCOUNTING SYSTEM (A CASE STUDY IN ROBE TOWN

MUNICIPALITY)

RESEARHCE SUBMITTED TO THE PARTIAL FULFILLMENT

OF THE BACHELOR OF ARTS DEGREE IN ACCOUNTING

PREPARED BY: ZELALEM MENGISTU

ADVISOR: LEUL ABEBE

RIFT VALLY UNIVERSITY

DEPARTMENT OF ACCOUNTING

HIDAR, 2007
GOBA, ETHOPIA
 Acknowledgment
First and for most I would like to thank the Almighty God. Next my
sincerely gratitude and appreciation goes to my Advisor Leul A. for his
invaluable comments and advise to do this research paper. Also I would
like to thank my family and friends who helped me to accomplish this
research paper.

I
 ABSTRACT
This research paper is done on the topic of assessment of practice of
governmental accounting system in the case of Robe municipality.
Governmental accounting system is used to make a decision concerning
the use of limited resource including the identification of crucial decision
area and determination of objectives and goals. Like other governmental
organization, Robe municipality employees have the problem of not
clearly understanding the practice of governmental accounting system.
This paper has the objective to assess and examine the practice of
governmental accounting system of Robe town municipality. Primary and
secondary sources are used and the data is analyzed by using descriptive
type of analysis. Robe municipality is unable to cope up with the
improved governmental accounting system. Therefore, the municipality
should train the employees of the administration and finance center and
improve the existing accounting practice by following financial rules and
administration.

II
 TABLE OF CONTENT
Acknowledgment......................................................................................I
ABSTRACT..............................................................................................II
TABLE OF CONTENT.............................................................................III
CHAPTER ONE.......................................................................................1
1. INTRODUCTION..................................................................................1
1.1 Background of the Study...................................................................1
1.2 Background of the Organization.....................................................2
1.3 Statement of the Problem...............................................................2
1.4 Objective of the Study....................................................................3
1.4.1. General Objective of the study................................................3
1.4.2. Specific Objective of the study................................................3
1.5. Research question............................................................................4
1.6. Significance of the Study...............................................................4
1.7. Scope of the Study........................................................................4
1.8. Limitation of the study.....................................................................5
1.9. Organization of the Paper..............................................................5
CHAPTER TWO.......................................................................................6
2. Review of related literature..................................................................6
2.1. Definition of fund.......................................................................6
2.1.2. Characteristics of Governmental Accounting...........................6
2.1.3. Objective of Governmental Accounting....................................7
2.1.4. Similarities and Difference Between Governmental Accounting
and Commercial Accounting.....................................................7
2.2. Government Accounting Principles...............................................9
2.2.1. Definition of Accounting Principles.........................................9
2.2.2 Evolution of Accounting Principles...........................................9
2.2.3. Fund Accounting System........................................................9
2.2.4 Type of Fund..........................................................................10
2.2.5 Number of Funds...................................................................10

III
 2.3 Accounting and the Budget Process.............................................10
2.3.1 Basis of Accounting...............................................................10
2.3.2 Budget Preparation................................................................11
2.3.3 Revenue Estimates................................................................12
2.3.4 Expenditure Planning............................................................12
2.3.5 Estimating Other Charges......................................................12
2.3.6 Budget Execution..................................................................13
CHAPTER THREE.................................................................................14
3. RESEARCH METHODOLOGY............................................................14
3.1 Research Design..........................................................................14
3.2 Sampling Technique.....................................................................14
3.3 Method of Data Collection............................................................14
3.4 Method of Data Analysis..............................................................14
3.5 Data Presentations.......................................................................15
CHAPTER FOUR...................................................................................16
4. Data Analysis and Production...........................................................16
4.1 Work plan....................................................................................16
4.1 Participants Profile.......................................................................16
4.2 Over View of the accounting system Municipality........................18
4.3 The existence of fund accounting system of municipality.............19
CHAPTER FIVE.....................................................................................26
Conclusion and Recommendation.........................................................26
5.1 Conclusions.................................................................................26
5.2 Recommendations........................................................................26
References.............................................................................................28

IV
 CHAPTER ONE
1. INTRODUCTION
1.1 Background of the Study
Currently, there are different kind of organization among them
governmental organizations form the major ones. A governmental
organization should use governmental accounting system to makes
decisions concerning the use of limited resources including the
identification crucial decision areas and determination of objectives and
goals, to effectively direct and control its human and material resources
to maintain and report the custodianship of resource and to contributes
the effectiveness of the organization in fulfilling the desires and demands
of all society. (Lynn and Freeman, 1982, pp. 9).

