Fge Chap 3

Chapter Three 3: Recording Common entries of FGE
Contents
1.Cash transfer from MOFEC to Public Bodies – Zero
Balance Account
2.Non-Cash Transfers
3.Community Development Contribution in Cash
4.Aid in Cash
5.Operating Expenditures
6.Operational Expense without Withholding Tax
7.Letters of Credit
8.Construction Projects
9.Salary
Learning Objectives:
After completion of this chapter you will be able to:
•Recording cash transfer entries from MOFEC to the Bank
into the cash register
•Recording cash transfer entries from Bank to the safe into the
cash register
•Recording cash entries from safe to different expenditures
•Recording capital project entries into the cash register
•Recording payroll related transactions into the cash register
Cash transfer from MOFEC to Public Bodies –
Zero Balance Accounts
Cash transfers are cash movements within

government institutions or between bank accounts
that do not create obligations to provide further
documentation or repayment.
For public bodies located in Addis Ababa, MOFEC

authorizes funds by setting drawing limits at the National
Bank of Ethiopia against which the public bodies’ draws
funds up to the maximum of the specified drawing limit.
The drawing limits so established determine the amount of
cash that can be utilized by a public body. The Public Body
issues checks to effect payments for good and services and
the checks issued determine the balance of unutilized
drawing limits. The NBE issues advices daily for all checks
presented for encashment.
The bank advice is the supporting document for the Public

Body to record transfers from MOFEC. Any unutilized
drawing limit by a Public Body is carried forward to the
next period.
Cash Register
Account Cash at Bank
Ref Description TB Others
Number 4103
Dr Cr Dr Cr
Example: The Ministry of Health issues a check for Birr
150,000 for purchase of fuel, 10,000 for stationery, 5,000
for tiers and 120,000 for medical supplies. It records each
check as expenditure when issuing the check. A Drawing
Limits Register as described in Chapter 5 is also maintained
by the PB to identify the balance of the drawing limits.
The Ministry of Health receives one bank advice at the end

of each day from the Bank for the all checks issued during
that particular day. It uses the bank advice to record the
transfer.
Transaction Register of Public Body
Number 4103
Dr Cr Dr Cr
RV Cash transfer from MOFEC - 4017 285,000 285,000
Transaction Register of PB
Number 4103
Dr Cr Dr Cr
BPV Fuel - 6217 150,000 150,000
BPV Stationery 6212 10,000 10,000
BPV Tyres 6241 5,000 5,000
BPV Medical Supplies 6214 120,000 120,000
MOFEC also receives a copy of the single bank
advice of Birr 285,000 from the Bank relating to the
checks issued by the Ministry of Health. It uses the
bank advice to record the transfer of the cash
utilization by the PB from the Zero Balance Bank
Account.
Transaction Register of MOFEC
Number 4105
Dr Cr Dr Cr
BA Cash transfer to Public Body - 4017 285,000 285,000
MOFEC to Public Bodies - Non Zero Balance
Accounts
For public bodies located outside Addis Ababa, MOFEC
disburses funds by transfer of funds to the Public Bodies
bank account. At MOFEC, although a transfer
authorization to one bank account may include funds for
more than one BI, the entire transfer is one. Therefore, in
the Transaction Register maintained at MOFEC, only one
entry is made for the total transfer. The BI code for the
entry is the BI code of the Reporting Entity.
Example: Hawassa University receives from MOFEC a
transfer of Birr 150,000 for capital expenditure.
Transaction Register of MOFEC:

Number 4105
Dr Cr Dr Cr
BA Cash transfer to PB - 4004 150,000 150,000

Transaction Register of Public Body:
Number 4103
Dr Cr Dr Cr
RV Cash transfer from MOFEC - 4004 150,000 150,000
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
Example: MOFEC transfers of Birr 150,000 to a Public
Body for capital expenditure. The bank deducts 20 birr as
a service charge; the Public Body receives Birr 149,980.

