table of content - world banksiteresources.worldbank.org/intethiopia/resources/... · the fifteen...

________________________________________________________________________

_________________________________________________________________ PSCAP –Financial Management Guidelines

1

TABLE OF CONTENT PAGE

1. INTRODUCTION 2

2. BACK GROUND 3

2.1. PSCAP 3 2.2. INSTITUTIONAL ARRENGMENTS 3 2.3. FUNDING MODALITIES 5

3. ACCOUNTING POLICIES & PROCEDURES 6

3.1. BUDGETING & BUDGETARY CONTROL 6 3.2. CHART OF ACCOUNT 12 3.3. ACCOUNTING CYCLE 17

3.3.1. RECEIPT OF MONEY 17 3.3.2. TRANSFER OF FUND TO BENEFICIERIES 18 3.3.3. DISBURSMENTS 20

3.3.3.1. CHECK PAYMENTS 21 3.3.3.2. CASH PAYMENTS 22

3.3.4. JOURNAL VOUCHER 23 3.3.5. ACCOUNTING RECORDS 24 3.3.6. REPORTING TYPES AND FREQUENCY OF REPORINTG 28

3.4. TRAVEL EXPENSES 33 3.5. PROCURMENT 34 3.6. RECEIPT AND ISSURANCE OF GOODS 34 3.7. MANAGEMENT AND CONTROL OF PROGRAM ASSETS 35 3.8. INTERNAL CONTROLS 36 3.9. AUDITING 36

3.9.1. EXTERNAL AUDIT 36 3.9.2. INTERNAL AUDIT 36

3.10. RETAINING OF DOCUMENTS 37 3.11. USING COMPUTERS 37 3.12. REVISION OF FINANCIAL MANUAL 37 3.13. ANNEX 38

________________________________________________________________________


2

1. INTRODUCTION The Public Sector Capacity Building Program, PSCAP is a large national program planned to be implemented by different government offices in different government structures. The MoFED will be responsible for the disbursement of program fund to the different beneficiaries and for the eventual gathering of financial reports, consolidating them and preparation of financial reports to the government, donors and other stakeholders. This will only be possible if uniform and agreed procedures are followed by all the concerned. Uniformity of action facilitates bottom-up consolidation of financial monitoring reports in relatively easy, accurate and speedy way, which in effect ensures full accountability to providers of the funds. The purpose of this manual is to provide simple and user-friendly reference material for all the people involved to help them in transactions processing from the initial identification of transactions to the final financial reporting. It discusses the detailed procedures in receiving fund (from all donors of PSCAP), keeping the fund, spending it, recording the expenditures, reporting to the appropriate body and in safeguarding the assets acquired using the fund. The basic policies of Financial Management are explained in the Operational Manual/PIP . This manual provides the procedures that will be followed to adhere to the broad policies stipulated in the PIP. In the section that follows, the background of the program, as relevant to the understanding of the manual, is explained. This is essential for the quick grasp of the nature of the program, the purpose and out put of the program especially for the people that will join the structure at a latter date. Auditors will only be involved after the start of the program. The background provided would be a tip to them to kick-off their job. Section three deals with the detail policies and procedures necessary for the management of the fund. Each and every item that will be encountered during the execution of the project are identified and explained in a clear and simple way.

________________________________________________________________________


3

2. BACK GROUND

2.1. PSCAP In May 2003, the Government launched a new state transformation agenda. Specifically, the MCB announced its intention to rapidly scale up support for the six, out of the fifteen National Capacity Building Programs, core public sector reform programs as subprograms under a consolidated five-year federal program called the PSCAP. 1 The fifteen programs are Civil service reform, Justice reform, Tax reform, District-level decentralization, Urban management, Information and communication technology, Cooperatives, Private sector, Textiles and garments, Construction sector, Banking sector, Agricultural training of vocational and technical levels, Industrial training of vocational and technical levels, Higher education, Civil society. The first six are those covered under PSCAP. The objective of PSCAP Support Project for Ethiopia is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, and local level; to empower citizens to participate more effectively in shaping their own development; and to promote good governance and accountability. This objective will be achieved by scaling up Ethiopia's ongoing capacity building and institutional transformation efforts in the six priority areas under PSCAP.2 There are two main project components. Component 1, Federal PSCAP, supports federal level activities across each of the six subprograms including those capacity building activities for which there are scale and network economies including those activities that require national level prototyping. Component 2 , Regional PSCAP, constitutes the bulk of the Program and is designed to empower regions to adapt and implement national reform and capacity building priorities envisaged under PSCAP's six subprograms in a manner that is efficient, accountable, and sustainable. 3 The components are required to include basic program support activities to ensure effective implementation.

2.2. INSTITUTIONAL ARRANGEMENT

As mentioned above the PSCAP is a nation wide program involving different tiers of the government. The structure of PSCAP is fundamental to the financial management of the program. Funds flow down the channel and reports flow up the channel. 1 Ibid 2 http://web.world bank.org/ 3 Ibid.

________________________________________________________________________


4

FEDERAL PSCAP REGIONAL PSCAP Key Fund flow Report flow Figure 1 - PSCAP Fund and report flow chart The MCB, the MoFED, the MOR, the MFA , Federal Supreme Court, and ICTDA implement the Federal PSCAP. The BCB (BCB), the BoFED, Justice Bureau and the BoTIUD are the implementers of PSCAP at regional level. However, the financial management function will be fully carried out by BoFEDs of the respective regions. The overall coordinator of the program at national level is the MCB. The BCB in regions are the coordinators of the program in their respective regions. The MoFED (MoFED) is responsible for the overall financial management aspect of the program. It opens accounts for the program, receives funds from the donors, release funds to beneficiaries, collect reports from the beneficiaries and consolidate and report on the use of funds to donors, government and other stakeholders. At regional leve l, BoFED (BoFED) perform the same activity. The detail procedure is explained in the latter chapters.

