An Assessment of the Application of Government

Accounting System in A.A City Administration Finance

and Economy Development Bureau

By

TEWODROS ZERGAW BERRI

ID 0443/2008A

Submitted in Partial Fulfillment of the Requirements of award

of MBA in Accounting and Finance

Of the St. Mary’s University

Jan, 2018
Ethiopia

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 CERTIFICATION

We, the undersigned, certify that we have read and hereby recommend for acceptance by The St’
marry University, a dissertation (An assessment of application of government accounting system
In Addis Ababa City Administers Finance and Economy Development Bureau) in
partial/fulfillment of the requirements for award of the degree of Master of Accounting and finance
in St’ Marry University.

________________________ ____________________________ ________________

External examiner Sign Date

_________________________ ____________________________ ________________

Internal Examiner Sign Date

_________________________ ____________________________ __________________

Adviser Sign Date

____________________________

Signature

Dean/director, faculty/directorate/school/board

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 DECLARATION

Tewodros Zergaw , declare that this thesis is my own original work and that it has not
been presented and will not be presented to any other university for a similar or any
Other degree award.

Signature ____________________________

Date _______________________________

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 ACKNOWLEDGEMENTS

In the first place, I forward my sincere thanks to the Almighty God who protects me during my
studies and my daily life. Second my special thanks go to Assistant professor, Simon Tarekegn
who is my supervisor and advisor during the study, He highly and accurately devoted time to help
and assist me to accomplish the study successfully.

I am also grateful to the management of the Addis Ababa Finance Economy Development bureau,
who helped me to accomplish my dissertation and accepted my questionnaires and offered me there
great support and cooperation during my entire preparation of this dissertation.

My great appreciation goes to my Wife Yeshimbet Argaw for support and encouragement towards
the fulfillment of my thesis and also special thanks goes to my Friend Ashenafi Abera Principal
consultant at Ethiopia management Institute.

There will be long column to mention every one for his/her contribution to me, but for the above
appreciated they thought to be representatives to my acknowledgement but their contribution and
assistance have deserved a credit for this paper.

I lastly pray to my almighty God to bless all those whose assistance made me reaches where I am.

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ACRONYMS

ARB Accounting Research Bulletin

AACAAG Addis Ababa City Administration Auditor General

AGOHELMA Abebech Goben Children‘s Care and Development Organization

BOFED Bureau of finance and economy development

COSO Committee of sponsoring Organization

CSR Civil Service reform

DSA Development and Decentralization Support Activity

FASB Financial accounting standard Board

GAAP General Accepted accounting principle

GASB Government Accounting Standard Board

GTP Growth and transformation plan

IFRS International financial Reporting Standard

IMF International Monitory fund

IPSAS International public Sector Accounting standard

NGO Non government organization

NPO Not for profit Organization

MOFED Ministry of Finance and Development cooperation

PB Public Body

ROSC Reports On Observance of standard and codes

SPSS Social statics package

WTO World Trade Organization

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 ABSTRACT

This study examined an assessment of the Application of government accounting system in A.A
city administration finance and economy development bureau. The General objective of the study
were investigating application of government accounting standard in Addis Ababa city
administration finance and economy Development bureau; the study area was Addis Ababa Town,
the research was used census method of data collection, the target population compassed of 50
respondents were attained, The data collected were both quantitative and qualitative Analysis
were done using Statistical Package for Social Sciences (SPSS), this study adopted a mixed
research design, likewise the study was analyzed through descriptive and statistical techniques,
the finding of the research found out that, the organization partially implement its financial
statement according to Government accounting standard so the accounting recording and
processing are not effective. There Is also limitation in, recording of recurrent budget effectively,
there is high variation of utilization of planed budget and actual budget, lack of valuation of fixed
assets and record of investment, weakness in completeness of financial transaction and reporting,
similarly, weakness in, low level of satisfaction in stakeholders’ involvement in budget
preparation, However, there is clear responsibility and accountable of expenditure in the
organization, likewise, the financial system with relate to expenditure of goods and service with
other department is satisfactory, the Record of the bureau is reliable, valuable and clear, and also
the organization use pre-numbered financial documents and better budget management with
relate to Approval of budgets on yearly basis and Adherence to budget estimates, there is also
effective time management of budget plan, likewise, with relate to the challenge of government
accounting, inconsistency for implement the policies, procedures of government, and lack of
adequate competent accountant, little computer skills by employees, the poor operation due to
ineffective or poor financial management, finally, The study recommend that using of accrual
basis of accounting rather than modified cash basis of accounting to improve efficiency of the
system and complete application of Government accounting standard, similarly City councils and
regional finance bureau should access, they should improve financial management, and also they
should read, and use financial reports on a regular basis, Increase utilization of the system by
ensuring all accounting issues are computerized.

Keywords: Government accounting system, budgetary system, valuation of plant assets,

government accounting reporting, government accounting standard

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 LIST OF TABLES

Table 2.1 Comparing Budget Reporting and Financial Reporting budget 27

Table 4.1 Gender and Age 41
Table 4.2 Experience in Government Accounting 42
Table 4.3 Level of Education 43
Table 4.4 Descriptive statics table of application of government 44
accounting system
Table 4.5 Descriptive statics table of budget system 46
Table 4.6 Descriptive statics table of Plant asset record and management 47
Table 4.7 Descriptive statics table of Reporting financial statement 49

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Table of content

Certification……………………………………………………………………………….……... i
Declaration…………………………………………………………………………………......... ii
Acknowledgement………………………………………………………………………….......... iii
Acronyms ………………………………………………………………………………….……. v
Abstract………………………………………………………………………………………….. vi
List of table…………………………………………………………………………………........ ix
CHAPTER ONE: Introduction
1.1 Back ground of the study…………………………………………………………….……... 1
1.2 Background of the organization……………………………………………………….….... 3
1.3 Problem Statement ………………………………………………………………………….. 4
1.4 Research Question…………………………………………………………………………… 6
1.5 Objectives of the study…………………………………………………………………….... 6
1.5.1 General Objective of the study……………………………………………………………. 6
1.7 Specific objective……………………………………………………………………………. 6
1.8 Significance of the study……………………………………………………………………. 7
1.9 Scope of the study…………………………………………………………………………… 7
1.10 limitation of the study……………………………………………………………………… 8
1.11Ethical Consideration……………………………………………………………………….. 8
1.10 Organization of the paper………………………………………………………………....... 8
CHAPTER TWO: Literature Review
2.1 History of government accounting in Ethiopia…………………………………………........ 10
2.2 The federal Government of Ethiopia accounting system…………………………………..... 11
2.3 Government accounting basis……………………………………………………………….. 12
2.4 Nature and objective of accounting of Government accounting…………………….............. 14
2.5 Users of Government accounting Information……………………………………………… 15
2.6 Comparisons b/n Public and private sector accounting…………………………………….. 16
2.7 Statement of financial position……………………………………………………………... 17
2.8 Cash Flow statement………………………………………………………………………… 18
2.9 Valuation of fixed Assets…………………………………………………………………..... 18
2.10 Budget System and relating reporting……………………………………………………… 24
2.11 Financial Reporting………………………………………………………..……………….. 28
2.12 Challenge of Government Accounting…………………………………………..…………. 32
2.13 Review of Empirical studies……………………………………………………………….. 33
CHAPTER THREE: Research Design and Methods
3.1 Introduction………………………………………………………………………………….. 36
3.2 Research Design ………..…………………………………………………………………… 36
3.3 Study Area…………………………………………………………………………………… 36
3.4 Target population……………………………………………………………………………. 37
3.5 Method of data collection …………………………………………………………………… 37
3.6 Reliability and validity of Instrument……………………………………………………….. 38
3.7 Data Presentation and analysis………………………………………………………..……... 40

CHAPTER FOUR: Data Presentation, Analysis and Interpretation

4.1 Demographics characteristics of respondent………………………………………………... 42
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4.2 Application of government accounting…...…………………………………………............. 44
4.3 Budget system……………………………………………………………………………….. 47
4.4 Plant Asset record and management………………………………………………………... 48
4.5Reporting financial statement………………………………………………………………… 50
4.6. Analysis of qualitative Information.....……………………………………………………… 51
CHAPTER FIVE: Summary of Major Findings, Conclusion And Recommendation
5.1Summary……………………………………………………………………………………... 53
5.2Conclusion…………………………………………………………………….……………... 56
5.3Recommendation…………………………………………………………………………….. 58
5.4Reference…………………………………………………………………………………….. 60
5.6 Appendix…………………………………………………………………………….............. 62

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 Chapter One
Introduction
1.1. Background of The Study
The past few years have shown that the global financial system is in need of a variety of
reforms (Ernst & Young, 2011). One of the most important aspects is the tendency of
reforms in the financial information systems (Christiaens et al., 2013). The government
accounting reform is regarded as part of improving information system in public financial
Management based on accruals as a tool to gain a wider accountability in a democratic
system and in a free market (Chan, 2006).
The movement to accrual accounting was pioneered by the developed countries as a part
of the public sector reform (Hassan, 2013); thus, the annual financial statements play a
significant role in the accountability of governments to their citizens and their elected
representatives (Huges, 2013); Therefore, the priority of the developing countries was
moving from the cash to the accrual basis of accounting (Tudor& Mutiu, 2006); because
the cash and cash moderated-based accounting does not allow obtaining the necessary
information in order to provide better support for planning and managing resources and
more generally for the decision-making processes, allowing greater comparability, even
between different entities (Christiaens et al., 2013); Thus, the international public sector
accounting standards (IPSAS) have become de facto international benchmarks for
evaluating government accounting practices worldwide. In addition, the absence of
transparency about the result of implementation of budget lead consequently to the
absence of the accountability of the government. There is also high weakness of the
public services, beside the absence of any evaluation process of performance.
According to (Mona, 2012); accounting is concerned with the processing of financial
transactions of an entity. It generates and communicates necessary financial information
to its users. It is, therefore, a process of recording, classifying and summarizing the
financial transactions and communicating the results of its operations. There are different
branches of accounting. One of its branches is government accounting. It is that branch of
accounting, which is used in government institutions. The government accounting is
different from other branches of accounting such as commercial accounting.

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Nelly (2011), the accounting system used in government offices to record and report their
financial transactions is known as government accounting. Government accounting is
concerned with systematic and scientific recording of government revenues and
expenditures. It is the systematic process of collecting, recording, classifying,
summarizing and interpreting the financial transactions relating to the revenues and
expenditures of government offices. It reveals how public funds have been generated and
utilized for the welfare of the general public. It is moreover, concerned with keeping
records of government revenues and their expenditure in different development and
administrative works. It further reflects the receipt and payment position of the public
funds (Maftah, 2010).
Likewise, reporting of financial results is among the most important activities conducted
by any public entity. Financial reporting provides a basis on which parties inside and
outside a government can judge the effectiveness in conducting its core activities and
determine its future financial viability. To maintain the efficiency and the comparability
of financial reporting in the public entities, standards for accounting and financial
reporting have been created and modified. These standards are typically called Generally
Accepted Accounting Principles (GAAP) were created to provide the most effective and
accurate methods of communicating the financial results of a public organization.
Without such standards, public entities would likely use many different standards, some
of which might accurately reflect economic reality and provide comparability across
entities, and some of which may not (Nurdin, 2009).
With respect to Ethiopia, the practices of accounting in three distinct periods where the
nation has had alternating political orders; from a developing market economy (pre 1974)
to a communist economy (1974 through to 1991), and then back to a market oriented
economy (1991 onwards). Before 1974, Ethiopia was a developing market economy. In
1974, with the coming into power of a military government, the country shifted to a
command economy. This led to nationalization of private companies and establishment of
state-owned companies. In 1991, the present government came into power, proclaimed a
free market economic system, and privatized a number of state-owned companies.
(Fitsum, 2012)

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PRE-1974 registered a remarkable economic growth in the past seven years. Real GDP
has accelerated from a five years average rate of 6.3 percent before 2004/05 to an average
growth of about 10 percent during the period 2005/06 and 2012/13. This growth was
largely spearheaded by the service sector which accounted for 55 percent of the overall
GDP growth. With relate to this information Accounting for Government has become an
interesting and important topic. (Reports on Observance of Standards and Codes (ROSC),
2014)
International Public Sector Accounting Standards (IPSAS) for instance are issued by
International Public Sector Accounting Standards Board (IPSASB) established by
International Federation of Accountants (IFAC), and based on International Financial
Reporting Standards (IFRS) with changes appropriate to public sector issues. IFRS are
issued by the International Accounting Standards Board (IASB), based on accrual
accounting and used for private sector enterprises.
1.2. Background of the organization

The town of Addis Ababa has three (3) administrative levels: the City Government of
Addis Ababa is the first level. The second level of the City includes ten (10) sub-cities.
The third level includes kebeles, which are units of sub-cities. There are currently ninety
nine (99) Kebeles. Sub-cities and kebeles like the City of Addis Ababa itself have elected
councils.
The A.A city administration finance and economy development bureau (BOFED-Bureau
of Finance and Economic Development) was established in 1984 E.C after the year that
AA city categorized as a region 14. Through the proclamation 41/1985 that Ethiopia
transition government amend to discriminate the authority of central and regional
executive bodies and there are 10 sub cite offices And 116 woredas offices found within
the city (/http://www.aabofed.gov.et/about%20eng.html/)

similarly, BOFED’s Vision is aspire to bring basic economic transformation in the year
2020 through effective and efficient administration of the city administration wealth and
assuring sustainable development (/http://www.aabofed.gov.et/about%20eng.html)

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1.3 Problem statement

Public sector Accounting refers to an accounting method applied to non-profit pursuing

entities in the public sector including central and local governments and quasi-
governmental specially corporations for which the size of profits does not provide an
effective measurement for evaluating performance (Lewis & Pendrill, 1999). With relate
to this point, Accounting is essential for the best administration of any organization,
whether governmental or profit making business organization. Because it is a means
through which the activities of the organizations are communicated to users of accounting
information. Accounting has, therefore, been called the language of business. Everyone
engaged in a business or not activity uses this language directly or indirectly. It can,
consequently, be viewed as an information system that provides essential information
about the financial activities of an entity to various individuals or groups for their use in
making informed judgments and decisions. (Perera, 1989) contends that ―accounting is a
product of its environment, and a particular environment is unique to its time and locality.