Number 4105
Dr Cr Dr Cr
Number 4103
Dr Cr Dr Cr
RV Bank Service Charge 02 6256 20
Cash transfer from MOFEC - 4004 150,000 149,980

Public Bodies to MOFEC
Cash transfers from bank accounts of Public Bodies to
MOFEC bank accounts are recorded:
•By MOFEC, as a debit to Cash at Bank 4105 and a
credit to 4009 transfer code, and
•By the Public Body, as a debit to 4009 and a credit to
Cash at Bank 4103.
Example: A Public Body collected revenue of Birr
15,000 that is transferred to MOFEC.
Number 4105
Dr Cr Dr Cr
RV Cash transfer from PB - 4009 15,000 15,000


Number 4103
Dr Cr Dr Cr
BPV Cash transfer to MOFEC - 4009 15,000 15,000

At the end of the year balances in blocked bank accounts at
Public Bodies are transferred to MOFEC based on standing
instructions. The bank transfers the balance from the account
at the PB immediately to MOFEC, but the balance is not
credited to MOFEC’s bank account for weeks. The
transaction should be recorded as follows:
•By the Public Body on the last day of the year, as a debit to
transfer code 4009 and a credit to Cash at Bank 4103, and
•By MOFEC on the last day of the year, as a debit to Deposit in
Transit 4114 and a credit to transfer code 4009, and, when the cash
is received in the bank account, as a debit to Cash in Bank 4105 and
a credit to Deposit in Transit 4114.
•Example: A Public Body transferred Birr 10,000 is transferred but
not credited to MOFEC.

Number 4103
Dr Cr Dr Cr
BPV Cash transfer to MOFEC - 4009 10,000 10,000
Ref Account Cash at Bank

Description TB Others
Number 4105
Dr Cr Dr Cr
JV Cash transfer from PB - 4009 10,000
4114 10,000
Public Bodies to Region Sector Bureaus
Federal Ministries may transfer donor funds directly to RSB
and such payments to a region from the federal level budgeted
as part of the federal budget. The responsibility for the
budgeted expenditure remains with the Federal Ministry,
although the expenditure is executed by the RSB. Since a
settling of the funds is expected, the receipt of funds is
recorded as a payable by the RSB, and the return of invoices
and/or cash is recorded as an elimination of the payable.
Example: The Ministry of Education sends Birr 50,000 to the

Regional Education Bureau for training.
•Transaction #1: Cash is received from the Ministry of Education
to deliver training

Number 4103
Dr Cr Dr Cr
BPV Due from RSB 4210 50,000 50,000

Transaction #2: The Regional Education Bureau delivers training at a cost of Birr 47,000 and
sends the cost documents to the PB and refunds the balance of Birr 3,000..

Number 4103
Dr Cr Dr Cr
JV Settlement of dues 6271 47,000
4210 47,000
RV Refund of balance due 3,000
4210 3,000
Bank Accounts within a Public Body – Same Source of Finance
Example: Bank Account #1 transfers Birr 150,000 to Bank Account #2 using the same
SOF.
Transaction Register Public Body

Number 4103
Dr Cr Dr Cr
BPV Cash transfer to BA #2 - 4103-2 150,000
4103-1 150,000
Bank Accounts within a Public Body – Different Sources of Finance
Example: Bank Account #1 transfers Birr 150,000 to Bank Account #2 using a different SOF.
Transaction Register Public Body – Bank Account # 1

Number 4103
Dr Cr Dr Cr
BPV Cash transfer to BA #2 - 4010 150,000 150,000

Transaction Register of Public Body - Bank Account #2:

Number 4103
Dr Cr Dr Cr
RV Cash transfer from BA #1 - 4010 150,000 150,000

Bank Accounts within a Public Body – Transfer to Branch
Example: Bank Account #1 transfers Birr 150,000 to Bank Account #2 to a branch office.
Transaction Register Public Body – Bank Account # 1

Number 4103
Dr Cr Dr Cr
BPV Cash transfer to BA #2 - 4008 150,000 150,000
Transaction Register of Public Body - Bank Account #2:

Number 4103
Dr Cr Dr Cr
RV Cash transfer from BA #1 - 4008 150,000 150,000
Inter Bank Transfers
Cash may be transferred between bank accounts of MOFEC
•Example: MOFEC transfers Birr 150,000 from Bank Account # 1 to Bank Account # 2.
Transaction Register of Bank Account #1

Number 4105
Dr Cr Dr Cr
BA Cash transfer - 4008 150,000 150,000
Transaction Register of Bank Account #2
Number 4105
Dr Cr Dr Cr
RV Cash transfer - 4008 150,000 150,000