In Robe town, there are different kinds of governmental organizations

and the municipality of Robe is one of the principal governmental
organizations with the main objectives of giving quick and qualified
services in social, economic and moral aspects.

The need to assess the practice of governmental accounting system of

municipality of Robe town arises because to see its problems and the
way to improve it weakness and to examine its accounting practice.

Even through previous studies were made, there is a need of data

assessment of the practice of governmental accounting system for this
reason, by conducting this research would try to examine the existing
governmental accounting system of Robe town municipality by
comparing with the GASB principles.

1
1.2 Background of the Organization
Municipality of Robe town was established in 1942E.C. After the 1945
governmental proclamation of developing urban town.

The municipality changes his working system. Its primary objective is for
giving quick and qualified services in social, economic and moral aspects.

The municipality has many departments and four kebele service giving
branch. It has fifty five employees. From this forty five of them are
permanent and the rest are contract employees. Land preparation and
development agency, infrastructure and engineering service agency,
administration and finance center, and administration and supply
agency are some of departments found in the municipality. Robe city
municipality has its own revenue agency which collects revenue from
different sources like property tax, lease contract, tax from market
abattoir service rental income from governmental houses and others.

This town municipality is accountable to the provisional administration

of Robe town and monthly financial reports are prepared to explain how
it had spent the budgets appropriated to it.

1.3 Statement of the Problem

A governmental organization should use governmental accounting
system to make decisions concerning the use of limited resources. Most
of the time, the employees do not clearly understand the practice of
assessing governmental accounting system.

Like other governmental organization Robe town municipality employees

who work on administration and finance center has also this problem

2
and also the department has the problem of the absence of documents,
lack of computers and lack of room this and other problems affect the
assessment of the governmental accounting system of the municipality.

1.4 Objective of the Study

1.4.1. General Objective of the study

The general objectives of the study is to assess and examine the practice
of governmental accounting system of Robe town municipality

1.4.2. Specific Objective of the study

The specific objective of the study are:
1. To assess whether the GASB principles are followed wisely.
2. To investigate whether the accounting system of the
municipality comply with these financial accounting standard
principles.
3. To investigate the problems of the organization in implementing
the governmental accounting system
4. To makes recommendation and give suggestion to the
departments about the departure from the GASB principles
since this could be a cause for causing problems

1.5. Research question

The main aim of the paper was attempted to answer the following basic
research question.
1. Is the existing accounting system of Robe town municipality going in
conformity with GASB principles?
2. How well each governmental accounting principle is obeyed?
3. What significant problem existed in the practice of governmental
accounting system?

3
4. What measures are taken and planned to be taken to correct the
problems in the administrative and finance?

1.6. Significance of the Study

This research would help the municipality specially the administration
and finance center to see its problems. In addition, the research would
also help the department to find out a way to improve its weakness, if
any, and to examine its accounting practice. The study would also
provide some suggested solution for the identified problem.

1.7. Limitation of the study

In conducting this study the researcher would face the following
problems time, financial and experience on the study of research.

1.8. Organization of the Paper

In this paper five chapters are included. The first chapter consists
background of the study, statement of problem, objective of study,
significance of the study, scope of the study and organization of the
paper. Chapter two is all about review of related literature. Chapter three
is about methodology. Chapter four of the paper consist of data
presentation and analyzation. Finally the last chapter is all about
Recommendation and conclusion.