Accounting in accordance with Mazuma (2010) is the backbone of any organization-

private or public. This is due to the fact that all collections (revenues) and disbursements
(expenditures) of such organizations would perfectly end up or accounted through
accounting activity. In this connection, accounting practice must follow certain prescribed
and agreed procedures, systems and standards, but it is better to identify problems are
essential reasons for the need to improve the public financial management and decision-
making of the government, when there is a relationship between a country’s government
accounting development and its political and economic development (Chan, 2006). In this
field, the introducing IPSAS, provides more and accurate information about government
performance (Pina and Torres, 2003; Christiaens et al., 2013).

The Federal Government of Ethiopia accounting system, reforms the accounting system
was jointly developed, designed and implemented by the Accounts Design Team and the
DSA Project in GC 2002. The key indicators to measure the success of the new
accounting system include reduction in the annual backlog of reporting at federal and
regional levels, timeliness, accuracy and comprehensiveness of monthly reporting together

4
and the capacity of the staff that operate the system ( MOFED accounting Manual 3-
2014).

In this case, there is modified cash basis accounting in the region which has clarity
problem not only to the public but also to his official, whether it is computerized, manual,
double entry, single entry or any other reporting practice. There is some study shows in
2007, Reports on Observance of Standards and Codes (ROSC), an initiative of the World
Bank and International Monetary Fund (IMF), reviewed the accounting and auditing
practices and the institutions supporting the accounting and auditing environment in the
corporate sector in Ethiopia. But the study does not show how it’s efficiency of the
application of government accounting system and its challenge face.

As shown in the above paragraph, currently, the government accounting system use
modified cash basis of accounting, but most of the government sector abroad, use accrual
basis of accounting, The majority of IPSAS use the full Accrual-based accounting which
recognizes fully assets, liabilities, net assets/equity, Revenues and expenses regardless of
when the cash or cash equivalents are received or paid. The IPSAS set out requirements of
recognition, measurement, presentation and disclosure dealing with transactions and
events in general purpose financial statements of all public sector entities (Juvenaly,
2010).

Healthy accounting standard setting process needs representation from the entire spectrum
of stakeholders to retain its integrity, similarly; a transparent due process allows outsiders
to see the interactions and compromises among the key participants in the development of
acceptable accounting rules (Miller, 1995). The accounting information for Government
has become an interesting and important topic, because governments allocate budget more
than 2 Billion (Mulatu, 2015).
Similarly, Government prepares budget in form of public policy to serve as a driving force
through which mission could be achieved. As good as our budget is, the performance can
be measured in terms of accomplishment is nothing to right about, (Olurankinse, 2012).
Budget accomplishment is far from reality and the disparity between budget and
accomplishment are so wide and kept on abating as years pass by.

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In many cases, the incoming resources have their unique usages, which demand separate
accounting records. In addition there is no clear information with related to How
theoretical perspective of International Public Sector Accounting Standards (IPSAS)
related with the application of government accounting and it is not clearly Identifying
what kind of challenge face the system government accounting has.
1.4 Research Questions
Arising from preliminary discussion of the research problem, the study should elicit
answers to the following key questions which essentially form the bedrock of the problem
statement:
1. How the accounting cycle (process) applied in the bureau?
2. What type of budget preparation process or system adopted by the bureau?
3. How asset valuation and record used in the bureau?
4. How the government financial reporting applied in bureau financial statement?
5. What are the challenges pertaining to Government accounting the bureau face?
1.5 Objectives the Study
1.5.1 General Objective:
The general objective of the study is to investigate application of government
accounting system in Addis Ababa city administration finance and economy bureau.
1.5.2 Specific objectives:
1. To find out the application of accounting cycle (process) used by the bureau.
2. To identify the budget preparation process or system adopted by the bureau
3. To assess whether there is a proper asset valuation method and record used in the
bureau.
4. To investigate the government accounting financial reporting applied in the
bureau financial statement.
5. Investigate the challenges pertaining to Government accounting the bureau face.
1.6 Significance of the study
This thesis is prepared for the purpose of investigating and reviewing the theoretical
principles with related to the application of the government accounting system and
identifies the challenges face the system within “the Implementation of modified cash
basis of accounting.”, (MOFED, 2002). The study also assesses the principles,
6
standards and overall system, In addition, the study may serve as a reference for those
who are interested body for further research work in the area, has a potential to
provide important evidences, likewise, by investigating challenge face by the system
of accounting, it help to put possible solution by showing research finding to the
concerned body and indicating the challenge faced and also the output of the research
support the concerned body who have relation with the organization.
Finally the research output shows best practices and makes policy recommendations
aimed at improving the quality of financial system and reporting in the bureau as well
as the country, The study also contribute to Knowledge by providing policy makers
with understanding of some of the accounting and accountability issues facing A.A
city administration finance and economy development bureau as a result policy
makers will be better informed in designing policies to address some of these issues.
Further the results are shared with the management of the case organization and based
on the recommendations made, management will be able to understand how they can
better implement and manage challenge in the accounting and accountability systems
of the organization.

1.7 Scope (Delimitation) of the Study

The study addresses the assessment of Application of government accounting
system in Addis Ababa city administration finance and economy development
bureau, specifically, the study paper covers on the application of accounting cycle
used, asset valuation method and record used in the bureau, budget preparation
process or system adopted by the bureau and also application of financial reporting,

The study is confined to the recent fiscal year period of 5 years. The part of this time
frame is holding to the fact that Governments increase in budget each year from and
increase project activities arising from the government commitment for development
when compared to previous years (MOFED, 2016).
Finally it focuses on challenges pertaining to Government accounting the bureau face
in addition, The population of this study was on the staff of BOFED in Addis Ababa
towns (piazza office) which have direct or indirect relation with the government
accounting system such as All top level managers, All accounting staff, and All

7
 internal auditing staff of BOFED but other staff was not included in the study because
they are irrelevant to the study.

1.8 Limitation of the Study

Although the research has reached its aims, there were some unavoidable limitations,
first because of the time was a big constraint, and the study was carried out for a short
period of time because of the requirement to be able to follow the deadline of the
University calendar and so more time could not be devoted to individual respondent.
The second limitation was, the research was conducted only on small size of
population who was working in Addis Ababa city administration finance and
economy bureau only, therefore, this make the research limited on accountant,
casher and internal auditing staff in bureau only other staff was not included in this
research, the third was, the limitation was the research material available was not
sufficient; fourth was attitude of the respondent, which was, bias, hesitation and
Uncooperative attitude of respondents affected the analysis of the study in
significantly manner. The last was the data collection was limitation on Addis Ababa
city administration finance and economy bureau head office only, which limited the
data cover age in sector or branch office.
1.9 Ethical Considerations
The respondents were asked by formal letter and before the interview were conducted
and before they start to feel the questioners, the researcher explained about the purpose
of the research. Furthermore, the researcher explained to the respondents that all their
responses and ideas would be kept in secrete.

1.10 Organization of the Paper

The research paper has five chapters. The first chapter consists of background of the
study, background of the organization, research problems, research questions,
objective, significance, scope and limitation of the study. Chapter two deals with all
literature review. The third chapter discusses about research design, source of data
and data collection techniques and target population. The fourth chapter presents

8
 methods of data analysis and presentation and the last chapter contains summary of
findings, conclusion and recommendation of the study.
.

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 Chapter Two
Literature Review
2.1 History of Government Accounting In Ethiopia
Accounting has undergone significant changes in transition economies, and it has
evolved from a technical topic to a scientific one, respectively accountants had been
perceived as “bean counters”. But later with the development of complex domestic and
global markets accounting has became a socially embedded practice that influenced
particularly the wealth accumulation (Caruthers, 1995).
Following Ethiopia’s return to a market-oriented economic system in 1991, the country
embarked on policy reforms to liberalize its economy along the lines of neo-liberal
economic principles to facilitate economic development (Peterson, 2001; Tesema,
2003).
Ethiopia is one of those countries that reconceived foreign aid and loans from
international organizations in the effort to reduce poverty (Collier and Dollar, 2002).
The country has been undertaking the reforms as a prerequisite for WTO membership
(WTO, 2011). IFIS championed the reforms by providing technical and financial
assistance (The World Bank, 2007) for a number of projects claimed to foster
competition in the private sector and enhance global competitiveness of the country’s
economy (The World Bank, 2010).
The reforms resulted in renewed focus on accountancy. Participants commented: WTO
accession requires sound accounting infrastructure. The World Bank has put a pressure
and significant amount of funding for the same cause in Ethiopia
Government policy has had substantial impact on accounting. The civil service reform
has significantly enhanced the need for accounting professionals. While the importation
of Western accounting education and professional certification continued, the
globalization era produced new dynamics that called for Ethiopia’s adoption of IFRS. In
2005, the Ministry of Trade and Industry commissioned a World Bank funded project to
devise strategies for the development of accounting (Miheret, Dessalegn Getie and
Bobe, Belete Jember, 2014).

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2.2. The Federal Government of Ethiopia accounting system
Ethiopia accounting system used up to GC 2002 was in service for more than half a
century. Accordingly, the reforms to the accounting system was jointly developed,
Designed and implemented by DSA (Development and the Decentralization Support
Activity project in GC 2002). This system has since been operating successfully in
MOFED and all public bodies at the Federal level and at the regional and sub regional
levels. The key indicators to measure the success of the new accounting system include
reduction in the annual backlog of reporting at federal and regional levels, timeliness,
accuracy and comprehensiveness of monthly reporting together and the capacity of the
staff that operate the system. Over the last four years certain changes to procedures
have impacted the accounting system. The Central Accounts Department had to update
the accounting manual to factor in these changes in order that the manual continued to
serve as a practical and efficient guide to all its Users. The key changes that have
impacted the accounting system are described below:

 The disbursement system was modified to introduce the zero balance drawing limit
accounts at the National Bank of Ethiopia for Public Bodies located in Addis
Ababa. MOFED has instructed the regions to implement the zero balance drawing
limit accounts system at the region sector bureau level. However, the single treasury
system will continue at zones and woredas.
 The responsibility for processing monthly payroll, salary loans and remitting
pension contributions to the pension authority was transferred to public bodies. A
revolving fund has been established by MOFED to fund staff loans.
 The jobs responsibilities of the accounts personnel need to be reviewed given that
accounts data was initially processed using manual systems and are currently being
processed using automated systems at federal public bodies.
 New types of transactions were introduced. Such as accounting for value added tax,
withholding tax, letters of credit, staff loans cost sharing, surtax, and other payroll
deductions.
 The chart of accounts was revised to accommodate additional account codes
All reforms have been initiated and funded by external bodies like the World Bank.
When a particular project is completed, it will be put to file [i.e., recommendations