IDA credit account Washington DC (Foreign currency)

Government of Ethiopia‘s

Contribution (Birr)

IDA special account in USD in

Ethiopia

Special USD account in Ethiopia for each of the other Donor in the pool

Birr account for PSCAP at each

BoFED

Birr account for PSCAP at each federal executing

agency

Birr account for the pool at MoFED

(CAD for reporting)

________________________________________________________________________


5

2.3. FUNDING MODALITIES Funding modalities or disbursement modalities specify how funds flow from the donors to the government and/or to the relevant public body. They also specify the way reports on the spending of the funds are submitted to the donors. The MoFED has identified three Channels or instruments for the flow of donor funds. 4 CHANNEL I – Aid and Loan funds that flow through the MoFED or BoFEDs are included here and the reporting system has to follow the same procedures. CHANNEL II – This is one of the aid disbursement channels used by bilateral donors for releasing resources to beneficiary institutions under projects financed by them. The donors provide goods and/or funds to beneficiaries usually ministries. CHANNEL III – Under this instrument, the donor directly controls all funds. The donors maintain their own bank account, pays invoices directly to contractors and/or suppliers. Channel I is the recommended funding modality for PSCAP. 4 MoF, Donor Fund Flow, Keeping, Recording and Reporting System (Amharic Version), Addis Ababa, Tir 5, 1991.

________________________________________________________________________


6

3. ACCOUNTING POLICIES AND PROCEDURES In the remaining part of this manual, detailed discussion of accounting procedures is presented. The first paragraph in each section is given in a box. The text in the box is the accounting policy on the basis of which the detailed procedures are provided. The financial management provisions in the PIP are taken as financial management policies as appropriate to ensure consistency between this manual and the PIP.

3.1. BUDGET AND BUDGETARY CONTROL

Budget codes for PSCAP The budget for PSCAP shall be proclaimed under the name of MCB, MoFED , MFA, MOR, Federal Supreme Court and ICTDA. Once identified and used, the budget code for PSCAP shall remain unchanged through out the life of PSCAP. Budget calendar (as provided in the PIP) The federal lead institutions prepare their PSCAP budget and submit to the FTT) through the PPD no latter than 1st March. The regional lead institutions prepare their PSCAP budget and submit to the RTT through the RPPD no latter than 22nd February. RTT shall forward the regional PSCAP budget toFTT no latter than 1 st March. FTT shall submit the annual regional and federal plan to IDA for no objection no later then 15 th March. FTT shall submit the annual regional and federal plan to cabinet no later then 22nd March. Annual plan for PSCAP, along with the over all budget, shall be submitted to the Council of Ministers and, regional matching fund requirements in the regional budgets shall be submitted to regional council, no latter than 22nd May. The Cabinets shall recommend PSCAP budget no latter than 2nd June. Approval and adoption by federal legislature will be undertaken before 2nd July. Execution of PSCAP budget begins at the start of the fiscal year on 8 th July Mid-year reallocation of budget shall be made between regions and between the federal lead institutions based on rules set out in the PIP by the FTT on or before 1st February. MoFED issues final reallocations on or before 8th February. Supplemental budget proposals shall be finalized by the MCB on or before 8th February.

________________________________________________________________________


7

a) Budget Codes In the government accounting system, the coding system starts from budgeting. In the process of budget preparation, all the recipients of the fund from MoFED are identified with specific budget code. That code is basic to understand how much budget is allocated to a public body for the budget year. The public body is the institution that is entitled to request and receive a budget. A pubic body is an institution that has a legal mandate, receives budget directly from the concerned finance and planning body, submits its final accounts directly to the MoFED. The budget proclamation is the basic document. Transfer to the public body shall be made under the code identified in the budget proclamation and the recipient of the budget is responsible to account for the budget it has received.. Using that code, it is possible to produce a report for the transfer, expenditures and the fund balance of a recipient. Under PSCAP, the budget recipient shall be the MCB for the programs that will be implemented by it and all regional PSCAP. All expenditures incurred by the MCB and those incurred by regional BoFEDs shall be given similar code –318. However as MoFED shall make cash transfers direct to BoFEDs, for cash transfer purpose the code shall be the codes that are currently used by BoFEDs when receving cash from MoFED. This code is 154 for regions using the old single entry system: namely Afar, Somali and Gambela. All other regions and MoFED shall use 152 when recording the cash transfer. Five federal implementing agencies shall be recipients of funds for the program each of them will be implementing. These are the MFA, MoFED, MOR, Federal Supreme Court and ICTDA. PSCAP budget shall be proclaimed under the name of these five public bodies. The budget code that will appear in the budget proclamation and thence on each accounting document and report shall be the following. The budget code presented below shall remain the same through out the life of PSCAP, as change of codes from year to year shall hinder preparation of reports correctly.