4
 CHAPTER TWO
2. Review of related literature
2.1. Definition of fund
“A fund is a fiscal and accounting entity with a self-balancing set of
account recording cash and other financial resource together with all
related liabilities and residual equities or balance and changes there in,
which are segregated for the purpose of carrying on specific activities or
attaining certain objective in accordance with special regulation,
restriction and limitation”. (Lynn and Freeman, 1982, P.8).
They also state that accounting is the art of analysis recording
summarizing, evaluating and interpreting an organization financial
activities and status, and communicating the results (Lynn and
Freeman, 1982, P.1).
They quoted that accounting is a service function and most evaluated to
meet the information demand in a given event. (Lynn and Freeman,
1982, pp.8).
Although the structure of financial administration is not stand and a
across all unit in government, a general pattern exist. (Lynn and
Freeman, 1982, P.10).

2.1.2. Characteristics of Governmental Accounting

Lynn and freeman quoted that among the distinguishing characteristics
of governmental accounting is the emphasis up on fund and budgetary
controls that causes the accounting for most not for profit organization
to more closely resemble cash flow or working capital change analysis
than commercial accounting in which net income determination is a
paramount consideration. The focal point of the most not for profit
accounting and reporting is expandable resource, accounted for in
expendable found entities and allocated by the budget and appropriation
process (Lynn and Freeman, 1982, pp.16).

5
2.1.3. Objective of Governmental Accounting
Lynn and freeman put that accounting to a major committee of the
American accounting association, the objective of accounting are to
provide information for making decision concerning the use of limited
resource, including the identification of crucial decision area and
determination of objectives and goals. Effectives directing and controlling
an organization human and material resource, maintaining and
reporting the custodianship resources and Contributing to the
effectiveness of all organization whether profit oriented or not in fulfilling
the desires and demands of all society for social control or their function.
((Lynn and Freeman, 1982, pp.6).

2.1.4. Similarities and Difference between Governmental

Accounting and Commercial Accounting
According Lynn and freeman, non-for-profit organization are many
similar to profit seeking enterprise for example.
They are integral parts of the same economic system and utilize similar
resource in accomplishing their purpose, both most acquire and convert
scare resource in to their respective goods or services ,financial
management process are essentially similar a booth and each most have
available information system of which the accounting system is an
integrals component if its managers and other interested persons or
group are to receive relevant and timely for planning, directing,
controlling and evaluating the use of its scarce resource, in as much as
their resource are relatively scarce whether donated, received from
consumers, acquired from investor or creditors or secured through
taxation. Least cost analysis and other control and evaluation techniques
are essential to assuring that resource are utilized economically,
effectively and efficiently and in some case both produce similar product,
example both government and private enterprise may own and operate

6
transportation. Systems sanitation service and electric or gas utilities.
(Lynn and Freeman, 1982, pp.3).

They also stated that there are many similarities in the accounting for
profit – seeking and not – for- profit organization. A double entry system
or accounts is recommended for both. The general machines of record
keeping are the same, document from the basic record, books of original
entry (journals) are kept and posted to general ledgers and subsidiary
ledgers trial balance are drawn to prove the equality of debit and credit, a
chart of account properly classified and properly fitted to their
organization’s structure is essential to good accounting and of course,
uniform terminology highly describe in both field (Lynn and Freeman,
1982, pp.8).
Though commercial type of accounting is employed where not for profit
organization are engaged in commercial type of activities (eg electric and
utilities) accounting and reporting for not profit endeavors have involved
largely in view these key difference from profit seeking enterprise (Lynn
and Freeman, 1982, Pp.11).
The objective and control factor underline the major difference between
commercial and not for profit accounting. The primary consideration in
this environmental is up on compliance and accounting reporting, and
auditing have developed principally as tools of compliance control and
demonstration (Lynn and Freeman, 1982, pp.12).
Use of the term “fund” in not for profit situation should be sharply
distinguished form its use in private enterprise. A fund of a commercial
enterprise is simply a portion of its use in private enterprise
A fund of commercial enterprise is simply a portion of its assets that has
been restricted specific uses, not separate and distinct accounting entity.
(Lynn and Freeman, 1982, pp.9).

7
On the other hand, a fund in the not-for-profit sense it a self-contained
accounting entity with its own asset. Liability, revenue, expenditure or
expense, fund balance or other equity account and win its own ledgers
(Lynn and Freeman, 1982 pp 9).