11
 were not implemented because different donors tended to fund new projects rather
than continuing with what was accomplished in prior projects]. Another project at
another time by another or same body would be initiated and will have the same fate.
Reforms should be institutionalized and owned by the (Accounts Reform Team of
MOFED, 2007).
2.3 Government Accounting Basis
Government accounting system is used as a tool to input, process, store and output
accounting information of financial reports. It adds all record transactions that
regularly deal with financial position and performance of a unit (Meigs & Mary,
1998).Further, government accounting system records financial information on
business transactions. The system serves as a tool for organizing, summarizing,
analyzing, interpreting and communicating with stakeholders through the use of
computer based systems such as accounting packages (Marivic, 2009).
A more recent and comprehensive definition of Government accounting was given by
Oshisami and Dean (2004) as: “The process of recording, analyzing, classifying,
communicating, and interpreting financial information about government in aggregate
and in detail, reflecting all transaction involving the receipt, transfer and disposition
of government funds and property. The purposes are to demonstrate the propriety of
transaction and their conformity with established rules, to give evidence of
accountability for the stewardship of government resources and to provide useful
information for the good control and efficient management of government operations.”
Government has to do with a whole Nation. It is represented by organizations that are
established to use the resources of a Nation for the upliftment and the welfare of its
Citizens. For the skilful administration development of a Nation, there is the need to
institute financial and accounting systems in the established organizations which
are responsible for finances and human resources. In the same way, such systems are
to be introduced and nurtured in those organizations that will be using the finances for
such National development. The systems introduced should promote transparency,
data storage and retrieval, and accountability. Government organizations are different
from private sector establishments. Consequently, they have different features; Public
Enterprises Proclamation 25/1992 requires state-owned enterprises to keep books of

12
 accounts following generally accepted accounting principles (GAAP). However,
within the Public Enterprises Proclamation, there is no requirement for state-owned
enterprises to prepare financial statements in compliance with any defined accounting
standards or for their auditors to comply with any defined auditing standards. Without
definition, interpretations of GAAP can vary widely.
2.3.1 Cash Basis
The cash basis of accounting recognizes transactions and events only when cash is
received or paid. FGE (federal government agent) changed its basis of accounting from
cash basis to modified cash basis in the fiscal year 1995. (Accounts Reform Team of
MOFED, 2007)
2.3.2 Modified Cash Basis
The modified cash basis of accounting recognizes transactions and events which have
occurred by the year end and are normally expected to result in cash disbursement
within the specific legal grace period stipulated by a country’s financial regulations
after year end. Payments over this grace period that are related to transactions of the
previous fiscal year are reported as expenditures of the previous fiscal year. (Accounts
Reform Team of MOFED, 2007)
2.3.3 Modified Accrual Basis
However, the modified accrual basis of accounting recognizes transactions and events
when they occur, irrespective of when cash is paid. There is no deferral of costs that
will be consumed in future periods. Assets that will provide services 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 off as soon as
they are acquired. (Accounts Reform Team of MOFED, 2014)
The difference between the modified cash and modified accrual basis of accounting is
whether or not the financial regulations specify a grace period over which cash payments
that are related to transactions of the previous fiscal year are reported as expenditures of the
previous fiscal year and beyond that grace period cash payments that are related to
transactions of the previous fiscal year are to be reported as transactions of the next fiscal
year. (Accounts Reform Team of MOFED, 2014)

13
In Ethiopia, the accounting period includes a legal grace period of 30 days after the
close of the fiscal year. Hence, the modified cash basis of accounting is applied in
Ethiopia. Similarly, the modified cash basis of accounting recognizes transactions and
events which have occurred by the year end and are normally expected to result in cash
disbursement within the specific legal grace period of 30 days after year end. Payments
over this grace period that are related to transactions of the previous fiscal year are
reported as expenditures of the previous fiscal year. (Accounts Reform Team of
MOFED, 2014)
2.3.4 Accrual Basis.
The accrual basis of accounting recognizes transactions and events when they occur
irrespective of when cash is paid or received. Revenues reflect the amounts that came
during the year, whether collected or not. Expenses reflect the amount of goods and
services consumed during the year, whether or not they are paid for in that period. The
costs of assets are deferred and recognized when the assets are used to provide service.
(Accounts Reform Team of MOFED, 2014)

2.4 Nature and objectives of government accounting

The objectives of Government accounting include the following:

(a) To fulfils legal requirement. The law requires that government accounts are
prepared and audited annually.
(b) To perform the stewardship function. The ruling government is the steward of the
resources and finances of the Nation. Government has to give account of how
these finances are used.
(c) To enable Government to plan well the future activities and programmers of the
Nation.
(d) To provide a process of controlling the use of the financial and other resources.
(e) To provide the means by which actual performance may be compared with the
target set.
(f) To evaluate the economy, efficiency and effectiveness with which governance is
carried out (Accounts Reform Team of MOFED ,2014)

14
2.5 Users of government accounting information

There are two groups of users of Government Accounting information. These are
Internal and External users whose peculiarities and areas of interests are briefly
discussed, as follows:

A. Internal Users and Interest Areas

This group of users includes:

The Labor Union in the public service which will press for improved conditions of
employment and security of tenure for their members who are the executive of
government, such as, the president, ministers and governors. Their interest areas are to
ensure probity and accountability through record keeping and performance control
which are achieved through accounting information. Top Management members they
are the conduit of accounting information generation, transmission and serve as liaison
officers between Government, employees and the public. (Association of Accountancy
Bodies in West Africa, 2009)

B. External Users and Areas of Interest.

External Users include Members of the Legislature at both National, State and Local
Government levels. Information in the accounts of Governments is the major media
through which politicians render stewardship to their constituencies and apprise them of
the endeavors of governance.

The Members of the Public, who demonstrate accountability and Assist the people to
appreciate otherwise the efforts of Governments who are Researchers and Financial
Journalists,. Researchers are expected to develop new and better ideas of governance.
Financial journalists cherish accounting information to advise existing and potential
investors.

Financial Institutions, Such As Commercial Banks, World Bank And International

Monetary Fund (IMF). Accounting information assists them to evaluate the credit rating
of a borrowing Nation. Governments, apart from the Ones, Reporting Governments

15
collaborate on ideas of investment and research. They require accounting information on
the well-being or otherwise of each other. Suppliers and Contractors Suppliers and
contractors are eager to ascertain the ability of a Government to pay for goods and
services delivered. Only Accounting information can be revealing. (Association of
Accountancy Bodies in West Africa, 2009)

2.6 Comparisons Between public and private sectors

The term “Public Sector” refers to all organizations which are created, administered and
financed by Government, from the tax payer’s money, on behalf of the members of the
public. Such establishments which are referred to as the “three tiers” Government
Companies, and other public agencies created by the Nation’s Constitution, Acts of
Parliament and Bye-Laws. The organizations produce public goods and services which
are available to the citizens free or at very minimum charges. (Association of
Accountancy Bodies in West Africa, 2009)

Public sector organizations are managed by appointed members of the citizenry. “Private
Sector” is that part of the economy where the factors of production of land, labor, capital
and entrepreneurship are supplied by private individuals who are the business owners.
They manage the businesses, beat the risks and earn the profits through the sale and
production of goods and services as sole traders, business partners or shareholders in
limited liability companies. Public Sector organizations are content with pricing products
or services at marginal costs, thereby catering for the welfare of the public, privately
owned businesses venture to recover not only marginal costs but fixed overheads and
even earn profits. (Association of Accountancy Bodies in West Africa, 2009)

Public concerns do not distinguish between capital and revenue expenditure, unlike
private companies. The latter write off the values of fixed overheads and even earn
profits. Public concerns do not distinguish between capital and revenue expenditure,
unlike private companies. The latter write off the values of fixed assets over estimated
useful lives through depreciation. Public Sector organizations are accountable to the
citizens of the Nation through their elected representatives. Private Sector concerns are
answerable to their owners.(Association of Accountancy Bodies in West Africa,2009)

16
2.6.1 Differences between government accounting and private sector
accounting
According to (Association of Accountancy Bodies in West Africa, 2009) Financial
statements are structured representations of the financial position and economic
performance of an entity. Specifically, the objectives of general purpose financial
reporting in the public sector should be to generate information useful for decision-
making, and demonstrate the accountability of an entity for the resources entrusted to it,
by providing statistics:
(a) On the sources, allocation and uses of financial resources;

(b) On how an entity financed its activities;

(c) For the valuation of the entity’s ability to finance its activities and to settle
liabilities;

(d) For the measurement of an entity’s performance in respect of the set goals.

(e) Which will reveal whether or not an entity has acted within the approved
budget?

2.7 Statement of financial position

Government accounting and budgeting system aid the use of financial reporting by
evaluating the amounts, timing and uncertainties of cash flows. It also help in
furnishing Information about the entity’s economic resources, claims against those
resources, owners equity and changes in the resources and claims (Wood and
Sangster,1999).

A statement of financial position must be prepared for the organization as a whole

presenting the total amount to assets, liabilities and net assets. Either the statement of
financial position or the notes must provide information of liquidity, financial
flexibility (i.e. restrictions/and interrelationship of assets and liabilities .Information
about liquidity can be provided by listing assets and Liability in order of liquidity, in
order of liquidity, classifying assets and liabilities in accordance with ARB
(Accounting research Bulletin, 2009)

17
2.8 Cash flow statements
A Fund flow Statement is that which shows the various sources of income and
expenditure in analytical form comprising inflows and outflows, from operating
activities, investing activities and financing activities.

These may be further discussed as follows:

(a) Operating Activities:- These comprise the principal revenue generation and
disbursement activities through the business of an organization, during production
(b) Investing Activities: - These have to do with the acquisition and disposal of
fixed assets, investments and intangible assets such as trademark, goodwill, patent
rights.
(c) Financing Activities: - These are activities that bring out structural changes in the
composition of equity capital of an enterprise.

2.9 Valuation of fixed assets

Fixed assets should be accounted for at cost or if the cost is not practicable
determined, at estimated historical cost. Donated fixed assets should be recorded at
their estimated fair market value when received (Peterson, 2002).

Cost-The cost of a fixed asset includes the purchase price or construction cost
(including costs of engineering studies) and ancillary charges necessary to acquire the
asset or to place it in the intended location and condition for use. Ancillary charges
include costs such as transportation charges, site preparation, professional fees, legal
claims directly attributed to asset acquisition, and certain interest costs during
construction. For equipment the costs of any testing also should be capitalized
(Peterson, 2002).

Estimated Historical Cost-Institutions are sometimes required to establish appropriate

fixed assets accounting records after many years of operating without such records. In
such situations, the original purchase documentation may not be available, or an
inordinate expenditure of resources maybe required establishing original costs
precisely. Therefore, it may be necessary to estimate the original asset cost on the
basis of documentary evidence available, price levels at the time of acquisition, and to

18
record these estimated costs in the appropriate fixed assets accounts. In some cases,
the cost may not be known but information and records may be available showing the
year of acquisition. In this instance, a historical appraisal cost can be used (US
Department of Housing and Urban Development, 1999).

A historical appraisal cost is defined for this purpose as the current appraised value
adjusted to the year of acquisition (Peterson, 2002). If the exact date of acquisition and
cost are not known, but the general period of acquisition and cost are known, an
average year during the period of acquisition and a reasonable estimated cost might be
used (Peterson, 2002). The important concept is to obtain reasonable estimated costs to
record these assets on the books and establish accountability. Littrell and Thompson
(1998),explained in their article, "Fix Asset reporting: Research note", that using
estimated costs does create some margin of error in the fixed assets accounting records
as compared to the proper recording at acquisition. However, such errors should
diminish over time as assets are retired and replaced, and estimated costs are replaced
with actual costs

Valuation Considerations According to Peterson (2002)in his book, Accounting for

Fixed Assets, valuation consideration by category of fixed assets includes: Land-If the
land is Purchased, the valuation includes such costs as purchase price, legal fees,
filling and excavation, and other costs directly related to the acquisition of the land and
its preparation for use. If purchased or constructed, the valuation includes such costs
as the purchase price, acquisition legal fees, and other professional fees. Equipment-
The basis of valuation of purchased equipment includes the net contract price,
transportation charges, and the cost of installing special devices or other preparations
required to ready the asset for its intended use. In case of a gift, the valuation recorded
for these assets should be the appraised value at the time of acquisition. Initial
Inventory of Assets to set up a fixed assets system, an initial inventory must be taken.
For this Inventory, all fixed and controlled assets should be tracked and accounted for.
Once the data has been collected, it is fed into the inventory management system. The
initial inventory of fixed assets should begin with the identification of land and rights
in land, all buildings, and all improvements, other than buildings should be listed.

19
All equipment should be tagged, including equipment that is being leased to the
business (Brady, 2001).In addition, assets that do not meet the price criteria under the
fixed assets category, need to be inventoried as well due to their vulnerability of
becoming lost or stolen. Examples could be cameras and photographic projection
equipment, record players, and radios. Developing and maintaining complete and
accurate fixed assets records should always be emphasized as one of the most
important functions of fixed asset management. An accurate fixed assets inventory
provides information as to what assets is on-hand, their specific location, and what if
any loss, theft or damage assets.