BUDGET CATAGORY

CODE

Public body MCB 15/318 MFA 15/118 MoFED 15/152 MOR 15/156 ICTDA 15/325 Federal Supreme Court 15/122 Program PSCAP 08 Sub- agency Plan and Program Department 01 Federal implementing agencies other than MCB 00

________________________________________________________________________


8

Sub-program PSCAP - Tigray 01 PSCAP – Afar 02 PSCAP – Amhara 03 PSCAP – Oromia 04 PSCAP – Sumali 05 PSCAP – Benishangul gumuz 06 PSCAP – SNNPR 07 PSCAP – Gambela 08 PSCAP – Harari 09 PSCAP – Addis Ababa City 10 PSCAP – DireDawa Administration Council 11 Federal implementing agencies 00 Project Civil Service Reform 001 Justice System Reform 002 Tax System Reform 003 Urban Management Reform 004 Information & Communication Technology Reform 005 District Level Decentralization Reform 006 Expenditure Management & Control Reform 007 Program Support 008

Figure 2- PSCAP account code

A complete budget code can be written as follows: Example 1 – Budget for Civil Service Reform sub program at federal level is identified as

15/318/08/01/00/001 Example 2 – Budget for Urban Management and Reform Project in Gambella region is identified as

15/318/08/01/08/004 Example 3 – Budget for Tax system reform at federal level is identified as

15/156/08/00/00/003

Note that in the above code, only the last three fields are variable. If the implement ing agency is the MCB, the sub-agency code shall be 01. If the implementing agency is any of the federal lead institutes other than MCB, the sub-agency code shall be 00 . Regions that are using single entry accounting code The budget for PSCAP shall be proclaimed as a federal project under the MCB. Hence the double entry budget coding system shall be used. However, those regions using single entry accounting cannot use the budget code because, firstly, the formats they are using are not designed to include all the information in the double entry system, secondly, the accountants may not be familiar with the double entry. New codes have to be identified so that it will be possible to identify PSCAP expenditure by both regional and federal users.

________________________________________________________________________


9

The account code under single entry accounting is organized to show three major elements: the location code, organization code and receipts and payments code. Location code has four fields, each field having two-digit code. The first field is standard, 01 for central government and 02 for regional government. The next field is also a standard two digit, which identifies regions. The third filed which has also two digits is to identify zones and the last filed having two digits is to identify woreda.

E.g.: Ministry of Agriculture in the federal government is located as 01 00 00 00.

Organization code identifies the sector (the budget institution in the sector) and the Project or reporting unit. It has three fields. The first field has three digits the sector and the supervising institution.

E.g. Ministry of Agriculture is in the Economic sector 200 and is number 11. So the code is 211 .

The second field has two digits and identifies the sub unit. The third field has also two digits identifying the sub-sub-unit.

E.g.: To complete the above example – Ministry of Agriculture Administration and General Services Section is identified by 211 01 00.

If the above budgetary institution is implementing a capital budget, another three fields shall be used to identify the project. The first field has three digits and identifies the sector. The next field has two digits and identifies program. The last field has two digits and identifies the specific project.

E.g.: If the Ministry of Agriculture has a project at Gode under a program called Irrigation Development and the sector is Natural Resource Development the code can be 721 02 02.

If the payment in the above example is for land preparation and other construction the code can be 8203. The combined code can be presented as:

01 00 00 00 - 211 01 00 - 721 02 02 - 8203 The above structure can be used to identify a unique code that all the single entry using regions can use so that the program’s expenditure can easily and effectively be identified. Since PSCAP has two components, the first two digits in the location code can be used to identify those. Federal PSCAP is 01 and regional PSCAP is 02. The next two digits are to identify regions. Under PSCAP these shall be used to identify the sub-programs, which are the regional PSCAPs. The list is as shown in the table for double entry budget codes. The zone and woreda digits will not be used.

Egg: PSCAP – Dire Dawa-Bureau of Urban & Works (BoTIUD) is identified as 02 11 00 00 .

________________________________________________________________________


10

The Public Body or the supervising institution in whose name the budget is proclaimed is the MCB. The Plan and Program Department of MCB is the sub units responsible for PSCAP. Sub-sub-units codes will not be used. Hence the second three fields can be written as 318 01 00. The third group is to identify a capital project code. PSCAP is a capital project. The sector code cannot be used. The program code can be identified as 08. The project code under double entry accounting has three digits. Under single entry the first digit shall be dropped and the last two digits shall be used as follows: Project Civil Service Reform 01 Justice System Reform 02 Tax System Reform 03 Urban Management and Reform 04 Information & Communication Technology Reform 05 District Level Decentralization Reform 06 Expenditure Management & Control Reform 07 Program Support 08

The last group of code is the receipts and payments code. This code is more or less the same as the code under the double entry. The codes relevant for PSCAP are identified in the next section. The combined code for PSCAP under single entry can be written as follows. Take for example, the Dire Dawa- PSCAP has paid for land preparation and other construction the code being 8203. Assume the payment is made under Urban Management and Reform sub program.

02 11 00 00 - 318 01 00 - 000 08 04 - 8203 The formats that shall be used under single entry shall be filled with the above codes. It will therefore be possible to identify transactions by source and it is also possible to summarize transactions as needed. Additional information box shall be added on the existing Ge/He/29/4, the Trial Balance, Ge/He/29/5, Monthly Transfer Summary and Ge/He/29/3, Capital Expenditure summary. The heading of, for example, the Ge/He/29/4 can be presented as follows.