2.2. Government Accounting Principles

2.2.1. Definition of Accounting Principles
According to Lynn and freeman, the national council on governmental
accounting defined accounting principles as “specific fundamental texts
which, on the basis of reason, demonstrated performance, and general
acceptance are generally essential to effective management control and
financial reporting” (Lynn and Freeman, 1982, pp.27).
Lynn and freeman stated that governmental accounting systems should
be organized and operated on a found basis (Lynn and Freeman, 1982,
pp.28).

2.2.2 Evolution of Accounting Principles.

Lynn and Freeman 1982 pp.21 state although the origin of the profession
of accountancy is sometimes traced to ancient governmental, modern
municipal accounting us a development of the twentieth country.
The quoted that the accounting principle may be divided in to
(1) Generally accepted accounting principle and legal compliance (2) fund
accounting (3) fixed assets and long term liability. (4) basis of
accounting (5) the budget and budgetary accounting (6) classification
and terminology and (7) financial reporting ( Lynn and Freeman, PP.27).

2.2.3. Fund Accounting System

Accounting to Lynn and freeman, the fund concept involved an
accounting segregation not necessarily the physical separation of
resource; However, resource are often also physically segregated… for

8
example, through use of separate checking accounting for cash resource
of various fund (Lynn & Freeman, 1982, pp.28).

2.2.4 Type of Fund

Governmental fund like general fund, special revenue of fund, capital
project fund, and proprietary funds like enterprise funds, and internal
service funds and fiduciary funds like trust and agency funds should be
used by state and local government. (Lynn and Freeman, 1982, pp.28).

2.2.5 Number of Funds

Governmental units should establish and maintain those fund required
by law and sound financial administration. Only number of funds
consistent with legal and operating requirements should be established
(Lynn & Freeman, 1982, pp.31).

2.3 Accounting and the Budget Process

2.3.1 Basis of Accounting

Accounting to manual 3-5 the basis of accounting is the basis set of
principles and rule employed by accounting system to determine when
and how to record transactions. A transaction is an economic event that
affects the financial position of the governmental (manual 3- 5 volume
version 1.1, pp. 5).
In the manual it is also stated that the cash is received or paid. The
modified cash basis of accounting recognized transaction and events
which have accrued by the year end and are normally expected to result
in cash disbursement with in the specific legal grace period stimulated
by a country’s financial regulations after year ends.

However, the modified accrual basis accounting recognizes transaction

and events when they occur, irrespective of when cash is paid. There is

9
no deferral of cost that will be consumed in future periods. Assets that
provide service in the future are expensed in the period acquired.
Therefore, under the modified accrual basis of accounting assets and
stocks are considered consumed and expensed of as soon as they are
acquired. (Lynn and Freeman, 1982, pp.5).

Lynn and Free man stated that the modified accrual of or accrual basis
of accounting as appropriate should be utilized in measuring financial
position and operating result. (Lynn and Freeman, 1982, pp.35).

2.3.2 Budget Preparation

Lynn and Freeman described the budgeting is the process of allocating
scarce resource to unlimited demand. (Lynn and Freeman, 1982, pp.75).
They also stated that after making his best estimate of the fund balance
at the beginning of the budget, the chief budget officer must obtain
estimates of the revenue source at current rate of taxes, fees and other
charges, having produced such estimate the budget officer and the chief
executive can compare them with revenue and expenditure of prior years
and with detail knowledge of change in demands on the government and
its program. Such comparison should provide an impression of the
adequacy of estimated revenue to meet the needs for expenditure (Lynn
and Freeman, 1982, pp.77).

In the manual 3-5, it is stated that the budget process begin with the
appropriate budget. The appropriate budget is the budget approved by
the regional or local council. The appropriate budget is broken down by
recurrent and capital expenditure. (Lynn and Freeman, 1982, pp18).
According to manual, Approved budget: the detailed breakdown of the
appropriated budget by sub agency or project and source of finance,
Appropriate budget: is the legal mandate to spend form the consolidated
funds and Adjusted budget: additional or reduction approved budget.