Organizations should maintain a fixed assets system, which includes records for all
fixed assets that should be inventoried. Strict control must be maintained during the
inventory process to assure that items not yet inventoried are not moved to areas
already accounted for, or vice versa. "The physical inventory function is one of the
functions in the management of fixed assets and the particular inventory verification
procedures that are employed are of critical importance to the success of the fixed
assets management program", (Brady, 2001)

Cost is measured by the cash paid in a cash transaction or by the cash equipment price
equal to the fair market value of the asset given up or the fair market value of the asset
received, whichever is more clearly determinable. Once cost is established, it becomes
the basis of accounting for plant asset over its useful life (Weygand, 1999). When it is
talk about plant asset valuation, Depreciation method should also be taken in to
account, because through depreciation method the cost of a plant asset can be allocated
expenses over its useful (service) life in a rational and systematic manner. To do so,
there are three depreciation methods

2.9.1 Fixed assets

Companies worldwide have fixed assets to support business operations. These fixed
assets are an essential part of every business. Sometimes fixed asset management can
be difficult if there are not policies and procedures in place. Fixed assets affect myriad
aspects of financial planning, reporting, and control. Many discrete, complicated, and

20
time-dependent tasks comprise fixed asset management. In addition, the slightest error
can have drastic effects.

Fixed assets are non-consumable goods, tangible in nature and have a useful life longer
than one year .According to (William D. Brady, Jr. (2001) "it can be any item costing
over a certain dollar amount, large or small, to an item that has a certain useful
life."These fixed assets are classified as land, improvements other than buildings,
operating plants, equipment, vehicles, and construction in progress (Peterson, 2002).

Fixed assets can be both movable and immovable. Items of insignificant value, while
they meet the above criteria, are normally expensed instead of being considered fixed
assets. For profit and non for profit organizations, such as universities, are required
under GAAP, General Accepted Accounting Principles, (Delaney, Epstein, Nach and
Budack,2002) to maintain a ledger or group of accounts in which to record the details
relating to the general fixed assets of the organization

Establishing and maintaining complete and accurate accounting records for fixed assets
is important for several reasons as stated by Brady (2001). First, the value of fixed
assets is large in most organizations. Therefore, adequate accounting procedures and
records are essential for effective property management (including risk management)
and control. Second, the stewardship responsibility involved in safeguarding such a
large investment is of the utmost importance for good financial administration. Third,
adequate fixed assets records can assist in making management decisions. Proper use of
these records may prevent unneeded assets from being purchased. Fixed asset records
also could be used to help clarify long-term capital budgeting needs.

Finally, accurate and complete fixed assets records can prevent the possible
misstatement of the institutional financial statements for fixed assets. Otherwise, assets
such as those acquired under capital leases and joint ventures could be overlooked
Classification of Fixed Assets Fixed assets should always be recorded in the accounting
records of an institution. Accounting classifications of fixed assets accounts are as
follow (Heintz & Parry, 2002):

21
1. Property

Land: a fixed assets account that reflects the acquisition value of land and the rights to
land owned by the organization. It includes all land held in fee simple and all rights to
land that have no termination date

2. Plant

Operating Plants-A fixed assets account that reflects the acquisition value of plants
used to provide the services of utilities, including both the building and the equipment

3. Equipment: It is a fixed assets account that reflects the value of tangible property
not permanently a fixed to real property, used in carrying out the operations of
business. Examples of equipment are machinery, furniture, and vehicles. This project
will specifically examine and recommend a new process for the management of
equipment Recording Fixed Assets Business may acquire fixed assets by several
methods. Possible acquisition methods include purchase with a Purchase Order or PO,
lease-purchase, installment purchase, construction, and gifts. The method of
acquisition of fixed assets should be properly recorded on the books of account and in
subsidiary records that provide detailed information on each asset In an article
published in Management Accounting: Magazine for Chartered Management
Accountants, Stephan Moriarty (Moriarty, 1998) says that "a lot of financial managers
do not have accurate information about what their companies own", and continues
explaining how important it is to record fixed assets in the appropriate books.

There are many rules and regulations on what and how fixed assets should be
recorded. To avoid recording many assets with low values that do not, in the
aggregate, amount to a material portion of the value of the fixed assets, organizations
should set minimum asset values below which an asset is not recorded in the fixed
assets records.

There are some guidelines recommended to make decisions on when to record an asset
in the fixed assets record staking into consideration its value. Peterson (2002)
recommends the following in his Accounting for Fixed Assets book: Land-All land

22
and permanent rights to land should be recorded without regard to any significant
value.

The dollar amount used to decide whether an asset is of significant (capitalized or

expensed) value should be policy decision of the institution's governing board. When
organization decides to increase its threshold for capitalization, all old assets not
meeting the new requirement should be removed from the fixed assets records
(Peterson, 2002).

Those assets where it is impossible to affix a permanent tag, need to have a number so
it can be positively identify as a capitalized asset (Brady, 2001). Identification
numbers should be assigned and affixed as soon as the item is acquired.

Disposition of Fixed Assets

An asset maybe disposed of once it has reached the end of its useful life. In this case,
these assets are considered, in many occasions, as surplus for the business. Most
property or fixed assets even thought they have reached or exceeded their useful life,
may still have a value to the business operations. Assets that no longer contribute to
the organization's operations need to be disposed and considered surplus. Institutions
should have a central warehouse of surplus property, where all surplus assets can be
store for further process. Brady (2001) states that the purposes of a disposal program
are:

1. Elimination of costs related to the warehousing, insurance and accounting systems

necessary to fulfill the business’ surplus property responsibility.
2. Maximize the proceeds by disposing of assets as soon as possible after they become
excess to an institution's needs.
3. Establishment of priorities in the disposal process that encourages keeping assets in
use as Long as possible.
4. Conversion of unneeded assets into available funds on a timely basis for offsetting
the cost of new assets.

23
Depreciation Considerations: Depreciation is an element of expense resulting from
the use of long-lived assets or fixed assets. It is conventionally measured by allocating
the expected net cost of using the asset (original cost less estimated salvage value)
over its estimated useful life in systematic and rational manner. The objective of
depreciation is to charge each accounting period for the estimated loss in economic
value of the depreciable assets used during the period (Peterson, 2002). This implies
ability to:

(a) Estimate the economic useful life of each asset

(b) Predict the probable salvage value.
(c) Estimate the rate at which the economic value of the asset will be consumed
during its economic life.

1.9.2 Acquisition cost of property, plant and equipment

The term expenditure refers to a payment or an obligation to make future payment for
an asset, such as a truck, or a service, such as a repair. Expenditures may be classified
as capital expenditures or revenue expenditures according to (fees-warren, 1990):

 Capital expenditure is expenditure for the purchase or expansion of a long-

term asset. Capital expenditures are recorded in the asset accounts because
they benefit several futures accounting periods.
 Revenue expenditure is an expenditure related to the repair, maintenance, and
operation of a long-term asset. These expenditures do not extend the asset's
original useful life but are necessary to enable the asset to fulfill its original
useful life. Revenue expenditures are recorded in the expense accounts because
their benefits are realized in the current period.

2.10 Budget system and related Reporting

Government use budgets as a guiding tool for planning and control of its resources,
be it financial or otherwise. The use of budget involves knowing how much money
you earn and spend over a period, particularly one year. When a budget of an
establishment, department or ministry is created, it means creating a plan for spending
and saving money (Abdullah, 2012).

24
The need for utilization of scarce resources surrounding mankind effectively and
efficiently, invite economic skills, on which the use of budgeting is inevitable
(Armstrong, 2006). That is to say budgeting cuts across all personalities; starting from
individuals, partnership, cooperative societies, companies, multinational corporations
and nations hence, necessitating emergence of various definitions by different authors.
Frederick (2001) defines budget as a plan that is measurable and timely. In addition,
Drury (2006) defines budget as a plan expressed in quantitative, usually monetary term
covering a specific period of time usually one year in other words a budget is a
Systematic plan for utilization of manpower and material resources. In a business
organization a budget represents an estimate of future costs and revenues.

As Blucher et al (2002) argue that, budgets help to allocate resources, coordinate

operations and provide a means for performance measurement. Furthermore, budgeting
involves planning for various cost generating activities and Revenue producing of an
organization. The importance of budgeting is emphasized by an old saying, “Failing to
plan is like planning to fail”. Thus, budgeting is essentially financial planning or planning
for performance.

Thus, from the definitions of budget as stated earlier three major concepts or aspects are
highlighted: First; is the planning aspect of a budget: the plan is referred to as statement
of objectives or goals of the organization. Second; is the measurability aspect: this
enables to measure what is planned, the extent to which the plan can be achieved. Lastly;
it is time aspect: it gives the possibility to say if the plan is achieved and covers certain
duration.

In summary, a budget is a statement setting out monetary, quantitative aspects of an

organization’s plans for the future period monthly, quarterly or yearly. Budgetary control
is the analysis of what happened that is when stated plans are compared with actual
results.

The primary concern during budget implementation process is to ensure the

fulfillment of financial and economic aspects of the budget. The financial tasks
include; spending the amounts for the purposes specified, minimizing expenditures
during the end of the year. The economic tasks on the other hand are; ensuring that

25
the physical targets of program and projects are achieved and macro Economic
aspects of the budget such as borrowing and deficit levels. In managing budget
implementation one of the key areas of focus is the revenue and expenditure flow
pattern.

The budget is also a tool for the implementation of social, economic and political
priorities which impact on the lives of the population. A successful budget must be a
product of a process that is based on sound and quality information, rigorous impact
analysis and effective feedback mechanism to internalize lessons of past budgets. It is an
integrated output of a dynamic process in which the connections between various sectors
are critical for its ultimate impact and should be looked at in a holistic manner
(Kwanashie, 2005).

In the mid-1990s, Ethiopia embarked upon a new Civil Service Reform (CSR)
initiative. Arising from its various studies, one recommendation was to program
budgeting. The first piloting took place with federal ministries from 2006 to 2008
(three years). In 2009, a shadow PB exercise was undertaken, as a prelude to full
implementation a year later. While significant progress was made, government
decided to develop the technical aspects further, before its new target date, could be
achieved. The recommended technical scope of PB captured in this manual.(2010,
program budget training manual)

The Four Principles of the Budget Process (1999, the Government Finance Officers
Association (GFOA),) are as followers:-

1) Establish Broad Goals to Guide Government Decision Making

2) Develop Approaches to Achieve Goals A government should have specific
policies, plans, programs, and management strategies to define how it will
achieve its long-term goals.
3) Develop a Budget Consistent with Approaches to Achieve Goals A financial
plan and budget that moves toward achievement of goals, within the
constraints of available resources, should be prepared and adopted.

26
4) Evaluate Performance and Make Adjustments Program and financial performance
should be continually evaluated, and adjustments made, to encourage progress toward
achieving goals. Elements of the Budget Process Each of the principles of the budget
process incorporate components or elements that represent achievable results. These
elements help translate the guiding principles into action components. Individual
budgetary practices are derived from these elements and are a way to accomplish the
elements. The elements of each guiding principle are identified on the following page.
The principles and elements provide a structure to categorize budgetary practices. A
more detailed explanation of the principles and elements is provided in the appendix.
The Twelve Elements of the Budget Process Establish Broad Goals to Guide
Government Decision Making
The neglect of the budget in the basic financial statements is remedied in three ways:

(a) Interim and annual reporting of budget execution,

(b) Making budget-to-actual comparisons according to budget measurement rules,

and

(c) Providing explanation of the effects of different methods used in budgeting and
accounting.

Comparing Budget Reporting and Financial Reporting

Table 2.1
Budget Reporting Financial Reporting
Regulated by budget laws and rules of a Regulated by GAAP accepted nation-wide
Jurisdiction. And with emerging international consensus.
Interim reporting during the fiscal year Takes place after end of fiscal year
Reviewed and approved by high-level Often audited by government or private-sector
executives and legislature auditors.
Focusing on revenues and expenditures in most Covers all aspects of public finances, including
countries assets and liabilities.
Rarely includes account-based financial Often includes comparison between the
Statements budget and actual results

(Olaoye, Festus Oladipupo, Ogunmakin, Adeduro Adesola, 2014)

27
 2.11. Financial Reporting
The annual financial report should be composed of and organized in to three major
chronological sections: (1) introductory section; (2) financial section and (3) statistical
section. The first of these, the introductory section, does not need to be labeled as such
in the report because of the self evident nature of the few introductory materials which
it contains. The second and third sections, by contrast, must be segregated by separator
sheets titled, respectively, “Financial Section” and “statistical section.” (Larson, 1982).