Bank to Safe
The Accountant writes a check to the cashier to put cash into the safe for
petty cash. The source document is a Bank Payment Voucher for the
Transaction Register.
•Example: A check for Birr 5,000 is written to the cashier for petty cash.
Account Cash at Bank Cash in Safe

Ref Description TB
Number 4103 4101
Dr Cr Dr Cr
BPV Cash withdrawn for safe - - 5,000 5,000
Safe to Bank
The cashier transfers cash from the safe to the bank by depositing the cash in the
bank. The cashier brings the bank deposit slip to the Accountant, who prepares a
Receipt Voucher. The Accountant records the Receipt Voucher in the Transaction
Register and the Cashier records the Receipt Voucher in the Cash Book.
•Example: The Cashier deposits Birr 15,000 into the depositary bank.

Ref Description TB
Number 4103 4101
Dr Cr Dr Cr
RV Cash deposited into bank - - 15,000 15,000
Cash -Imprest Payments
Each Public Body should establish the amount of cash to hold in petty
cash. The Cashier makes cash payment from the imprest- fund using
Cash Payment Vouchers. When the petty cash balance is low, the
Cashier submits the Cash Payment Vouchers to the Accountant
together with the Petty Cash Summary Sheet. The Accountant writes
a check to the Cashier for the total amount of the Cash Payment
Vouchers in the Petty cash Summary Sheet to reimburse the imprest-
fund.
Example: The Accountant pays the Cashier Birr 2,000 by check to replenish the
petty cash for cash paid to an employee for per diem of Birr 2,000. The Cashier
records the receipt in the Petty Cash Book. The Accountant records the Cash and
Bank Payment Vouchers in the Transaction Register as follows:
Number 4103 4101
Dr Cr Dr Cr Dr Cr
CPV Per Diem 01 6231 2000 2,000
BPV Cash to Cashier 2,000 2,000

Check Deposits into Bank
Example: Assume that a check of Birr 500 received as court deposit is deposited in the
depositary bank by the Cashier. The accountant will first issue a receipt voucher to the
Cashier for the court deposit.
The Cashier will record the receipt of the check in the cash book as a receipt and on deposit
of the check in the bank will record it as a payment in the cash book.

Number 4103 4101
Dr Cr Dr Cr Dr Cr
RV Deposit 5052 500 500
Transfers to Revolving fund – Staff Loans
An employee can receive a staff loan under appropriate
conditions. A request is made by the Public Body for
approval to MOFEC and setting of drawing limits to
include the staff loan. The Public Body issues a check to
withdraw cash from the zero balance bank account and pays
the staff loan to the employee. When a long-term salary
advance is processed, interest is charged and withheld from
the advance.
Refund of the staff loans by deductions from the
employee’s salary is transferred to a revolving fund that is
intended to fund future staff loans.
Transaction 1: MOFEC approves Birr 2,000 as staff loans to a
Public Body from the zero balance bank account based on the
approved list of employees eligible for staff loan.
Transaction Register of Public Body on withdrawal of cash:

Ref Description TB 4101
Number 4103
Dr Cr Dr Cr
BPV Cash withdrawal 1,900 1,900
Transaction Register of Public Body on payment of staff loan:
Account Cash in Safe

Number 4101
Dr Cr Dr Cr
BPV Staff loan 4203 2,000
Interest 1465 100 1,900

Transaction Register of Public Body on receipt of bank advice:

Number 4103
Dr Cr Dr Cr
RV Revolving fund transfer - 5035 1,900 1,900
Transaction Register of MOFEC on receipt of bank advice:

Number 4105
Dr Cr Dr Cr
Non-Cash Transfers
Non-cash transfers are used to record a transfer when cash does not
actually move. Non cash transfers include payments made by
MOFEC on account of Public Bodies, adjustments for opening stock
of supplies, opening cash in safe and opening balance of receivables.
The example below details customs payments made by MOFEC on
behalf of a Public Body when the source of finance is not domestic.
For domestic source of finance, Public Bodies will pay the customs
duty directly to the Customs Authority.
Example: The Ministry of Health (MOH) requests MOFEC to
pay customs duty amounting to Birr 150,000 on its behalf to the
Customs Authority (CA) for motor vehicles from its capital
expenditure budget.
Number 4105
Dr Cr Dr Cr
JV Customs duty - MOH - 4054 150,000
Customs duty - CA - 4055 150,000