10
2.3.3 Revenue Estimates
Lynn and freeman quoted that the process of estimating revenue has
almost as many fact as there are types of revenue. The revenue for the
property tax is computed by applying a rate determined by the legislative
body to a lax base of assessed properly value. The latter may be expected
to increase with building activity inflation and economic devloopemt
since most assessment do not equal market value, property has revenue
may also be changing the percentage of market value at which property
is assessed. (Lynn and freeman, 1982, pp. 78).

2.3.4 Expenditure Planning

According to Lynn and Freeman, in large organization, expenditure
planning should be considered a year round activity. The budget director
and his budget examiners should be continually studying the agencies
with whose budgets they will work because analysis of agency operation,
including both what the agency does and how it does consideration to
agency request.
As stated on the manual 3-5 budget control has two key element. Those
are expenditures including only if there is an available budget and actual
expenditure does not exceed the adjusted budget. (Lynn and Freeman,
1982, pp.78).

2.3.5 Estimating Other Charges

Lynn and Freeman stated that, interest, contribution to pension fund,
retirement of serial bond and contribution to sinking funds are ordinarily
not allocated to any program or activity of an organizations unit. These
expenditure estimates are therefore prepared by the budget officer. (Lynn
and Freeman,1982, pp.86).

11
 However, refinements of accounting and budgeting are continually
reducing the number of allocated expenditure. (Lynn and Freeman,
1982, pp.86).

2.3.6 Budget Execution

According to Lynn and Free man, the process of budget includes every
operating decision and transaction made during the budget period by the
legislative body expresses in financial term the government planned
activities. Accounting keeps record of the result of the transaction and
permit their summarization, reporting and comparison with plans. (Lynn
and Freeman, 1982, pp. 92).

12
 CHAPTER THREE

3. RESEARCH METHODOLOGY

3.1 Research Design

Research design is the science and art of planning procedures used to
answer question rises for doing the study, so as a get most valid findings
an efficient and relevant manner for the study and the research design
implies that the researcher would used descriptive types of source of
data and other technique for study activities.

3.2 Sampling Technique

Under the administration and finance center, there are 16 permanent
employees among them 10 of them would be selected by using
judgmental sampling. This method enable the researcher to select
respondents who have willingness to give information and enable the
researcher to select respondents who can give an accurate information.

3.3 Method of Data Collection

To conduct this study the researcher would use both primary and
secondary data., The primary data was collected from concerned bodies
like the administrative and finance hand, staff of this department and
those who are believed to have relationship with this study by using
questioner method of data collection, secondary source was the
administrative document of the department like financial statement,
monthly report and other written material.

3.4 Method of Data Analysis

The research would uses descriptive types of data analysis. The common
form of data analysis is presenting the collected data in tabulation and
percentage.

13
The analysis data would presented using table which help the researcher
would presents all collected information in simplest from effectively as
possible.

3.5 Data Presentations

The analyzed data would be presented by the time the department is
scheduled. This is on this part major finding and possible
recommendation would be more pronounced effectively concluded as
possible.

14
 CHAPTER FOUR

4. Data Analysis and Production

This chapter is devoted for the assessment of the existing governmental
accounting system of Robe town municipality based on the data obtained
form the questioners filled by 10 samples of staff members form 16
permanent employees of the administrative and finance center using the
judgmental sampling technique.

4.1 Work plan

4.1 Participants Profile

Table 1
Distribution of respondents based on their gender
Gender No of respondents Percentage
Male 6 60%
Female 4 40%
Total 10 100%
Source:- primary data
From the above table out of 10 respondents 6(60%) are males and 4(40%)
are the female. This show that majority of the respondents are males.
Table 2
Distribution of respondents based on their educational level
Level of education No of respondents Percentage
Certificate 2 20%
Diploma 3 30%
Degree 5 50%
Other 0 0%
Total 10 100%
Source:- primary data

15
According to the above table out of 10 respondents 2(20%) are certificate
holder, 3(30%) are diploma holder and the remaining 5(50%) are degree
holders. So most of respondents are degree holder.