Financial reporting should assist users in evaluating the operating results of the
governmental entity for the year.

According to (GASB, 1984), the following are basic financial reporting component.
(GASB, 1984)

 Defining the financial reporting entity

 Comprehensive Annual Financial Report
 Additional financial reporting considerations
 Notes to financial statements
 Budgetary reporting
 Cash flows statements
 Segment information
 Reporting entity and component unit presentation and disclosures
 Supplemental and special purpose reporting
 Statistical Section
 Interim financial reporting
One of important concept in accounting system is generally accepted accounting
principle (GAAP). GAAP is a set of standards and rules that are recognized as a general
guide for financial reporting purposes. This recognized set of standards is used to guide
accounting profession. To be in line with GAAP, the following operating guide line has
to be followed. These are :-

28
(1) Assumption (2) Principles & (3) Constraints Western democracies share the
following basic principles:

1) Credibility. Government financial reports should be trustworthy by presenting

objective and reliable information in accordance to standards set by a body
with a high degree of independence.
2) Fair Presentation. Even though total disclosure is impossible and
unnecessary, governments should accurately and adequately disclose their
financial conditions and performance.
3) Value Added. Government financial reports should add value relative to the
governments already disclosed budgets and other fiscal information.
Constrained by their historical orientation and unavoidable time lag, the special
value of year-end financial reports lies in providing a long-term and overall
perspective.
4) Consistency and Uniformity. The same measurement rules should be used
over time unless circumstances change, and the same reporting formats should
be used whenever possible, so as to increase the understandability and
comparability of financial reports. Furthermore, financial, budgetary and
statistical reporting rules should be harmonized when possible, aligned when
necessary, or otherwise reconciled.
5) Financial Statements. At year-end governments should issue three basic
financial statements based on its accounts: a statement of financial position in
terms of assets, liabilities, net assets; a statement of financial performance in
terms of revenues and expenses, and gains and losses; and a statement of cash
flows classified in terms of operating, investing and financing activities. These
general purpose financial statements (GPFS) provide common knowledge to all
the stakeholders of the government.
6) Financial Disclosures. Due to the limitations imposed by accounting
recognition criteria and measurement techniques (discussed in previous
chapter), general purpose financial statements should be complemented by
additional financial data to achieve the goals of accountability and
transparency.

29
 7) Reporting Entity. General purpose financial statements should cover the
government as a whole, including the primary government (controlling entity)
and the other controlled entities for which the primary government is
financially accountable. The fiscal relationships among these entities should be
clarified, especially when the inter-relationships are not visible on the face of
aggregative financial statements. Additional reports should be prepared and
made available for the components of a government, such as departments and
funds, to facilitate management and oversight.
8) Full Reporting Capacity. A government’s financial information system
should be capable of generating data for assessing budget execution, interim
and year-end financial reports, as well as statistical reports and others required
by laws and regulations.
9) Budgetary Reporting. For any fiscal year, a government should report, at the
appropriate time and level of aggregation: initial and revised budgets and other
financial plans; results of budget execution, including revenue collection and
spending; and explaining financial results measured with different methods.
10) Statistical reporting. Government financial data and reports should serve as
the foundation of government finance statistics compiled by national and
international statistical offices, in order to facilitate international comparable
evaluations of economic impacts and fiscal soundness of governments.
Objectives of Government Financial Reporting per the American GASB
Financial reporting should assist in fulfilling government’s duty to be publicly
accountable and should enable users assess that accountability. The GASB is
responsible for financial reporting standards for state and local governments,
but not for federal agencies. The GASB has sought to “describe the unique
nature of governmental entities and the distinguishing characteristics of the
environment they operate in” (Attmore, 2009).

2.11.1 The Impact of Government Accounting System on Financial Reporting

Financial reporting is the process of presenting financial information or data about a

company’s financial position, operating performance and its flow of funds for an

30
 accounting period (Van, 2005). Government accounting and budgeting systems is
also credited for their quick processing speed and large storage capacity. For
example, effective use of government accounting and budgeting systems promote and
ensure up to date account balance that aid management in their decision making
(Lancouch, 2003). The system also saves time on transaction hence, leading to
accurate and quality of financial reporting and reliability of information (Lewis &
Pendrill, 1999). Thus the influence of accounting systems depends on the end user’s
satisfaction. This position was supported by Mihir (2002) when he highlighted that
higher end user’s satisfaction leads to positive attitude that in turn increases the
voluntary usage of the system. Therefore, the quality of accounting information and
performance of the accounting systems is a great concern to management (Nash &
Healy, 2003).
The GASB’s Concepts Statement No. 1 (1984) identifies objectives of external
financial reporting:
 Demonstrate public officials’ accountability to citizens for raising public monies
and determining how they are spent.
 Compare actual financial results with the legally adopted budget.
 Assess financial condition and results of operations.
 Assist taxpayers in determining compliance with finance-related laws, rules, and
regulations, including the budget.
 Assist taxpayers in evaluating efficiency and effectiveness

Also, government accounting and budgeting system aid the use of financial reporting
by evaluating the amounts, timing and uncertainties of cash flows. It also help in
furnishing information about the entity’s economic resources, claims against those
resources, owners‟ equity and changes in the resources and claims (Wood and
Sangster,1999). Indira (2008) emphasized that Government accounting and budget
system provide information about financial performance and promote effective
management. The system also helped managers and directors themselves in making
good decisions on behalf of the owners (Indira, 2008). This further shows that

31
accounting information is a necessary tool for various parties to make accurate and
rational decision in an organization (Indira, 2008).
2.12. Challenge of government accounting
The government accounting and budgeting system is associated with several
limitations. These limitations include costs and human need (Nash & Healy, 2003) to
update a traditional organization, government increase government expenditure and
costs. Also, reorganization of personnel and buying of accounting software requires
organization spending, such as investment in new computers, regular software updates,
and training and a new recruitment policy and employment of qualified professionals
who are familiar with the operation of the system. Besides, as Accounting Information
systems is automated; there is a need for accountants to acquire necessary skills to
effectively utilize the system (Dalci & Tanis, 2013). Further, Tarmitti, Rashid, Deris
and Roni (2013) argued that untrained personnel are likely to make error when entering
information in the system, thus leading to disaster.
In addition, government accounting and budgeting system requires human beings to
attain effectiveness and despite its advancing complexity, the system cannot fully
replace human resources (Nash & Healy, 2003).

One of the challenges is how to meet the projected needs of the stakeholders.
According to Batt (2014) budgets are created based on requests from competing
stakeholders, each justifying their projected expenditures based on their departmental
needs rather than the overall goals of the organization. Despite the advent of powerful
computer networks and multi-layered models, budgeting remains prolonged and
expensive as government and private organizations budgeting approach consistently
show higher rates of inaccurate assumptions, a massive time commitment and tedious
manual input (McRae, 1998). However, if this is not properly managed, it can affect the
organizational achievement and goals. Batt (2014) expressed that budgeting system
does not adequately link financial investments to results or outcomes. This limits the
ability for in-depth analysis and understanding of the real Return on Investment (ROI)
for any given line of business or initiative

32
Another problem associated with the use of government accounting system is network
problems (Wahab, 2003). Review of literature showed that some of the countries using
government accounting and budgeting system have long been experiencing network
problems. This means that the network provided is not up to the mark (MFDP Report,
2007). A network is essentially a collection of information processing and
communication resources that connect different information system assets, enabling
them to share, access, and transmit information and data. It is important to control
access of information system by both internal and external users to avoid compromising
network security. Connections which are not secure can seriously compromise the
information systems of the organization as a whole. Connections should be protected to
avoid compromising the information system of the entire organization. Network and
network services usage should not be left entirely for operational discretion; rather, a
policy should be used to govern it (Hingarh & Mahmed, 2013).
2.13 Empirical Review
accrual accounting benefits for Romania as an emerging economy and in terms of all
independent variables used in the study, fixed assets, liabilities, revenues and costs. It
also shows the gradual evolution of finding the advantages of the Romanian accounting
system’s transition from a cash basis to an accrual basis in the two analyzed stages, the
transition and post-reform periods. It proves thus the correlation between the pace of
regulatory changes and their application in practice, indirectly confirming the orientation
of the Romanian standard-setters towards IPSAS (International Public Sector)
Accounting Standards and accrual accounting. Moreover, this research is an argument
for the importance of accounting and of the economic analysis which the study can
support through proper financial reporting. We tried to demonstrate the usefulness of
accrual accounting through a quantitative approach and to add arguments for the trend
which has been noted today, the increasing implication of accounting in the public
sector management and guidance to governments who generally give more attention to
the efficiency and effectiveness of public sector management. (Deacon, 2011)
Moreover, various scholars carried out empirical studies on measurement of efficiency
in government accounting. Study by Ammons and Rivenbark (2008) in Russia revealed
that there are complexities in measuring efficiency in government accounting as about

33
23 local governments resorted into reporting differently from what was actual in books
of accounts. Likewise, efficiency was revealed to be further outcomes governments
produce. Outcomes are the social life improvement, the cleanliness of streets, and the
economic vitality of the community.
A survey conducted by (Ambetsa, 2004) of budgeting control practices by commercial
airlines operating at Wilson Airport, Nairobi indicated that the challenges faced were
budget evaluation deficiencies, lack of full participation of all individuals in the
preparation of the budget and lack of top management support. He further concludes
that airlines operate and use budgets to plan implement and evaluate their business
performance. All enterprises make plans using budgets some in a systematic and formal
way, while others in an informal manner but still have some Form of budgetary control
and budgetary control practices. Therefore the issue is not whether to prepare a budget
but rather how to do it effectively

The objectives of government accounting are to safeguard the public treasury and
property to accurately measure and communicate the government's financial condition
so as to demonstrate financial accountability, and to facilitate decision-making. a
government should prepare and publish its budgets, maintain complete financial records,
provide full financial disclosure, and subject itself to independent audits., the form and
content of financial reports Should be guided by the rights and need to know of intended
users., The accounting system should measure the cash and other financial consequences
of past transactions and events, including, but not limited to budget execution. The
accounting system should be capable of keeping track of the levels and changes in
assets, liabilities, revenues and expenditures or expenses, relative to budgeted (Chan,
2003)
The researcher conducted by admasu had tried to study and explained the accounting
and reporting practice of Abebecheg Goben Children’s Care and Development
AGOHELMA, so in order to generalize of the study AGOHELD employees or members
have a clear understanding accounting practice and financial reports covering all funds
and financial transactions. AGOHELMA has a better record keeping systems. Thus
recording, summarizing and evaluating process are accurate and relied with generally

34
accepted accounting practice Financial statements are prepared to meet financial users
and financial reports are prepared periodically because to control financial operations
and to satisfy the end users of like donors, governments. AGOHELMA’s major source
of fund is donations or contributions (Admasu, 2012)

35
 Chapter Three
Research Design and Methods
This chapter focuses on the activities and processes followed in undertaking the study. It is
structured to describe and discuss the research design adopted; the necessary sources of
data, methods used in generating and collection of data, the population of the study, and
data analysis techniques including their justifications
It presents the data collection and processed into a research document. The methodology
for a research must therefore be scientific. That is, the process must be systematic,
rigorous and unbiased. In order to guard against potential statistical errors, relevant and
appropriate data collection instruments and census method of data collection was applied
to arrive at accurate results. This mainly involves the research design, population under
the study, types of data and method of data analysis.
3.1 Research Design
This study adopted a mixed research design which describe the characteristics of certain
groups, estimate the proportion of people who have certain characteristics and make
predictions. The study sought to collect data from the BOFED staff at one point in time
and determine application and challenge of accounting system. Mixed Research design
was the framework or blueprint for conducting a meaningful research. It set the outline
for collection, measurement and analysis of data. Mixed Research design provides the
glue that holds the research project together. which was used to structure the research to
show how all of the major parts of the research project -the groups, measures, treatments
or programs, and methods of assignment work together to try to address the central
research questions. In an attempt to complement and validate one research method with
the other in order to compare results in different contexts, the research triangulated via
using primary data sources specifically, questionnaires and interviews. Thus, interviews
response was used to complement and to check the validity of data gained from
questionnaires.
3.2 Study Area
The researcher takes into account the cost and the representation matter, and focuses on
BOFED in Addis Ababa Town. As a matter of fact, there are zonal branches in Addis

36
Ababa Finance and Economy Bureau and the researcher did not collected data from these
zones because all the respondent in the bureau are adequate for data analysis because the
research was used census.