This is on the reports this will be added

Reporting unit Code Central government/ region Zone Woreda Unit Sub-unit Sub-sub-unit

Supervising unit Code Name of Public Body Name of Program Name of Sub-agency Name of Sub-program Name of Project Source of finance Bank account No

________________________________________________________________________


11

All the remaining details shall remain the same as in the existing Ge/He/29/xx. The above will enable the processing of accounts by CAD in an effective way. In addition, the regions that are not yet implementing the accounting reform shall start familiarizing themselves to the requirements of the double entry accounting. Codes to be used for cash and non-cash transfers As mentioned above, implementing agencies shall get transfer from MoFED. Hence, even if the budget is proclaimed in the name of MCB and that the expenditure code for regional PSCAP shall be 318, the cash transfer code will be different. The MoFED code as sender of the money and the BoFED code as recipient of the money shall be used. This is not a new requirement but the one that is being used currently. To illustrate: Example 1: MoFED transferred Birr 1 million to Tigray BoFED

• MoFED shall record the transaction as follows:

Account code Debit Credit 01/000/00/152/01/001 4015 1,000,000

15/000/00/152/00/22 4115 1,000,000

• Tigray BoFED shall record the transaction as follows:


15/000/00/152/00/22 4015 1,000,000 Example 1: MoFED transferred Birr 1 million to Somali BoFED

• Somali BoFED shall record the transaction on Ge/He 23 as follows:

Account code Received 15/000/00/154/00/22 4015 1,000,000

• MoFED shall record the transaction as follows:


15/000/00/152/00/22 4115 1,000,000 Note: that 4015 represents transfer and 4115 represents cash at bank accounts.

b) Budget preparation and control The budget preparation at the implementing agency level starts before March 1st of the year. The budget is the annual fiscal plan (annualised drawing rights) in monitory terms. The procedure for the preparation, Appraisal Adoption, Execution, and Re-allocation of budget is provided in the PIP. The relevant section of the PIP (section IV – Resource allocation and Management) is attached at the end of this manual as Annex XXXIX.

________________________________________________________________________


12

It is very important that the accountants responsible for keeping the records of PSCAP and the budget section representatives in the implementing agencies are fully participated in the budget preparation process so that they can fully understand the budget and they will not be in problem when they perform the control function. The account codes that will be recommended in subsequent sections shall be used for the detailed budget purpose. Expenditure codes shall be assigned to each item in the budget based on the chart of account and that code must be used in keeping the accounting records to ensure comparison of budget with actual spending. The budget ledger card, as described in the following section, shall be used in the budget control exercise. The detail procedure is described in that section. The budget section shall prepare monthly budget tracking report. Preparation of this report is not a difficult task if the budget ledger is kept up-to-date at all time. The budget section shall extract the approved revised budget for each item of expenditure from the budget ledger card. Expenditure to date is also extracted from the same ledger and put in the budget tracking report. Comparison is made between the two and a third column showing the budget balance. The budget balance shall be normal, under spent or over spent. The budget section shall give comments on the budget balance in bullet points to give warnings to the budget users. The accountant shall agree the report by signing on the face of it. The report shall then be circulated to the procurement officer, the section that follows up the program and the head of the implementing agency on the basis of which they can take appropriate corrective action. In regions, BoFED is responsible for the financial management function. The preparation of budget tracking report is therefore the responsibility of BoFEDs. The circulation of the report will be to the above-identified three officers of the implementing agencies. Sample budget tracking report is given in annex I.

3.2. CHART OF ACCOUNT The FGE accounting system provides the FGE Chart of Accounts which is a system of coding government uses to identify and classify financial entities and events.5 5 The Civil Service Reform Account Design Team of MoFED with the support of the Decentralisation Support Activity (DSA) Project, Manual 3 FGE Accounting System, Volume II, FGE Chart of Accounts, Version 1.0, January, 2002.

The Federal Government of Ethiopia’s (FGE) financial management system shall be used in the overall management of the Program. A supplemental chart of account is provided. The purpose of the supplemental chart of account is to enable MOFED to capture and classify the funds received from donors by subprograms. The intent is to enable project costs to be directly related to specific work activities and outputs under PSCAP and to enable MOFED to monitor funds utilization across subprograms and to serve as one of the source of information for assessing performance by relevant entities.

________________________________________________________________________


13

Under PSCAP, the final financial report that will be produced is the Statement of Cash Receipts and Payments. The Chart of Account that is recommended in this manual is sufficient to capture transactions in a way that enables the preparation of this statement. The account codes shall enable the preparation of the detailed budget, accounting for the transfers from donors and transfers to beneficiaries (receipt from MoFED), capturing the transactions that will occur, and preparation of periodic financial reports and the year-end financial statement. The Chart of Account is developed based on the accounts classification and coding system used in the FGE Accounting system for Modified Cash Basis transactions. The equivalent codes for those agencies that are using single entry bookkeeping is also provided. Under the Modified Cash Basis of accounting, the following accounts shall be used. CAD shall officially issue the final codes.

PSCAP

TRIAL BALANCE

MoFED Implementing

agencies Account

code Debit Credit Debit Credit

Cash on hand 4101 XXX XXX Cash at Bank – Foreign Currency -IDA 4102 XXX Cash at Bank – Foreign Currency – XXX 4102 XXX Cash at Bank – Foreign Currency - XXX 4102 XXX Cash at Bank – Pooled Birr Account 4115 XXX Cash at Bank – Implementing agencies 4103 XXX Cash shortage & overage 4202 XXX XXX Other advance within government 4210 XXX XXX Advance to consultants 4252 XXX Advance to suppliers 4253 XXX Due to MoFED 5027 XXX XXX Other payables within government 5028 XXX XXX Transfers - cash 4015 XXX XXX Transfers –non cash 4050 XXX XXX Net asset equity 5601 XXX XXX Revenue - External assistance 2000-2999 XXX Revenue - External loan 3000-3999 XXX Expenditure 6000-6999 XXX _____ XXX _____ XXX XXX XXX XXX

NB: The specific codes for revenue, both assistance and loan, is given in the budget proclamation which will be available soon. Those codes shall be used by MoFED to open ledger accounts and record the income. For example, external loan from IDA is given a code number “3014”. The chart of account shall be expanded as and when the new donors or lenders are identified.