Transaction Register of Ministry of Health:

Number 4103
Dr Cr Dr Cr
JV Purchase of motor vehicles 02 6311 150,000
Customs duty - MOFEC– - 4054 150,000

Transaction Register of Customs Authority:

Number 4103
Dr Cr Dr Cr
JV Transfer to MOFEC - 4055 150,000
Duty on Motor Vehicles - 1301 150,000

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. Account codes for
Domestic Revenue are 1000-1999, External Assistance are 2000-
2999 and for External Loan 3000-3999.
Domestic Revenue
The source document for collection of revenue is a Receipt Voucher.
Revenue/Assistance/Loan receipts are reported monthly on Me/He
21.
Example: The Ministry of Foreign Affairs collects Birr 50,000 in
fees for visas.
Transaction Register of Ministry of Foreign Affairs:

Number 4103
Dr Cr Dr Cr
RV Revenue - 1411 50,000 50,000
Direct Deposit of Revenue into MOFEC Bank
Account
Some Public Bodies deposit revenues directly into a

MOFEC bank account. In such cases the Public Body
records a debit to transfer code 4009 and a credit to the
revenue code.
Example: Inland Revenue deposits Birr 100,000 from the
collection of agricultural income tax directly into a
MOFEC bank account.
Account Cash at
Ref Description TB Number Others Bank
4103
Dr Cr Dr Cr
RV Agricultural Revenue 1107 100,000
Transfer 4009 100,000

When MOFEC receives the bank advice, MOFEC records a debit to Cash in
Bank 4105 and a credit to transfer account code 4009.

Number 4105
Dr Cr Dr Cr
RV Transfer from Inland Rev - 4009 100,000 100,000
Community Development Contribution in Cash
In Addis Ababa, the Community Development Committee collects

cash from residences to construct schools and health posts. The
committee deposits such cash collections to the community
development bank or to the cashier.
Example: Birr 15,000 is collected by the Community Development
Committee in Addis Ababa from residences as contribution for
construction of secondary schools.
Number 4101
Dr Cr Dr Cr
SRV Public contribution - 1792 15,000 15,000
Community Development Contribution in Kind
In Addis Ababa contribution in kind represents contribution
of goods or services or materials by the community that are
used in the construction of schools, health posts and
conference halls. These contributions should be accounted
to accumulate the project costs.
Scenario 1 Material Contribution
Residences contribute sand stone and cement estimated Br.
7,500 for a school project. A Model 19 is prepared.
Account Cash in
Ref Description TB Others Safe
Number
4101
Dr Cr Dr Cr
JV Material contribution 2 6323 7,500
1792 7,500
Scenario 2 Labor Contribution
Residence contributes Br. 2,500 in the form of labor for the school project.
Time sheets are approved.

Ref Description TB Number Others
4101
Dr Cr Dr Cr
JV Labor contribution 2 6323 2,50
0
1792 2,500
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: Aid in kind is received by a Public Body in the form of a
motor vehicle with a cost of Birr 150,000 from USAID under the
capital expenditure budget.
Transaction Register of the Public Body:
Account Cash at
Ref Description TB Others Bank
Number
4103
Dr Cr Dr Cr
JV Motor vehicles 02 6311 150,000
Assistance 2284 150,000

Aid in Cash
Aid in cash can be made by donors. Aid in cash is recognized
if a cash or check deposited or transfer made by the donors.
If aid in cash was not budgeted, a budget supplement should
be requested and approved.
Accountants should receive a copy of deposit slip or credit
advice or receipt voucher. Aid in cash represents two
transactions simultaneously: the receipt of assistance and
cash.
Example: Cash in kind is received from Japan Government of
Birr 150,000 by check for school construction under the
capital expenditure budget.
Transaction Register of Public Body
Accoun Cash at Bank

Ref Description TB t Others
4103
Number
Dr Cr Dr Cr
BPV Assistance 2 2287 150,000 150,000
Operating Expenditures
Public Bodies are authorized to make cash expenditures from
funds budgeted for that purpose. Expenditures from the recurrent
budget and capital budget are reported monthly on separate
monthly reports. The Public Body should maintain a subsidiary
ledger for each expenditure account code if the Public Body
handles more than Budgetary Institution. Each Budgetary
Institution should be an account in the subsidiary ledger.
Subsidies to Regions by MOFEC
Payments by MOFEC to Regions are budgeted expenditures of the
federal government.
Example: A subsidy payment of Birr 32,400,000 is made to a
region.