Table 3
Distribution of respondents based on their work experience,
Work experience (In year’s) No of respondents Percentage
2 1 10%
2-4 2 20%
4-6 4 40%
6-8 2 20%
Above 8 1 10%
10 100%

Source:- primary data

From the above table out of 10 respondents 1(10%) have two year work
experience, 2(20%) are a two to four year work experience,4(40%) are a
four to six year work experience and 2(20%) are a six to eight year work
experience and the remaining 1(10%) are above eight year work
experience. This indicated that most of respondents have a four to six
year work experience.

Table 4,
Distribution of respondents based on their profession
Response No of respondents Percentage
Es 7 70%
No 3 30%
Total 10 100%

Source:- primary data

16
As the table show that out of 10 respondents 7(70%) said yes and the
remaining 3(30%) said no. This show that majority of respondents are
working on their profession.

4.2 Over View of the accounting system Municipality

Table 5
Distribution of respondents based on the response about the accounting
system used
Accounting system No of respondents Percentage
Single entry 0 0%
Double entry 10 100%
Total 10 100%

Source:- primary data

As show in the above table out of 10 respondents 10(100%) all of the
respondents assured the implementation of the double accounting
system.
Table 6
Distribution of respondents based on their concept about governmental
accounting system
Response No of respondents Percentage
Yes 8 80%
No 2 20%
Total 10 100%
Source:- primary data
As it is show in the above table about 8(80%) of respondents say that
yes and the remaining 2(20%) have say no. As the above table proves,
majorities of the respondent have a concept about governmental
accounting system.

Table 7

17
Distribution of respondents based on their response on the existence of
significant problem when implementation governmental accounting
system.
Problem No of respondents Percentage
Existed 7 70%
Not existed 2 20%
I have no idea 1 10%
Total 10 100%
Source:- primary data
As we can see from the table, majority of the respondent implied the
existence of significant problems.

4.3 The existence of fund accounting system of

municipality
Table 8
Distribution of respondents based on their response about the existence
of fund accounting system.
Response No of respondents Percentage
Yes 8 80%
No 0 0%
I have no on 2 20%
Total 10 100%
Source:- primary data
As show in the above table out of 10 respondents 8(80%) have say yes
and the remaining 2(20%) are on idea about the existent of fund
accounting system. As the majority of the respondents of the
municipality use the accounting system.

Table 9

18
Distribution of respondents based to their response about the existence
of general capital assets and fund capital assets
Responses No of respondents Percentage
Yes 6 60%
No 2 20%
I have no idea 2 20%
Total 10 100%
Source:- primary data
As the above table indicate that out of 10 respondents 6(60%) have say
that yes, 2(20%) say that no and the remaining 2(20%) has no idea about
the existence of general capital assets and fund capital assets
Table 10
Distribution of respondents based on their response about the recording
of depreciation of capital assets
Response No of respondents Percentage
Yes 5 50%
No 3 30%
I have no idea 2 20%
Total 10 100%
Source:- primary data
As it is show in the above table out of 10 respondents 5(50%) have say
that yes, 3(30%) are say that no and the remaining 2(20%) have no idea
about the recording of depreciation of capital assets. This show that
majority of the respondents have a concept about the recording of
depreciation of capital assets.

Table 11

19
Distribution of respondents based on their response about the basis of
accounting used

No of
Basis of accounting respondents Percentage
Accrual basis 0 0%
Cash basis 1 10%
Modified cash basis 8 80%
Modified case basis and cash 1 10%
basis
Total 10 100%
Source:- primary data
As the above table show that out of 10 respondents 1(10%) have use
cash basis,8(80%) use modified cash basis and the remaining 1(10%) are
used modified cash basis and cash basis. This show that majority of
respondents respond that the municipality uses modified cash basis of
accounting
Table 12
Distribution of respondents based on their response about the
measurement focus used
No of
Basis of accounting respondents Percentage
Flow of economic resources 2 20%
focus
Flow of current financial 7 70%
resource
Other 1 10%
Total 10 100%
Source:- primary data

20
As it is show in the above table out of 10 respondents 3(30%) have
respond the flow of economic resources focus,7(70%) flow of current
financial resource. This show that majority of respondents respond the
municipality focus on the flow of current financial resources.