________________________________________________________________________


14

Under the single entry booking, the following accounts shall be used:

PSCAP TRIAL BALANCE

MoFED Imple menting

agencies Account code Account code Cash 4005 4005 Cash at bank 4115 4006 Staff debtors 4101 4101 Cash shortage 4201 4201 Custom deposit 5300 5300 Other payable 5400 5400 Transfers – capital 4015 4015 Other cash transfers 4020 4020 Expenditure 8000-8999 8000-8999

The definition and purpose of the above accounts is as provided in the FGE Accounting System. The definition serves for both the single entry using entities and the double entry using entities. Cash: - Under PSCAP, MoFED shall maintain one special account each for the donors. A pooled

local currency account shall be opened wherein transfer from the special accounts and from the treasury (the government contribution) shall be kept. Each of the implementing agencies at federal level and BoFEDs at regional level will have Birr accounts, type “A” which will not be closed at the end of the budget year, opened for PSCAP purpose to receive transfers from MoFED. BoFEDs shall have only one bank account although the fund they are going to handle is for all implementing agencies in the region. In addition each federal beneficiary and BoFEDs will have cash on hand account to handle petty cash. The definition for cash therefore embraces all this accounts.

Receivables: - Included in this category are cash shortage, advances, prepayments and other

receivables. Advances include prepayments to consultants and suppliers. Other receivable is to account for other kinds of advance that will not fall in the other categories.

Payables: - Payables under PSCAP are expected to be short term. Only two accounts are

suggested in the double entry, Due to MoFED and other payables within government. Similar purpose payables shall be identified in the single entry.

Transfers: - This account is not a permanent account and is closed at the end of every year.

During the year it will be used to record monthly transfer of money to implementing agencies at Federal level and the BoFED at region level. The implementing agencies and BoFED shall debit their respective bank account for PSCAP and credit the transfer account. The transfer in the single entry has the same purpose.

The rule is that the total debit in the transfer account of MoFED shall equal the total of credits in all implementing agencies. In effect at the time of consolidation, the transfer account will have a balance of ZERO. The same rule applies for the single entry although the debits and credits are not there.

________________________________________________________________________


15

The accounting for non-cash transfers will be the same as above except that the implementing agency shall debited the appropriate expense account instead of the bank account.

Revenue : - Only MoFED shall use this account, as the distinction of revenue by source (donor)

in all the implementing agencies is irrelevant and impossible because transfer to the agencies will be made from one pooled Birr account.

There are three categories of revenue under PSCAP: the transfer from central treasury being the Government’s contribution shall be kept in the first revenue account. Income from IDA will be a credit and is categorized as external loan. A separate account shall be maintained for it. Income from other donors can be either external loan or external assistance. Separate account for each of the donor shall be kept according to the nature of the transfer, i.e., either loan or assistance.

Expenditures: - The major and most important section of the Chart of Account is this

section. Most of the expenditure types can be captured by the expenditure account codes being used in the accounting sys tem at present. The expenditure codes have sufficient detail accounts and control accounts as well such that there is no need at all to create new codes.

The expenditure codes have also control account and subsidiary account code system. Fore example 6200 is the general category for Goods and Services and accounts from 6210 to 6224 are the subsidiary ledgers. The control account shall be used to provide summary report by category for the donors’ purpose.

Matching of the single entry code with the double entry code is very important and it is done like shown in the following table. As mentioned earlier PSCAP is a capital budget program. The capital budget expenditures under the single entry are in the 8000 group. It is also possible to establish major ca tegories for donor reporting purpose so that the system can directly produce the donor report. Using the IDA’s category, the chart of account can be designed as follows.

Account title

Donor Category

Double entry

Single entry

Control account Goods and Services Goods 6200 Subsidiary accounts Office supplies 6212 8303 Printing 6213 8303 Food 6216 8303 Fuel and lubricants 6217 8303 Other material & supplies 6218 8303 Miscellaneous equipment 6219 8303 Research & development supplies 6223 8303 Control account Fixed assets Goods 6310 Subsidiary accounts Purchase of equipment 6313 8204 Purchase of building s, furnishings & fixture 6314 8206 Control account

Contracted services

Consultant services

6250

Subsidiary accounts Contracted professional services 6251 8101

________________________________________________________________________


16

Control account

Personnel service

Consultant services

6100

Salaries to permanent staff 6111 8301 Wages to contract staff 6113 8302 Wages to external contract staff 6115 8302 Allowance to permanent staff 6121 8301 Allowances to contract staff 6123 8302 Allowance to external contract 6124 8301 Government contribution to permanent staff pension 6131 8301 Control account

Contracted services

Operating costs

6230

Rent 6252 8303 Advertising 6253 8303 Insurance 6254 8303 Fees and charges 6256 8304 Electricity charges 6257 8303 Telecommunication charges 6258 8303 Water & other utilities 6259 8303 Control account Travelling & official entertainment service Operating

costs 6230

Subsidiary accounts Perdiem 6231 8501 Transport fees 6232 8501 Official entertainment 6233 8303 Control account Training Training 6270 Subsidiary accounts Local training 6271 8501 External training 6272 8501 Training related Perdiem 6273 8501

Training related transport fee 6274 8501 Control account

Personnel service

Operating costs

6100

Subsidiary accounts Wages to causal staff 6114 8302 Control account

Maintenance & repair

Operating costs

6240

Subsidiary accounts Maintenance & repair of vehicle 6241 8303 Maintenance & repair of equipment 6243 8303 Maintenance & repair of building, furnishings & fixtures 6244 8303

Figure 3- PSCAP expenditure code

The PSCAP expenditures are not fully known at this stage. The above codes and accounts categories are drawn using the information at hand at the time of writing this guide. It will be mandatory to revise the chart of accounts once the expenditure items are clearer. The responsibility to establish new codes as the need arises shall be of CAD. The new codes shall be identified, organized and communicated in writing to all implementing agencies. The chart of account discussed above is attached as an annex at the end of this manual in a summarized and detachable format. Refer annex XXXVIII.