Number 4105
Dr Cr Dr Cr
BA Region subsidy 6411 32,400,000 32,400,000

Payments to Transfer Recipients by MOFEC
Payments by MOFEC to Transfer Recipients

(Functional classification 400-499) are budgeted
expenditures of the federal government.
Example: A payment of Birr 32,000 is made to the
Red Cross.

4105
Dr Cr Dr Cr
BA Region subsidy 6412 32,000 32,000

Cash Payment by Public Body to Region as
part of Specific Purpose Grant
Occasionally, Public Bodies make cash payments to

regions. Usually a sector line ministry receives funds
from a donor through Channel 2. Some of the funds are
intended for sector bureaus in the regions. When a
Public Body pays cash to regions, the payment is part of
the region’s subsidy. The Public Body should record the
payment as a subsidy payment.
Example: The Ministry of Health sends Birr 50,000 to a
region as part of HSDP.
Transaction Register –Ministry of Health:

4103
Dr Cr Dr Cr
BPV Region Subsidy - 6411 50,000 50,000

Operational Expense without Withholding Tax
Example: An accountant pays by check an amount of Birr 1,500 for
office supplies.

Number 4103
Dr Cr Dr Cr
BPV Office supplies paid in 6212 1,500 1,500
cash
Operational Expense 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 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 is 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
appropriate government instead. When a purchase is made that
requires the withholding of tax, a Bank Payment Voucher is
prepared that indicates:
•The expenditure account code with a debit for the full
purchase price.
•The tax deducted is payable account code 5006 to federal or
region tax authority for the amount of the tax. The region or
federal tax authority will record the withholding tax as revenue
code 1103 or 1104 (depending of whether the supplier is an
individual or a corporation) when they receive the cash from the
public body.
•Cash at Bank 4103 with a credit for the actual amount paid to
the supplier.
Operational Expense Requiring Withholding of
Tax
Example: A Public Body buys office supplies from a

corporation for Birr 100,000 from its recurrent expenditure
budget – Birr 98,000 relates to the cost of the office
supplies and Birr 2,000 is the withholding tax. The supplier
is federal tax payer.
Transaction #1: Payment effected to supplier

Number 4103
Dr Cr Dr Cr
BPV Office Supplies 01 6212 100,000
Withholding tax payable 5006 2,000 98,000

Transaction # 2: Transfer of Withholding Tax to Federal Inland Revenue Authority

Number 4103
Dr Cr Dr Cr
BPV Transfer to IRA 5006 2,000 2,000
Transaction Register of Inland Revenue Authority:

Number 4103
Dr Cr Dr Cr
RV W. tax revenue 1103 2,000 2,000
Letters 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 bank account dedicated to
payment of the purchase price when appropriate conditions
are met. When a Public Body opens a Letter of Credit, cash is
paid from the Zero bank account of the Public Body to a bank
account at the CBE. The amount of the letter of credit
represents a receivable – advance to the supplier.
Example: The Ministry of Health (MOH) opens a letter of credit

for the purchase of medical supplies valued at birr 45,000.
Transaction Register of Ministry of Health:
On opening letter of credit
4103
Dr Cr Dr Cr
BPV Letter of Credit 4251 45,000 45,000

Transaction Register of Ministry of Health: On
receipt of bank advice from NBE

4103
Dr Cr Dr Cr
BPV Transfer from MOFEC 4017 45,000 45,000
Transaction Register of MOFEC: On receipt of
bank advice from NBE