3.3 Target Population

According to (Abdulmalik, 2006), population in this context has been defined as all
conceivable elements, objects or observations relating to a particular phenomenon of
interest to research, i.e. it is the totality of items, object, persons, issue or observation
who share at least a common attribute or characteristic on which the research in
centered. This could be people, objects, cities, countries etc
To give Exact and accurate result the research was used census method of data
collection because the official and the number of staff which are finance, budget and
internal auditing business process working in the bureau are very small and manageable
for analysis purpose, and also they are related with their experience and professions the
other staff out of these are insignificant to the research.
Going by the above definition, there are two types of population which is of interest to
in this study. The first is the population of the government areas officials (BOFED)
management, while the second is the population of the respondents – finance, budget,
and auditor teams. Since it is practically almost possible to include entire populations
in the study, the researcher collection data not more than 50 which include 4 department
heads and 6 team leaders.
3.4 Method of data collection
Primary data: According to Ebvorakhai (2003) Primary data represents the raw
materials (data) needed for processing in order to arrive at some findings relevant to the
research problem. It is generally agreed that primary data, which is essentially data
collected by the researcher himself to address a particular research end, is the best and
most reliable source of data since the data is collected and analyzed by the researcher.
For the present study, the primary data consist mainly of cashers, budget experts,
accountants, Auditor and managements from BOFED. Primary data was collected by
means of distributing self administered questionnaires to the selected employees of the

37
organization and by face to face interviewing with the management of the office.
Interview responses (data) was coded and arranged according to their similarities.
Secondary data: A secondary source of data is related data that was collected by other
researcher or compiled by government and non-governmental agencies. Secondary data
is usually in documentation. For this study a wide range of data were collected from
secondary sources. Which were collected from different organizations’ library, from
BOFED archives and other sources, such date was collected from these sources were
books, articles, previous studies, websites, and BOFED raw data collected by experts.
These includes, government procedures, financial report, Main lager accounts Balances,
financial report, financial administration proclamation.

3.5 Reliability and Validity of the Instrument

Reliability of the Instrument: Reliability is literally the extent to which we can
rely on the source of the data and, therefore, the data itself. Reliable data is dependable,
trustworthy, unfailing, sure, authentic, genuine, reputable. Consistency is the main
measure of reliability. In this regard, data were collected from reliable sources, thus,
those at management levels who are informed with general operations of the
Government accounting in the BOFED, such as, decision makers, director, team leader
and finance expert. The reliability of the study was (also established by cross checking
the responses of the officials; the data collected from secondary sources and the
responses were given by Expert.

In order to say the research has the reliability, the instrument should show above 0.7
Cronbach's Alpha results. However the higher Cranach’s alpha result does not reflect
reliability, unless the test is shortened (Mohsen Tavakol, 2011). Cronbach’s alpha is a
model of internal consistency reliability based on the average inter item correlation of
an instrument” (Rovai, Baker, and Ponton, 2014) Hence, the research instrument was
checked by Cronbach’s alpha and its result was .801

Validity of the Instrument: The validity of the instrument was tasted through
discussion with the research adviser, and with knowledgeable individuals. The quality
of these instruments is very critical because “the conclusions researchers draw are

38
based on the information they obtain using these instruments” (Fraenkel & Wallen,
2003,). Thus, it is imperative that the data the research and the instruments to be
validated. On the whole, the following miscellaneous procedures can be used to
validate the instruments and the data of the research such as.
A. Content Validity Content: validity is related to a type of validity in which different
elements, skills and behaviors are adequately and effectively measured. To this end,
the research instruments and the data might be reviewed by the experts in the field of
research. Based on the reviewer’s comments the unclear and obscure questions can be
revised and the complex items reworded. Also, the ineffective and non functioning
questions can be discarded altogether. In addition, the questions could be face
validated by these persons. Based on this point the validity of the research was
investigated using skills and behaviors of the respondent and the expert was given
they valuable comment and was included the comment. Finally ineffective and non
functioning questions were discarded as shown in the analysis and appendix of the
questioner.
B. Internal Validity: Mainly, internal validity is concerned with the congruence of the
research findings with the reality. Also, it deals with the degree to which the
researcher observes and measures what is supposed to be measured. On the whole, to
boost the internal validity of the research data and instruments, the researcher might
apply the following six methods recommended by (Merriam, 1998), triangulation,
member checks, short term observation at research site, participatory or collaborative
modes of research. In order to strengthen the validity of evaluation data and findings,
the researcher should try to collect data through several sources: questionnaires,
interviews and. Gathering data through one technique can be questionable, biased and
weak. However, collecting information from a variety of sources and with a variety of
techniques can confirm findings. Therefore, if we obtain the same results, we can
become sure that the data are valid. Certainly, through triangulation we can gain
qualitative and quantitative data in order to corroborate our findings. There for the
research triangulate the qualitative and quantitative date and had got similar result.

39
3.6 Data Presentation and Analysis Techniques
According to Osuala (2001), data analysis involves the ordering and breaking down of
data into constituent parts. Akogun (2000), also opinion that the aim of statistical
analysis is to test hypothesis, draw a general conclusion and make a prediction.
Hence, the analysis of the data is the means by which the research problems are
answered. However, this study has adopted descriptive and statistical techniques.
3.6.1 Descriptive Analysis Techniques
This involves the use of numerical values to describe some features of a distribution,
(Gupter, 1996). These numerical values can also be used to describe qualitative
features. Also, descriptive techniques bring data into order, which according to (Asika,
2000) involves data preparation, tabulation and summarization Therefore, the
descriptive tool used in data presentation and analysis of this study includes tables and
simple percentages and mean. The SPSS 21 was used to prepare the data for
descriptive. This is due to its simplicity and explicit approach in research work
3.6.2 Qualitative Data Analysis Techniques
3.6.2.1 Interview
The face to face interview was conducted to Heads of Departments for the units
identified. This was applied given the fact that these kinds of people do not have
enough time to concentrate on questionnaire and fill in; therefore, interview is thought
an ideal technique for this government official. Information obtained was recorded and
analyzed. Interview technique created and promoted understanding between the
interviewer and interviewees. It involved presentation of oral-verbal stimulus and reply
in oral verbal responses. This technique leads to smooth flow of data from respondents
to the interviewer. However, the major advantage of this method is that interviewees
are comfortable more free to give out own views and opinions pertaining to the study.
3.6.2.2 Document Analysis
Documentary analysis is a suitable method for collecting data from secondary sources
that consist of statistical statements and reports, whose data may be used by researchers
for their studies; for example, articles, books, journals, manual, annual reports, policies
and other useful published reports. The secondary source consists of not only published

40
records but also unpublished records such as Journals, books, and internet. The purpose
of documentary analysis is relating the research’s investigation with literature and
empirical reviews relevant to the research topic.

41
 Chapter Four
Data Presentation, Analysis and Interpretation
This chapter contains an analysis of the information obtained from the respondents. Due
to Analysis of the results provides answers to the questions posed in chapter one
concerning the application of government accounting system in BOFED the implications
of the findings was presented throughout the chapter. The information used in this section
was obtained through from the organizations which was used census method,
questionnaires filled by the employees of the selected organizations. The questionnaires
used were planned in such a way that it can reveal information on the accounting system.
For easy understanding and use, the findings were clustered in to central areas related to
the research questions. These were Accounting cycle activities, plant asset and
management, budget system and reporting of BOFED and also it show the challenge face
the system in general.
4.1 Demographics Characteristics of Respondents
According to UN (2009) a thorough and professional research must encompass some
variables of world cross cutting issues. Therefore, in this study demographic
characteristic of respondents is composed of gender and age of respondents, working
experience and level of education of the respective respondents. However, such
demographic characteristic of respondents create inference on data validity and reliability
given the fact that significant information for the study would have high degree of
reliance. If at all given by matured respondents, a sound exposure on Government
accounting as well as level of education
4.1.1 Gender and Age
Table 4.1: Gender and Age
Gender Respondent Percentage Age range Respondent Percentage
Male 25 63 20-30 - -
31-40 4 10
41-50 19 48
>50 2 5
Female 15 37 20-30 4 10

42
 31-40 4 10
41-50 5 12
>50 2 5
Total 40 40 100
Questioner result of SPSS, 2017

Table 4.1 showed that 25 percent of the respondents were male while females comprise
of 15 percent. Their age range varied considerably. There were 10 percent males at the
age group of 31-40 while females were 4. There were also 10 percent tend at the group of
18-27, there were 19 percent male at same age compose of 5 percent, likewise, the age
group > 50 years old, there were 2 percent males while females were 2 percent. Gender
as a cross cutting issue was taken in to consideration in order to ascertain gender balance
in the study, hence reduce research biasness on gender. In this connection, more
respondent in the study were males than females.
4.1.2 Experiences with Government Accounting
Analysis was made on experience in operation for government accounting as shown on
table 4.2 and the following were results obtained. Out of 40 respondents in the study 10
percent had 1-3 years experience in operating with government accounting while 5 %
percent had such experience between 3.6 and 10 percent had such experience between 7-
9 years experience and 75 percent had the experience of more than 9 years. Therefore this
demography evidence that the study got adequate information from reliable source and
well informed respondent as 90 percent of the respondent where found to possess a sound
experience in operating with government accounting for more than 3 years
Table 4.2 Experience in Government Accounting
Number of years Respondent Percentage
1-3 4 10
3-6 2 5
7-9 4 10
>9 30 75
total 40 100
Questioner result of SPSS, 2017

43
4.1.3 Level of Education
Table 4.3 show respondent’s level of education as 15 percent had collage diploma level
of education while 77 percent was found to possess degrees as well as 8 percent were
found to possess post graduate level of education. Therefore, the study had more than 80
percent of respondent with recommendation level of education, thus information
reliability from the same would be guaranteed.

Table 4.3: Level of Education

Educational level Respondent Percentage

Diploma 6 15
Degree 31 77
Master 3 8
Total 40 100

4.2 Application of government accounting

The responses were placed on a five Likert scale ranging from 1 (not at all) to 5 (most
satisfactory). A mean of above mean average is regarded to measure satisfaction on the
test variables. Standard deviation was used to indicate the variation or "dispersion"
from the "average" (mean). A low standard deviation indicates that the data points tend
to be very close to the mean, whereas high standard deviation indicates that the data is
spread out over a large range of values. The results are shown in the Table below

44
 Descriptive statics 4.4

N Minimum Maximum Mean Std.

Deviation

The bureau of each recorded transaction is 40 2 5 4.20 .687

reliable, valuable and clear

the organization use pre-numbered 40 3 5 3.83 .781

documents for accounting purpose

your organization prepare its financial 40 1 5 2.58 1.299

statement according to Government

accounting standard statements
How do you see the accounting cycle with 40 1 5 2.93 .971

relate to economic data of the bureau

There is recording of Payment of salaries and 40 1 5 2.43 .984

wages
The relation of finance department with 40 1 5 3.73 1.320

Ordering, receiving and issuing materials

from store
The bureau‘s accounting system is 40 1 5 2.40 1.033

computerized?
The bureau record all account in ledger as 40 2 5 3.63 1.005

general and subsidiary ledger accounts

The bureau reconcile and update its record 40 3 5 3.95 .677

timely
The accounting data are Simple to Search and 40 1 4 2.38 .868

to correct errors
Valid N (listwise) 40

Questioner result of SPSS, 2017

As shown in the Table 4.4 From the total of the respondents (40), were asked organization
prepare its financial statement according to Government accounting standard which have
given the lowest mean (2.58), this show that the Government accounting standard is not
fully applicable in the bureau, therefore it is big problem of application of government

45
standard statement, likewise, the accounting cycle with relate to economic data of the
bureau, which have given the lowest mean (2.93), this show that resource of the bureau is not
given expected attention, therefore there is a problem of recording resource of the
organization based on evidence in the account is weak,

Similarly, the respondent where asked from the equation, with relate to recording of
Payment of salaries and wages, found out that (2.43) which is below average mean, Thus
, this parameter indicate that, It does not fulfill the interest of the average respondents.
Therefore, we can say that there is a weakness in recording recurrent budget effectively, in
addition, The bureau‘s accounting system was not computerized the result indicate 2.4
which is below average mean (i.e,3), Finally with relate to the accounting data either
Simple to Search or to correct errors shows below average mean which is 2.38 value, this
show that the accounting data are not Simple to Search and to correct errors, therefore, this
gap create negative impact on effectiveness of the transactions, so we can say that the
account recording is not effective.
However , with relate to the level of satisfaction in how transaction are reliable, valuable
and clear, found out that the mean of 4.2, this show that record of the transaction is above
average mean (i.e. 3), therefore, the bureau record of each transactions are reliable,
valuable and clear. Whereas with relate to the equation of how the organization use pre-
numbered documents for accounting purpose was found that 3.83 which have been rated
“above the expected average”, these clearly indicate that bureau use pre number
document for accounting purpose and show confidentiality of accounting document
likewise, the rating of respondent with relate to finance department with Ordering,
receiving and issuing materials from store found out that the mean of 3.73 this is above
average mean, therefore, the respondent agree about it, this indicate that in the system
there is clear responsibility and accountable of expenditure of goods and service in the
bureau.

similarly, The bureau record all account in ledger as general and subsidiary ledger
accounts (4.23), is above average mean, this show that there are ledger balances and
subsidiary ledger balances for each record account, there are also chart of account and
the accounting process of recording of journal to ledger. Finally The bureau reconcile

46
and update its record timely indicated a mean value of 3.95 which is above average mean
(i.e. 3.00) there are proving and checking of account balance, and transfer of balance of
each account from time to time and from period to period.