________________________________________________________________________


17

3.3. ACOUNTING CYCLE The accounting cycle for PSCAP is not different from the government accounting cycle. It starts when money is received in the special accounts and ends when report of expenditures is presented to the CAD and CAD is closing the accounts. In the sections that follow we shall see the accounting process.

3.3.1. RECEIPT OF MONEY

There are two concerned units of the MoFED that are relevant in the management of the PSCAP. These are the Counterpart fund unit (CFU) in the Treasury Department and the Central Accounts Department (CAD). The CFU is the one authorized to open special bank accounts for programs. It will be requested to open the special accounts mentioned above. The initial deposits to the special accounts will be the advance payments from each donor as agreed in the respective agreements signed with the donors. Subsequent deposits shall be based on Statement Of Expenditure (SOE) that will be presented to the donor. After a certain initial period, the Financial Monitoring Report (FMR) shall replace the SOE. These two reports are discussed further in subsequent sections. The CAD shall be responsible for the accounting function, i.e., to record the receipt transactio n, to prepare donor reports and annual financial statements for reporting to donors and for the annual audit. The PSCAP program shall receive money from the two major sources, from donors and from the government. The receipt transaction shall be recorded when bank advice is received from the bank. The accounting entry to record the transfers shall be as follows. Note that only MoFED shall receive money from donors. Hence the entries are relevant for CAD only. 1. If receipt of money is from IDA

Debit Credit Cash at Bank – Foreign currency IDA XXX

Revenue –External credit – IDA XXX 2. If receipt of money is other donors as assistance

Debit Credit Cash at Bank – Foreign currency (donor name) XXX

Revenue –External Assistance - IDA XXX

Foreign exchange (FOREX) account shall be opened to each donor with the national bank of Ethiopia by the Treasury Department of the MoFED. One of the accounts shall be the IDA special account. The others shall be used to keep funds received from other donors. One pooled Birr account shall be opened to keep transfers from the special accounts and from central treasury being government’s contribution to the program. Transfers to the pooled Birr account shall be made monthly based on the approved annual plan.

________________________________________________________________________


18

3. If receipt of money is treasury

Debit Credit Cash at Bank – Pooled Birr account XXX

Transfer XXX Transfer shall be made from the special accounts to the pooled Birr account whenever the pool account balance is low. The follow up of the bank account balance, like the special account balances, shall be made by CFU. The entry to record the transfer shall be: 4. Transfer from special accounts to the pooled Birr account. Assume that transfer is from IDA

account Debit Credit Cash at Bank – Pooled Birr account XXX

Cash at Bank – Foreign currency IDA XXX

3.3.2. TRANSFER OF FUND TO BENEFICIERIES

All institutions receiving PSCAP fund from the PSCAP Pooled Birr account shall open bank accounts of type “A”. This type of account is more appropriate for the nature of PSCAP of all the account types identified in Guideline No 16/2004, Guideline to Open and Administer Government Bank Account, of MoFED. Transfer of fund to federal implementing agencies and BoFED shall be made by the MoFED, upon receiving instruction from the MCB who is the responsible agency for the overall program. BoFEDs shall not transfer funds to regional implementing agencies. Rather, the BoFEDs will handle the fund and effect all payments related with PSCAP upon request from the implementing agencies. BoFED shall be responsible to prepare the monthly reports and present to the MoFED.

MoFED Treasury department shall make transfer from the pooled account to the federal beneficiaries and BoFED quarterly after the implementing agencies submit Disbursement Request approved and cleared by MCB and accompanied by Quarterly Report. The amount to be transferred to a beneficiary is calculated as the next quarter budget less procurement to be made centrally less any unused money from the previous quarter. Transfer to the beneficiaries and BoFED shall be made on the 12th day of the quarter. Each federal beneficiary shall ope n a separate Birr account for PSCAP and transfer from MoFED shall be to the PSCAP account. At region level, BoFED shall open a separate Birr account for PSCAP in which transfer from MoFED shall be deposited. The bank account shall be the only PSCAP account in the region. Transfer account shall be used to record transfer to the beneficiaries and transfer from MoFED. Cash receipt Voucher shall be used to recognize cash transfers received. The equivalent document for regions that are using single entry is Ge/He/21/1.

________________________________________________________________________


19

The first transfer from the pooled account to the federal beneficiaries and BoFEDs’ PSACAP account shall be made on the basis of the first quarter budget that shall be prepared with reference to the approved first year budget. Each beneficiary shall fill the Disbursement Request (see annex II) immediately after receiving its approved budget. Subsequent transfers shall be made on the basis of subsequent Disbursement Requests and quarterly reports. Disbursement Requests shall be identified by the name of the beneficiary and the request number referring to the quarter number for which request is made (the first advance shall be for the 1st quarter). Quar terly reports shall be in the form prescribed in annex III. This report shows the expenditures paid in the quarter on the approved budget lines. It shall also show the budget for next quarter. The amount to be requested for transfer is the budget for the next quarter less any procurement included in the beneficiary’s budget but that will be made centrally (using foreign exchange etc) less the balance of cash on hand and at bank at the end of the quarter. E.g.: If the budget for Quarter II is Birr 100,000, the budget includes Birr 50,000 for goods that

will be paid centrally and the cash on hand and at bank at the end of the quarter is Birr 10,000, and then the amount of transfer requested should equal Birr 40,000.