Number 4105
Dr Cr Dr Cr
Transaction Register of Ministry of Health: On
receipt of medical supplies
Account Cash at
Ref Description TB Number Others Bank
4103
Dr Cr Dr Cr
JV Purchase of medical supplies 2 6311 45,000
4251 45,000
Construction Projects
Long-term construction projects involve complicated financial

arrangements. Several accounting entries are necessary over the life
of the project. In general, when a construction contract is signed,
there are several steps in the payment process. At each step, an
accounting entry is required. The general steps are:
•Payment of an advance. Usually the contract calls for an advance
payment to the contractor that is proportionately deducted from future
payments to the contractor.
•Progress payments based on payment certificates. Usually the
contract calls for partial payment of the total contract price as
the construction reaches agreed-upon percentages of
completion. A payment certificate is evidence that the agreed-
upon completion percentage is reached.
•Payment of the retention. Usually a percentage of the payment
is retained and not paid until final acceptance of the completed
construction
•Deduction of withholding tax on the works completed
Example: Assume the following:
•A contract is signed to construct a building for 1,000,000 birr.
•Terms of contract are:
Initial advance of 20% = 200,000 birr.
Advance adjusted proportionately with each payment
certificate approval.
2% withholding tax on work certified as completed
Retention of 10% withheld from each payment certificate &
paid after final approval.
Steps in payment are:
•Payment of 20% advance.
•Payment certificate when 40% complete.
•Payment of retention with final approval.
•Transaction #1: Payment of 20% advance:
Accountant prepares a check for 200,000 birr.

Number 4103
Dr Cr Dr Cr
BPV Advance to contractor 4251 200,000 200,000
•Transaction # 2: Payment certificate when 40%
complete.
Accountant prepares a check for 272,000 birr as
follows:
•400,000 payment certificate request
•80,000 adjustment to advance
•40,000 retention
•8,000 withholding tax

Number 4103
Dr Cr Dr Cr
BPV Construction – Building 02 6323 400,000
Advance to contractor 4251 80,000
Retention on contract 5061 40,000
W/holding tax payable 5006 8,000 272,000
complete.
follows:
•40,000 retention

4103
Dr Cr Dr Cr
BPV Construction – 02 6323 400,000
Building

complete.
follows:
•20,000 retention

Number 4103
Dr Cr Dr Cr
BPV Construction – 02 6323 200,000

Building

Transaction #5: Payment of retention after final approval of project:

Number 4103
Dr Cr Dr Cr
BPV Retention on contract 5061 100,000 100,000
Transaction #6: Payment of withholding tax to Inland Revenue
Authority.

Number 4103
Dr Cr Dr Cr
BPV Settlement of W/H tax 5006 20,000 20,000
The retention withheld from the contractor is paid at the end of the
project life – usually after a few years. The cash withheld on account
of retention is transferred to MOFEC and is not kept with the Public
Body. Prior to repayment of the retention the amount of retention
should be proclaimed in the budget to allow MOFEC to approve
transfer of the retention amount to the Public Body. The Budget
Department at MOFEC should review the process of how such
amounts should be budgeted and proclaimed to allow for disbursement
to the Public Body.
Salary
Salary Expenditure
The Public Body must record the gross salary amount and
government’s portion of pension as expenditure to maintain
budget control. The Public Body is paid the total amount
including the pension contributions - employee and government
but excluding the amount deducted for income tax.
MOFEC will record in its Transaction Register a debit to transfer
code 4017 and a credit to Cash at Bank 4105 on receipt of debit
advice. The Public Body will prepare a Receipt Voucher for the
total amount of cash utilized upon the receipt of credit advice.
The entry is a debit to Cash at Bank 4103, and a credit to transfer
code 4017.
Example: A BI requests salary with the following details:
Gross salary 20,000
Pension expense – 11% 2200
Employee pension - 7% 1400
Income tax 5,500
Deduction: salary advance 600
Fine 250
Net Salary Payable 12,250
Number 4103
Dr Cr Dr Cr
JV Salary Expense 1 6111 20,000
Pension Expense 1 6131 2,200

Salary Payable 5004 12,250
Income Tax 1101 5,500

Staff Advance 4203 600
Fine 1489 250

Pension Payable 5003 3600
Withdrawal of Cash from Bank to Pay
Salary
Account Cash in Safe Cash at Bank
Ref Description TB Number
4101 4103
Dr Cr Dr Cr
BPV Cash transfer for salary 12,250 12,250
Payment of Pension by PB
Ref Description T Number Others
4103
B
Dr Cr Dr Cr
BPV Pension Authority 5003 3600 3600
Record Debit Advice for Transfer at MOFEC
Transaction Register of MOFEC

4105
Dr Cr Dr Cr
BPV Transfer to PB 4017 12,250 12,250
Record Credit Advice for Transfer at PB

Number 4103
Dr Cr Dr Cr
Settlement of Salary
Employees sign Model 33 to evidence receipt of salary from the Cashier. After
salary period is over, the Model 33 is used to prepare one CPV for the total salary
paid.