Tables 13
Distribution of respondents based of their response about the adaptation
of budget.
Basis of accounting No of respondents Percentage
Yes 8 80%
No 1 10%
I have no idea 1 10%

Total 10 100%
Source:- primary data

As indicated by the above table out of 10 respondents 8(80%) have say

that yes, 1(10%) are say that no and the remaining 1(10%) are say that I
have no idea. This show majority of the respondents respond that budget
is adopted is annually.
Table 14
Distribution of respondents based their response about the existence of
inter found transaction.
Basis of accounting No of respondents Percentage
Yes 2 20%
No 7 70%
I have no idea 1 10%
Total 10 100%
Source:- primary data

21
As the above table shows, majority of the respondent (70%) implied the
absence of inter found transactions. Only two of them ascertained
existence of inter found transaction.
Table 15
Distributions of respondents based on their reply about the preparation
of financial statement of governmental found.
Basis of accounting No of respondents Percentage
Yes 1 10
No 8 80
I have no idea 1 10
Total 10 100%
Source:- primary data
As the above table shows majority of respondents respond based there is
no financial statement of governmental fund, where only 10% verified
existence of financial statements and the rest 10% lave no idea whether
the statements prepared on not. For m this on can concluded that
absence of periodical financial statements.
Table 16
Distribution of respondents based on their response about the
operational reports
Basis of accounting No of respondents Percentage
Yes 9 90%
No 1 10%
I have no idea 0 0%
Total 10 100%
Source:- primary data
As the majority of respondents (90%) assured, there is a preparation of
operational reports but only 10% denied the fact. The fact, thus we can
say that there is periodic operational reporting practice in the
municipality

22
Table 17
Destruction of respondents based on their response about the existence
of budget accounts
Basis of accounting No of respondents Percentage
Yes 8 80%
No 0 0%
I have no idea 2 20%
Total 10 100%

Source:- primary data

As the above table indicates, there are budgetary accounts that are, used
to record transaction relating to revenues, expenditures and other budget
items are maintained since 8(80%) of the respondents ascertained the
truth and only 2(20%) then have no idea about budgetary accounts.

Table 18
Distribution of respondents based on their response about the recording
of estimated of their budgetary account of the beginning of the budgetary
Basis of accounting No of respondents Percentage
Yes 6 60%
No 2 20%
I have no idea 2 20%
Total 10 100%

Source:- primary data

According to the above table, majority respondents (60) give their

response that there is no recording estimates of those budgetary
accounts at the beginning during and end of the fiscal year

23
Table 19
Distribution of respondents based on their responses about the existence
of proprietary accounts which include balance sheet and operating
statement accounts
Basis of accounting No of respondents Percentage
Yes 7 70%
No 2 20%
I have no idea 1 10%
Total 10 100%

Source:- primary data

As the majority of the respondents 7(70%) responded there are

proprietary account which include balance sheet and operating
statement accounts that are show is the chart of account’s. only 2 (20%)
of them indicated absence of proprietary account, while 1(10%) lack
information.

Table 20
Distribution of respondents based on their response whether the
municipality makes an effort to follow the right governmental accounting
Basis of accounting No of respondents Percentage
Yes 6 60%
No 4 40%
I have no idea 0 0%
10 100%

Source:- primary data

The above table shows, even if the municipality exerting an effort to
follow the right governmental accounting it is not satisfactory, since 6
(60%) of the respondents prove the idea and 4(40%) of then disproves
absence efforts made by the municipality.

24
 CHAPTER FIVE

Conclusion and Recommendation

5.1 Conclusions
To sum up, as the data obtained from respondents showed, the existing
accounting system of Robe town municipality is somewhat modern
double entry system of accounts is used to recorded transaction and
event and most of the employs have a concept about governmental
accounting system. There are some problems for that matter measures
are planned to be taken in hear future to solve these problems.
Concerning the existing accounting system they used the accounting
system organized and operated on a fund basis.
Regarding the basic of accounting and measurement focus, the
municipality use modified and that use flow of current financial resource
focus.
Budget is adopted annually and there are budgetary accounts, but they
are not rescored at the beginning of the physical year. There are also
proprietary accounts which include balance sheet accounts and
operating statement accounts.