Disbursement requests from federal bene ficiaries shall be forwarded to the MCB for approval. The approved request shall be submitted to the MoFED, CFU. The CFU shall collect quarterly disbursement requests from both federal beneficiaries and regional BoFED and request the Treasury Department to make the transfer to the beneficiaries. Disbursement request from BoFED shall be submitted to BCB, which will approve and forward it to MCB. After checking and approving, the MCB shall advice the MoFED to make transfer to the BoFED. MoFED shall receive final disbursement requests and quarterly reports from federal beneficiaries through MCB on the 10th day of the following quarter. MoFED shall transfer funds on the 12th day of the next quarter (within two working days after it received the approved request). For this to happen, the federal beneficiaries shall submit the Disbursement Request to the MCB on the 6 th day following the end of the quarter. BoFED shall forward its request to BCB’s approval on the 6th day. On the 8 th day, the BCB shall approve the request and forward it to the MCB. The MCB shall forward the approved Disbursement request on the 10th day. The deadlines are very tight that quarterly reports and requests could not be send physically. Reports and requests should therefore be submitted by fax whenever possible and the originals can follow latter for file. Two accounting entries shall be made at this point, one by the CAD and the second by the beneficiary receiving the transfer. The CAD will receive bank debit advice for the transfer. Upon receiving it will,

Debit Credit Transfer account XXX

Cash at Bank – Pooled Birr account XXX

________________________________________________________________________


20

The beneficiaries shall receive bank credit advice when their bank deposits the money in their account. They will write cash receipt and pass the following entry:

Debit Credit Cash at Bank – Pooled Birr account XXX

Transfer account XXX The beneficiary shall use Cash Receipt Voucher as recommended in the FGE accounting system (see annex IV). According to the FGE accounting system Cash Rece ipt Voucher shall be used for all sorts of receipts. Cash may be received in notes and coins, in check, bank transfer or direct deposit in the bank account. Hence all transfers from MoFED to federal beneficiaries and to regional BoFED, and from BoFED shall be captured via Cash Receipt Vouchers. The budget and account code shall be written on the face of the cash receipts as follows: Example – The Amhara region BoFED received Birr 1,000,000 from the MoFED to cover expenditures of all PSCAP projects implemented in the region.

Budget category Account code Birr Debit Credit 152/08/01/03/000 4103 1,000,000 00 152/08/01/03/000 4015 1,000,000 00

The regions that are using the single entry accounting will use Ge/He/21/1, which has the same function as the cash receipt under the double entry accounting. Obviously they will not make journal entries as shown above. However they will record the transfer using the account number 4015 (remember that PSCAP is a Capital project). The above transaction can be recorded as:

Revenue Item Purpose of payment Birr

4015 Transfer for PSCAP program 1,000,000 00 Bank charges to transfer money to regions shall be born by MoFED. This is important to reconcile the transfer account maintained by MoFED with the tran sfer accounts maintained by beneficiaries and BoFED.

3.3.3. DISBURSMENTS Disbursement can be made in the form of cash (notes & coins), bank check or bank transfer.

The general policy is that disbursement shall be made for goods and services acquired or to be acquired, if there is firm commitment.

________________________________________________________________________


21

3.3.3.1.CHECK PAYMENTS & BANK TRANSFERS

As much as possible, all payments s hall be made by check. Only small payments, the limit/demarcation being the one existing in each of the implementing agencies, shall be made in cash. Bank transfers shall be used to make payments to people in different places from the location of the implementing agency. The Bank Payment voucher that is being used in the FGE accounting system shall be used (see annex V). The payment voucher has all the necessary details to identify the payment and all the details have to be filled in. The account code is filled in the payment voucher as shown in the following examples: Examples

1. Payment of Birr 250,000 is made to MOENCO for the purchase of vehicle by Amahara region Bureau of Urban & Works for UMRP. The region’s BoFED makes payment.

Budget category Account code Birr

Debit Credit 15/318/08/01/03/004 6311 250,000 00 15/152/08/01/03/000 4103 250,000 00

Those regional BoFEDs that are using the single entry accounting shall continue using model 6 until they go through the accounting reform. There is a space to write the expenditure code/budget code and the account code on the payment voucher. Example

2. Payment of Birr 270,000 is made to MOENCO for the purchase of vehicle by Sumali region BCB for ICTD. The region’s BoFED makes payment.

Budget code shall be 02150000 -3180100-0000805 Account code shall be 8205

All check payments and bank transfers shall be made via a payment voucher and shall be duly authorized by the responsible officer. Regions that are using single entry will use Model 6. The approval procedure and the authorization limits to approve check payments shall be the procedures existing in each implementing agency. In Regions, the implementing agency shall complete the approval process and present the payment documents for BoFED to effect the payment. Payments by bank transfer shall be made for payees who are in a distant place.

________________________________________________________________________


22

Each implementing agency shall use the existing procedures for payment process. This includes the decision as to who will sign checks and the threshold for approval of any one payment. In the regions, the implementing agencies are not check signatories. BoFEDs shall make the payment based on the request of the implementing agencies. All documentations and approval process shall be completed in each of the implementing agency, and on the basis of such document, BoFED will effect the payment. The list of signatories shall be provided to the bank where the PSCAP account is maintained.