4.3 Budget system

Descriptive Statistics 4.5

N Minimum Maximum Mean Std.
Deviation
Involvement of stakeholders in 40 1 4 2.55 1.037
budget preparation.
Level of Variations exit 40 2 5 3.75 .742
between budgeted and actual
amount
Usage of budgets for a given 40 1 5 3.63 .807
period of time effectively

Approval of budgets on yearly 40 2 5 3.85 .622

basis and Adherence to budget

estimates

40
Valid N (listwise)

Questioner result of SPSS, 2017

As shown in the Table 4.5 shows a summary of responses in regard to the level of
satisfaction in respect to stakeholders’ involvement in budget preparation as indicated
their satisfaction (2.55) which are below the expected average mean (i.e. 3.00).
Therefore, these indicate that BOFED should improve Stakeholder participation in
budget preparation and approval. Contrary to this, there is high satisfaction in the Level
of Variations exit between budgeted and actual amount have shown a mean value of 3.75.
This indicates that the respondent believes that there is high variation of utilization of

47
 planed budget and actual budget. Therefore, this shows that there is no proper effective
implementation of budget in the system. it should be improved, Likewise, Usage of
budgets for a given period of time effectively shows a mean Value of 3.63, this value
indicate that there is effective usage of budget for the given time table period, However,
there is a weakness of using all allocated amount of budget for each planed activities
which needs attention of the management, likewise, there is high satisfaction in
Approval of budgets on yearly basis and Adherence to budget estimates have been rated
as a mean value of 3.85, this indicate that the bureau approve budget based on the budget
calendar of MOFED.

4.4 Plant Asset Record and Management.

Descriptive Statistics Table 4.6

N Mini Max Mean Std.
Deviation
Plant assets recorded in accordance with the 40 1 5 2.43 1.279
cost principles of asset valuation
The relation of Revenue expenditure to the 40 1 5 2.15 1.167
repair, maintenance, and operation of a long-
term asset
Use capital expenditure for the purchase or 40 0 5 2.48 1.432
expansion of a long-term asset.
All equipment was tagged 40 1 5 2.68 1.474
Safeguarding of fixed assets 40 1 5 2.55 1.413
The level of valuation methods 40 1 5 2.08 1.347
40
Valid N (listwise)

Questioner result of SPSS, 2017

As shown in the table 4.6 From the total of the respondents 40, were asked how the level
of satisfaction in the relation of Plant assets recorded in accordance with the cost
principles of asset valuation found out that the mean value of 2.43, this show that

48
below average mean (3), therefore Most of the respondent do not agree about it, It can
be found out that Plant assets is not record in accordance with the cost principles of
asset valuation which was unsatisfactory responded, therefore, there is a limitation of
record of Plant assets, asset valuation and report of fixed asset and estimation of
current market. And also the level of valuation methods has a mean of 2.08, from this
value; we can found out that there is no application of valuation in the book of account,
due to the level of valuation methods was found to be less satisfactory. In this case the
revaluation decision is very important to the bureau, likewise, The relation of Revenue
expenditure to the repair, maintenance, and operation of a long-term asset which have
given the lowest mean (2.4), this show that there is no relation of Revenue expenditure to
the repair, maintenance, and also the bureau do not consider and record the level of
operation of a long-term asset, likewise, They asked how the bureau Use capital
expenditure for the purchase or expansion of a long-term asset, which have given the
lowest mean ( 2.48), this point show that capital expenditure is not consider as investment,
therefore, the bureau does not record investment in the book of account. Likewise,, the
respondent are not satisfied with the equation of all equipment control by using tagged,
it’s mean of 2.68, this show that equipment of the bureau had not serial number,
therefore, and there is no record of equipment with in and out of the accounting system.
Generally from the above finding Show that Overall Plant Asset record and management
is less satisfactory In the Organization, therefore, the Plant asset record and management
generally highly weak in the organization.

49
 4.5 Reporting financial statement

Descriptive Statistics 4.7

N Minimum Maximum Mean Std.
Deviation
the system produce and report 40 2 5 3.90 .672
financial statement timely
The financial statement is reliable 40 2 5 3.35 1.167
and relevant
standard format for reporting 40 2 5 3.88 .723
financial segment
Clarity understanding about the 40 2 5 3.63 .807
reporting practice of your
organization
Financial Reports of the Bureau is 40 1 4 2.40 .900
Accurate and Timely prepared
The financial report cover all event 40 1 4 2.33 1.023
and financial transactions
Valid N (listwise) 40
Questioner result of SPSS, 2017

Table 4.7 Summarizes responses in regard to the system produce and report financial
statement timely found out a mean of 3.9, this show that the organization system
produce and report Financial statement timely, therefore, the bureau financial
reporting fulfill Time lines of reporting Standard. Likewise, the respondent were
satisfied in relate to reliable and relevant of the financial statement found out that the
3.35 which is above average mean , therefore, the bureau financial statement is reliable
and relevant likewise, the respondents were asked to their satisfaction level in the
equation (is there Standard format for reporting financial segment), the value of the
mean (3.88), which is above average mean, this show that the organization highly used
standard format for reporting financial segment, Similarly, Clarity and understanding
about the reporting practice of the own organization show the mean of 3.63, which is
above average mean (3), therefore the financial statement are clear and reliable to all

50
 staff of finance expert, contrary to this analysis, the respondent are not satisfied with
relate to Financial Reports of the bureau Accuracy and Timely preparation, which
have a mean value of 2.40, this is below average mean (i.e. 3), therefore, the
organization report is not Accurate and Timely prepared, likewise, with relate to the
equation, The financial report to cover all event and financial transactions, show
below average mean (i.e. 2.33), this indicate that financial Report do not cover all
event. Therefore, we can say that the bureau financial report has a limitation on
completeness of financial transaction and reporting.
4.6 Qualitative Data Analysis and Discussion

Based on the research questions shows that face to face interview was conducted to
Heads of Departments for the units identified summarized as follow:
A kind of accounting method they used to record and analyze financial data was
modified based of accounting which Records short-term item when cash levels change
and, longer-term balance sheet items with accruals (the accrual basis).

Process accounting start after the budget was approved by using program budget and
the bureau use budget ledger card to control the budget, Maintains the adjusted budget
by line item, type of budget, by sub agency/project and source of finance, Records
commitments , Shows unutilized budget (remaining budget not committed) ,
Expenditure is incurred only if there is an available budget., Actual expenditure does
not exceed the adjusted budget and also different format, source document such as
receipt voucher, Journal voucher, Cash payment voucher, Suspense payment vouchers,
purchase order, minutes, memo etc were used to record transaction in to transaction
register and post to the general ledger and report the balance after closing based on the
code of assets, liabilities and net assets, in addition any transactions were recorded
using ibex-disbursement system similarly payment was used by e-payment system,

With relate to the Strength of the accounting system they say that, It has effective
accounting cycle so as to view simplified report, usage of IBEX (integrated budget
expenditure management), Existence of budget manual and different other policy and
procedure for accounting purpose

51
However, the weakness of the accounting system was lack of Stakeholder participation
in budget preparation and approval, there also weak in proper effective implementation
of budget , fixed assets were not recorded and also the system did not had accurate, fast
and updated information about these Fixed Assets. Therefore, it does not show complete
financial position of the business, likewise, Financial Reports of the bureau Accuracy
and timely prepared similarly, inconsistency for implement the policies, procedures, and
internal controls needed.

With relate to challenges facing Government accounting discovered the following point;
lack of government official the ability to read and analyze financial statements so that
data-driven decision making was not becomes the norm reading and little computer
skills by employees, Greater integration of IT systems is a key Priority and a major
challenge for the bureau, in addition, lack of competent personnel, low legal
enforcement and frequent updates in standards.
In addition, the study also identified many various challenges but due to data coding the
main five challenges were enunciated. Despite of the aforesaid five major challenges,
effectiveness of the accounting system also face other challenges such as usage of
outdated computers, government officers may not frequently refer to their formulated
budgets when carrying out their various tasks leading to the poor operation due to
ineffective or poor financial management

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 Chapter Five
Summary of Major Findings, Conclusion and Recommendation
This chapter presents summary of major findings, conclusions and recommendations
based on the analysis and interpretation of the data that were collected through
questionnaires on An Assessment of the application of government accounting system
and its challenge of the system in Addis Ababa city administers finance and economy
development bureau. On the general characteristics, the study indicated that majority was
males and most of them had worked in their respectful Organization more than 9 years.
The findings also indicated that Most of the respondents are BA Degree in Accounting.
The study was set out to assess issues in the application of Government accounting
system and its challenge. And also Help to suggest possible solutions by investigating
organizations system and depict the potential finance expert and top management in the
organization. The study also sought to answer the following basic questions to attain the
desired specific objectives of the study: How the accounting cycle (process) applied in
the bureau? How asset valuation and record used in the bureau? What type of budget
preparation process or system adopted by the bureau? How the government financial
reporting applied in bureau financial statement? What are the challenges pertaining to
Government accounting the bureau face?
5.1. Summary of major finding
Based on the analysis and interpretation made in the previous chapter the major findings
of the research were as follow:

A. The government accounting cycle

The study found out that The bureau accounting process Highly satisfied for the
following questions, each recorded transaction is reliable, valuable and clear, the
organization use pre-numbered documents for accounting purpose, the financial system
with relate to expenditure of goods and service with other department, and also its
record of each account and confidentiality of accounting document are satisfactory for
the respondent, the bureau also record all account in ledger as general and subsidiary
ledger and finally, The bureau reconcile and update its record timely.

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contrary to the above, The finding revealed that quiet a number of respondents
responded BOFED prepare its financial statement according to Government accounting
standard Is weak, Theory and principles are not fully applied , because most of the
respondent indicated their dissatisfaction, therefore the standard statement are not fully
implemented In the Organization. In addition the accounting data are not simple to
Search and to correct errors, therefore it indicate that there is negative impact on
effectiveness of the transactions, so the accounting recording and processing are not
effective.

B. Budget system
Most participants strongly agreed that indeed Approval of budgets on yearly basis, and
Adherence to budget estimates and using program budget, budget ledger card to control
the budget and also budget is used in decision making, and it is a management tool , there
is effective time management of budget at the bureau. Contrary to this point, with relating
to the effectiveness of budgets planning and management, Involvement of stakeholders in
budget preparation were also observed that less satisfactory. There is high satisfaction in
the Level of Variations exit between budgeted and actual. This indicates that the
respondent believes that there is high variation of utilization of planed budget and actual
budget. Likewise, in the bureau, there is no proper and effective system in the
implementation and evaluation of budget. The researcher further determined on extent
of using budget in decision making by asking the participants, if budgeting affects the
financial plan found out that highly affect their plan. Generally, in the bureau’s budget
system, there is no proper budget application of system in the organization.
A. Plant asset record and management.
The finding revealed that quiet a number of respondents were Un satisfied in The
relation of Revenue expenditure to the repair, maintenance, and also operation of a long-
term asset, in addition there is no valuation Method used by BOFED. Similarly, capital
expenditure is not considered as investment; therefore, the bureau does not record investment
in the book of account. These Investigation show that fixed assets record and
management are General highly weak.

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D. Reporting

Most of the respondents highly satisfactory in system produce and report financial
statement timely, therefore, the bureau financial reporting fulfill Time lines of reporting
Standard. Likewise, the respondent were satisfied in relate to reliable and relevant of
the financial statement, and also the organization highly used standard format for
reporting financial segment, Similarly, there is Clarity and understanding about the
reporting practice of the own organization, to all staff of finance expert, However,, the
respondent are not satisfied with relate to Financial Reports of the bureau Accuracy
and Timely preparation, therefore, the organization report is not Accurate and Timely
prepared, likewise, financial Report do not cover all event. Therefore we can say that
the bureau financial report has a limitation on completeness of financial transaction and
reporting.
E. Challenge of Government accounting system
The research Investigate Data gather tool through qualitative data found out that, weak in
implementation of budget, Lack of adequate competent official and accountant, turnover
of employees, little computer skills by employees, ICT integration, low legal enforcement
and frequent updates in standards, The Bureau Also Lack of a reliable management
process for its fixed and controlled assets becoming challenge for the government
accounting system.