4101
Dr Cr Dr Cr
CPV Salary Payable 5004 12,250 12,250
Summary
The accounting cycle for FGE starts when money is
received in the special accounts from MOFEC as well as
development partners and ends when report of
expenditures is presented to the MOFEC and MOFEC is
closing the accounts.
The Government of Ethiopian Budget calendar is used
for planning, budgeting and reporting purposes.
MOFEC shall ensure that adequate internal controls are put
in place and that the controls are adhered consistently. The
internal control system should ensure that all transactions
are recorded, and that the recorded transactions have
substance. It also ensures that transactions are recorded at
correct amounts in the correct period in the correct accounts
and that they are posted and summarized correctly, among
others.
The accounting system at the Federal, Regional and
Woreda level employs a modified cash basis of
accounting. The modified cash basis of accounting
means that cash basis of accounting applies except for
recognition of the following accounts:
•Revenue and expenditure are recognized when aid in
kind is received.
•Expenditure is recognized:
•When payroll is processed.
• When goods are received or services are rendered if
payments for the goods or services were rendered in
advance
•Transactions resulting from salary withholdings, VAT and
profit tax withholding from suppliers are recognized in the
absence of actual cash transaction.
•All other revenues and expenditures are recognized as
per cash basis of accounting i.e. revenues and
expenditures are recognized, when cash is received and
paid respectively.

Fge Chap 3

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Fge Chap 3

Uploaded by

Copyright:

Available Formats

Chapter Three 3: Recording Common entries of FGE

Cash transfers are cash movements within

For public bodies located in Addis Ababa, MOFEC

The bank advice is the supporting document for the Public

The Ministry of Health receives one bank advice at the end

Account Cash at Bank

BA Cash transfer to PB - 4004 150,000 150,000

Account Cash at Bank

RV Bank Service Charge 02 6256 20

Cash transfer from MOFEC - 4004 150,000 149,980

RV Cash transfer from PB - 4009 15,000 15,000

Account Cash at Bank

BPV Cash transfer to MOFEC - 4009 15,000 15,000

Account Cash at Bank

Ref Account Cash at Bank

Example: The Ministry of Education sends Birr 50,000 to the

Account Cash at Bank

BPV Due from RSB 4210 50,000 50,000

Account Cash at Bank

RV Refund of balance due 3,000

Account Cash at Bank

Account Cash at Bank

BPV Cash transfer to BA #2 - 4010 150,000 150,000

Account Cash at Bank

RV Cash transfer from BA #1 - 4010 150,000 150,000

Account Cash at Bank

Account Cash at Bank

Transaction Register of Bank Account #1

Account Cash at Bank

RV Cash transfer - 4008 150,000 150,000

Account Cash at Bank Cash in Safe

Account Cash at Bank Cash in Safe

CPV Per Diem 01 6231 2000 2,000

BPV Cash to Cashier 2,000 2,000

Account Cash at Bank Cash in Safe

Account Cash at Bank

Account Cash in Safe

Interest 1465 100 1,900

Ref Account Cash at Bank

Account Cash at Bank

Customs duty - CA - 4055 150,000

Account Cash at Bank

Customs duty - MOFEC– - 4054 150,000

Account Cash at Bank

JV Transfer to MOFEC - 4055 150,000

Duty on Motor Vehicles - 1301 150,000

Public Bodies are authorized to collect revenue on behalf of the

Account Cash at Bank

Some Public Bodies deposit revenues directly into a

Transfer 4009 100,000

Transaction Register of MOFEC:

Account Cash at Bank

In Addis Ababa, the Community Development Committee collects

JV Material contribution 2 6323 7,500

Account Cash in Safe

Assistance 2284 150,000

Accoun Cash at Bank

Account Cash at Bank

BA Region subsidy 6411 32,400,000 32,400,000

Payments by MOFEC to Transfer Recipients

Account Cash at Bank

BA Region subsidy 6412 32,000 32,000

Occasionally, Public Bodies make cash payments to