5.2 Recommendations
Based on the finding, obtained from respondents, analysis and
conclusions drown, the researcher forward the following
 The municipality should train employees of the administration and
finance center to cope up with the improved governmental
accounting system.
 The municipality should address those problems relating to the
implementation of the right governmental accounting system and it
should improve existing accounting practice by following financial

25
 administration rules and regulations in general and that oromia
region in particular.
 The municipality should also introduce faces assets found account
group to establish accounting control and accountability for the
general fixed assets of the municipality
 Financial statement of the municipality fixed should also be
prepared periodically, because it is the means through which
administrators discharge their responsibility again the resource
generated and the purpose for which those resources are expanded
to the public.
 There should be recording of budgetary accounts to compare them
with the actual results. This is because it is means of controlling
the financial operation of the governmental with by legislative body
of the governments.
 The organization should further develop efficient operating
procedures based on stipulated rules and regulation to facilitate
the smooth performance of financial operation.
 furthermore, the municipality should implement computerized
accounting system to record financial data and report them
accountability
 Finally, the organization should make great effort to follow the
right governmental accounting system as per financial rules and
regulations of oromia.

26
 References
1. Douglas p, 1993, Governmental & non profit accounting, Theory
and practice, 2nd ed. USA.
2. Edwards Lynn and Robert J. Free man. 1982 fund accounting
theory and practice, 2nd Ed. USA
3. Hay L. & Wilson E, 1995, Accounting for government and non
profit entities, 10th ed. USA
4. Manual 3-5 accounting system for regional sector Bureau (May
2008) volume I version 1-1, Addis Ababa Ethiopia.
5. Training manual for executing the by 1998 budget project report:
T-98, June 20, 2002. Addis Ababa Ethiopia.

27
 RIFT VALLY University
Department of Accounting

This questionnaire is prepared for staff members of the administration

center of Robe town municipality to assess the existing accounting
system of this organization.

It is designed for only academic purpose the response is kept on secret.

Remark A. It is not compulsory to write your name

B. Please put x sign on the box provided.

Personal Questionnaire

1) Gender: Male  Female 

2. level of educational
a. certificate  c. Degree 
b. Diploma First degree 
3. Work experience a. In the municipality 
b. other place 
4. Are you working on your profession?
a. Yes  b. No 
5. What system of accounting is used in your organization?
a. double entry system b. Single entry system
6. Do you have a concept about governmental accounting system?
a. Yes  b. No 
7. Are significant problem existed in the implementation of governmental
accounting?
a. Yes  b. No  c. I’ve no idea 
8. Do the accounting system organized and operated on a fund basis?

28
 a. Yes  b. No  c. I’ve no idea 
9. Are there general capacity asset and fund capital asset?
a. Yes  b. No  c. I’ve no idea 
10. Is there recording for depreciation of capital assets?
a. Yes  b. No  c. I’ve no idea 
11. What basis of accounting is used to recognize transaction event?
a. accrual basis  b. cash basis 
c. modified cash basis  d. modified cash and cash basis 
12. What measurement focus is used concerning whit the inflow and out
flow of resource?
a. flow of economic resources focus 
b. flow of current financial resource focus 
c. other 
13. Is the annual budget adopted annually?
a. Yes  b. No  c. I’ve no idea 
14. Are there inter fund transaction?
a. Yes  b. No  c. I’ve no idea 
15. Is there a preparation of financial statement funds?
a. Yes  b. No  c. I’ve no idea 
16. Are operational reports that showing the financial position operating
results, and other pertinent information which are prepared
periodically to control financial operation?
a. Yes  b. No  c. I’ve no idea 
17. Are there budgetary account that are used to record transaction
relating to revenues and expenditure are other budget item ?
a. Yes  b. No  c. I’ve no idea 
18. Is there a recording of these budgetary account at the beginning of
fiscal year?
a. Yes  b. No  c. I’ve no idea 

29
19. Are there the existence of proprietary which include balance sheet
and operating statement accounts?
a. Yes  b. No  c. I’ve no idea 
20. Does the municipality make an effort to follow the right governmental
accounting system?
a. Yes  b. No  c. I’ve no idea 

30