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5.2. Conclusion
A. The Government Accounting Application
The results of the analysis revealed that adequate books of account were often
maintained in BOFED, with relate to the first objective of the study (To find out the
application of accounting cycle (process) used by the bureau.) indicate that Government
accounting standard is not fully applicable in the bureau, therefore it is big problem of
application of Government standard, likewise, the resource of the bureau is not given
expected attention , therefore there is a problem of recording resource of the organization
based on evidence in the account is weak, Similarly, with relate to recording of Payment
of salaries and wages, there is a weakness in recording recurrent budget effectively, in
addition, The bureau‘s accounting system was not computerized and Integrated to
process accounting data, the accounting data are not Simple to Search and to correct
errors, this gap create negative impact on effectiveness of the transactions process..
However, the bureau record is reliable, valuable and clear whereas the bureau use pre
number document for accounting purpose and shows confidentiality of accounting
document. In addition finance department is working with other department to Order, to
receive and to issue materials from store, therefore, the system designed clear
responsibility and accountability of expenditure of goods and service in the bureau.

B. Budget system
Similarly, to achieve the second objective of the research (identify the budget preparation
process or system adopted by the bureau.) identified that better budget management in
Approval of budgets on yearly basis and Adherence to budget estimates, there is also
effective time management of budget plan and there is also high variation of utilization
of planed budget and actual budget, however, there is no proper and effective system in
the implementation and evaluation of budget likewise, budgeting affects the financial
plan. Generally, in the bureau’s budget system, there is no proper implementation and
utilization of budget; likewise, there is big gap in stakeholders’ involvement in budget
preparation.

56
C. Plant asset record and management
In the Third research objective (How asset valuation and record used in the bureau)
there is no asset valuation used by the government, capital expenditure is not recorded
as investment in the book of account and also fixed assets management and record is
General highly weak.
D. Reporting
the fourth objective of the research, To investigate the government accounting
financial reporting applied in the bureau financial statement identified that the
organization system produce and report Financial statement timely, therefore, the
bureau financial reporting fulfill Time lines of reporting Standard, there is also clarity
of each report of the organization, reliable and relevant of the financial statement,
and also the organization highly used standard format for reporting financial segment,
, however, the organization report is not Accurate and Timely prepared and also
financial Report do not cover all event. Therefore we can say that the bureau financial
report has a limitation on completeness of financial transaction .

E. Challenge of government accounting

In the last research objective (Investigate the challenges pertaining to Government
accounting the bureau face) based on the analysis concluded that lack of government
official the ability to read and analyze financial statements so that data-driven decision
making is not becomes the norm reading, inconsistency for implement the policies,
procedures, and internal controls need of the organization, Lack of a reliable
management process for its fixed and controlled assets becoming challenge for the
government accounting system.
Finally, more identified challenges facing Government accounting discovered was little
computer skills by employees, ICT integration, lack of competent personnel, Turn over, low
legal enforcement and finally ineffectiveness of the accounting system also faces other
Challenge.

57
5.3 Recommendation
Based on the findings and conclusion of the study, the following are some
recommendations which if considered, can assist in improving application of
government accounting System.

5.3.1 BOFED/Management
 The bureau accounting will be improved with gradually applying accrual based
standards. it providing financial position and performance, assuring a better
financial integrity, improving accountability and transparency for resources, being
a benchmark for evaluating and improving government accounting, enhancing
international comparability of financial information of the government with other
governments,
 facilitating the Consolidation of financial statements better than the present
accounting system
 Complete application of government accounting standard
 Increase utilization of the system by ensuring all accounting issues are
computerized and integrated if possible
 The management should expose all departmental heads to the budgetary process.
This will enable them to understand the importance of adhering to budget in order
to implement the management decision which will aid the actualization of set
goals.
 Budget training should thus be conducted yearly by the financial controller or an
independent accounting/management consultancy firm.
 Improving budget planning and management by Participation of stakeholder in
budget preparation and record of recurrent budget effectively should be improved.
 City councils and regional finance bureau should improve the knowledge and skill
of financial management.
 Improving quality of report based on the standard,
 Recording and measurement of fixed assets and effective administration of fixed
assets, To assure value for many of government, record of fixed assets, record of

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 capital expenditures and other government expenditures should be based on the
principle government accounting standard and cost principle.

5.3.2. Employees

 The study found further that employees are lacking competence and technical skills in
areas of their work. The study is here by recommending that apart from efforts made
by the Government to improve training and development, it’s a responsibility of each
employee to update and upgrade him or herself in accounting standards, computerized
accounting, general accounting knowledge and application of rule, policy and
procedure of government system of accounting.

59
 REFERENCES

1. Adebayo, J (2010) “Accrual Accounting – Does it meet Government Financial

Reporting Objective”? International Journal of Public Finance and Economic
Development.
2. Aristovnik, Aleksander & Seljak, Janko (2009). "Performance budgeting: selected
international experiences and some lessons for Slovenia," MPRA Paper 15499,
University Library of Munich, Germany.
3. Abdullah, A.M & Angus, O.U. (2012). Budget in Nigeria Public Sector: Need for
Balanced Scorecard Perspective. International Journal of Finance and
Accounting, 1(2): 1 -6.
4. Agnand, F. N (2011) Technology in accounting systems, Journal of Public
Finance, London Publications, England Association of Accountancy Bodies in
West Africa (2009), (ABWA). “Public sector accounting”, public by abwa
publishers, Nigeria.
5. Hajik, G and Kpamala, J (2011) Public Sector Accounting and Financial
Management; New Delhi; Vikas Publishers.
6. Hongs, M (2010) Public Financial Management and Accounting; New Jersey;
Prentice Hall Inc.
7. Olurankinse, F. (2012). Due Process and Budget Implementation: An Evaluation
of Nigerian Public Sector Auditing. Asian Journal of Finance and Accounting.
Vol. 4, No. 2, ISSN 1946-052X.
8. Nyakundi, Nyanyuki, Dr. Charles Okioga, Dr. Patrick Ojera (2011), “an
assessment of the effect of accounting practices on the Management of funds in
public secondary schools” Asian Journal of Business and Management Sciences
,Vol. 2 No. 8 [34-50].
9. Chan, James L., 2003, “Government Accounting: An Assessment of Theory,
Purposes and Standards,” Public Money and Management (January), pp. 13-20.
10. Chan, James L. and Yunxiao Xu, 2012, “How Much Red Ink? Comparing the
Economic and Accounting Approaches to Measuring Government Debt and
Deficit,” World Economics (forthcoming).

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11. Drebin, Allan R., James L. Chan and Lorna C. Ferguson, 1981, Objectives of
Accounting and Financial Reporting for Governmental Units: A Research Study,
Vol. I (Chicago: National Council on Governmental Accounting).PP19-30
12. Lienert, Ian and Israel Fainboim, 2010, Reforming Budget System Laws,
TNM/10/01 (Washington, DC: IMF).
13. Peter Mwangi , 2011 “Effects of management accounting practices on Financial
performance of manufacturing Companies in Kenya” PP19-30
14. Olaoye, Festus Oladipupo, Ogunmakin, Adeduro Adesola (2014),” Budgetary
Control and Performance in Public Corporations” Journal Of Humanities And
Social Science (IOSR-JHSS) Volume 19, Issue 7, Ver. IV
15. Mohammed, Huweish, Allawi and Alshujairi (2014) “Government Accounting
System Reform and the Adoption of IPSAS in Iraq”, Research Journal of Finance
and Accounting Vol.5, No.24,
16. MOFED (2002) Development and the Decentralization Support Activity project
Web sight.
 /http://www.aabofed.gov.et/about%20eng.html/-,Addise abeba of finance and
Development bureau Economy.
 http://www.mofed.gov.et/, ministry finance and economy Development
Cooperation.
 http://onlinelibrary.wiley.com/,Research Journal of Finance and Accounting
 Williamson D. (1999). Budgeting and Budgetary Control. Retrieved from
http://www.suite101.com/content/the-purpose-of-a-b.

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 Appendix
General Instruction
First and for most I would like to thank you for your willingness to fill these
questionnaire format.
NOTICE
1. All the information will be used only for the research purpose only. You do not
have to write your name. I assure that your response will be kept in secret.
2. Each of your response is add value for the study, therefore please go through each
question patiently and give genuine answer.
3. Fill the blanks and put thick () sign, where it is necessary for the questions
adequately in the space provided.
Part I: General Background of the employees
1. Age: 20-30  31-40  41-50  50 and above
2. Gender Male  Female 
3. Education level College diploma PHD/MD
Degree  Masters 
Other please specify_________________________
4. Name of the department of that you are currently
working_________________________________________________________________
________________________________________________________________________
___________________

5. What is your current position in the organization?

________________________________________________________________________
________________________________________________________________________
___________
6. Area of your specialization
Accounting and finance  Sales department 
Purchasing department  Cash fund 
HR/payroll department 
Other please specify____________________________________________

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7. For how long have you been working in your current position?
1-<3 6-<6 6<9 9 and above 
8. Years of working experience in the accounting profession
1-<3 6-<9
3-<6 9 and above 

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 Part two: Questions related to the study
Put thick () mark based on the rating (5) most satisfactory,(4) satisfactory (3)
moderately satisfactory (2) less satisfactory (1) not at all

No Questioner Not at Less Moderately Satisfactory Most

all Satisfactory Satisfactory Satisfactory
(1) (2) (3) (4) (5)

1. Accounting cycle
Q1.1 The bureau of each recorded transaction
is reliable, valuable and clear
Q1.2 the organization use pre-numbered
documents for accounting purpose
Q1.3 your organization prepare its financial
statement according to Government
accounting standard statements
Q1.4 How do you see the accounting cycle
with relate to economic data of the
bureau

Q1.5 There is recording of Payment of

salaries and wages
Q1.6 The relation of finance department with
Ordering, receiving and issuing materials
from store
Q1.7 The bureau‘s accounting system is
computerized?
Q1.8 The bureau record all account in
ledger as general and subsidiary ledger
accounts
Q1.9 The bureau reconcile and update its
record timely
Q1.10 The accounting data are Simple to
Search and to correct errors

64
 No Questioner Not at Less Moderately Satisfactory Most
all Satisfactory Satisfactory Satisfactory
(1) (2) (3) (4) (5)

2. Plant asset record and management

Q2.1 Plant assets recorded in accordance with
the cost principles of asset valuation.
Q2.2 The relation of Revenue expenditure to
the repair, maintenance, and operation of
a long-term asset
Q2.3 Use capital expenditure for the purchase
or expansion of a long-term asset.
Q2.4 All equipment were tagged
Q2.5 Safeguarding of fixed assets
Q2.6
The level of valuation methods (FIFO,
LIFO OR AVERAGE METHOD)
3. Budget system
Q3.1 Involvement of stakeholders in budget
preparation.
Q3.2 Level of Variations exit between
budgeted and actual amount
Q3.3 Usage of budgets for a given period of
time effectively
Q3.4 Approval of budgets on yearly basis and
Adherence to budget estimates
4 REPORTING
Q4.1 the system produce and report financial
statement timely
Q4.2 The financial statement is reliable and
relevant
Q4.3 standard format for reporting financial
segment
Q4.4 Clarity understanding about the reporting
practice of your organization

65
 No Questioner Not at Less Moderately Satisfactory Most
all Satisfactory Satisfactory Satisfactory
(1) (2) (3) (4) (5)

Q4.5 Financial Reports of the Bureau is

Accurate and Timely prepared
Q4.6 The financial report cover all event and
financial transactions

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Part II. Interview Questions related to the study
1. What kinds of accounting method you use to record and analyze financial data?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
________________________
2. How do you record (measure) contributed, fixed assets or donated assts?
At cost  at current fair value at market 
Cash basis  Modified cash basis  accrual basis 

3. Describe fixed assets of the bureau and how to record and value
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
________________________

4. How do you express the relevancy and reliability of the financial statements? Please
specify? Would you please mention those controlling mechanism?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
5. Strength of the Accounting system
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
_______________________

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6. Weakness of the Accounting system
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________

7. What are the challenges faces the system of government accounting practice?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________
8.any other comment -----------------------------------------------------------------------------------------
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Thank a lot

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