3.3.3.2. CASH PAYMENTS The purpose of keeping this fund is to meet small payments for which writing of check is not recommended. The fund shall be replenished whenever the amount of cash in safe is believed to be small. A bank check in the name of the cashier shall be prepared for replenishment. The Cashier shall keep the fund. There should be cash safe and the Cash office should be strong enough. Payment of cash out of the fund shall be made via the Cash Payment Voucher (see annex VI). As in the check payments, the existing procedure for cash payment in each of the implementing agency sha ll be used. The cashier shall maintain a follow up book, Petty Cash Book given in the FGE accounting system, to track the balance of cash on hand (annex VII). What goes to the debit column is the amount of check to replenish the fund. On the payment column of the book, payment vouchers shall be recorded. Temporary advances, suspense, can be paid out of the petty cash fund. Suspense Payment Voucher given in the FGE accounting system (annex VIII) shall be used to process the suspense transaction. The vouche r shall not be recorded in both the petty cash book and the Transaction Register. Under single entry accounting system, Model 6 (annex IX) is used for both check and cash payments. Model 6 is also used to make temporary advances such as travel advances and salary advances. When used as suspense vouchers, Model 6 is prepared in one copy only. When the advance is settled, the single voucher shall be cancelled and returned to the one settling the advance. The actual expense shall then be recorded following the normal procedure.

An imprest petty cash fund shall be established with each implementing agency at federal level and with each BoFED. The Cashier shall keep the fund in a safe. All small payments shall be paid out of petty cash. Every payment has to be duly approved. Suspense payments can be made form the petty cash account.

________________________________________________________________________


23

Both the cash and check payment transactions shall be prepared for posting to the transaction register when double entry, or to Ge/He/23 (annex X) when single entry. The preparation for posting is the coding of the payment vouchers. The accountant shall write the appropriate accounting code on the face of the voucher as shown earlier. In regions, BoFED shall keep one petty cash fund for PSCAP purpose. Payments shall be made based on the request of implementing agencies just like for Check Payments.

3.3.4. JOURNAL VOUCHERS

Not all transactions involve payment of cash or receipt of cash. The purpose of the Journal Voucher is to capture such non-cash transactions. Other common Journal Entries are correction of errors. For example, a payment might have been debited to a wrong expenditure account and need correction. The correction shall be made via Journal Voucher. The Journal Voucher in the FGE Accounting System shall be used for PSCAP purpose (annex XI). It shall be prepared in two copies. The first copy is the accounts copy and the second copy is pad copy. The Head of Budget and Accounts must approve all Journal Vouchers after the accountant prepares it. The accountant then posts it to the transactions register. The following examples illustrate the way the Journal voucher is prepared.

Example 1 – The MoFED purchased ICT equipment for Oromia region PSCAP from Blue Nile Trading. The cost of the equipment is Birr 265,000. Oromia region BoFED will record the transaction as follows: Description Budget Category Account Code Debit Credit Equipment 318/08/01/04/005 6313 265,000 00 Transfer 318/08/01/04/000 4050 265,000 00

Example 2 – In SNNPR’s JSRP, Birr 100,000 paid for external training was wrongly charged to local training. The correcting entry would be:

Description Budget Category Account Code Debit Credit External training 318/08/01/07/002 6272 265,000 00 Local training 318/08/01/07/002 6271 265,000 00

Under single entry accounting, there is no document equivalent to the Journal Voucher that exists under double entry accounting. But Model 64B (Annex XII) is used to account for non-cash transfers from the MoFED to implementing agencies and from one implementing agency to the other, The implementing agency, when receiving Model 64B from MoFED shall treat it as if it has received money from MoFED and immediately transfer the back to MoFED.

Journal Vouchers shall be used to capture transactions that do not result in payment or receipt of cash. The Head of the Budget and Accounts shall approve all Journal Vouchers.

________________________________________________________________________


24

To illustrate the treatment of Model 64B, assume that MoFED paid for consultancy who provided service in Gambela region. The payment was Birr 100,000. MoFED shall write a letter to the region that it has paid for the service. The region shall record the following on Model 64. Two entries shall be recorded. The first is to record the transfer as if it is a cash transfer.

Account code Receipts Payments 08/000/00/154/01/001 4012 100,000

The second is recording of the payment under the appropriate expense code;

Account code Receipts Payments 08/000/00/318/01/001 8101 100,000

3.3.5. ACCOUNTING RECORDS The recodes that shall be used under PSCAP shall be, Transactions register, Budget ledger card, General ledger and Subsidiary ledger. The use and the manner of recoding in the above records shall be explained in this manual but full discuss ion is made in the FGE accounting system manual.

The FGE standard accounting records, as described in the FGE Accounting System Manual III, Volume I (Accounting for Modified Cash Basis Transactions) shall be used by all implementing agencies uniformly in keeping records for PSCAP. Appropriate modifications to the reports shall be discussed in this manual Double entry Each implementing agency shall maintain the FGE transactions register. All transactions of PSCAP concluded by the implementing agency shall be recorded in the register from the source documents. Each debit and credit amount, for each transaction recoded in the transaction register, shall be recorded on a ledger card in the general ledger. When necessary, subsidiary ledger shall be maintained and posting to it shall be made from the transactions register. Single entry Each implementing agency shall maintain Ge/He 23. Transfer received from MoFED and all payments made shall be registered in the Ge/He23.

________________________________________________________________________


25

Transactions Register At Federal level, MoFED shall maintain three groups of transactions registers. The first group of transaction registers will be used to deal with the special accounts. One transaction register per special account shall be maintained. The second group will have only one transaction register. This register shall be maintained for the pooled Birr account. The third group shall also contain only one register, which will be used to rec ord the PSCAP transactions that will be implemented by MoFED. As the first group of transaction registers will be used to deal with the special accounts, the foreign currency transactions register (annex XIII) shall be used. This register is different from the local currency register in that it has additional column to fill in the foreign currency information. The first part of the register is used to fill information about the transaction. The second part is used to do the accounting. Taking the second part of the register, the common transactions that will be recorded in the register can be illustrated as follows:

Example 1: On July 9, 2004 USD 100,000 is received in the IDA special account. The exchange rate on that date was Birr 9 for one USD. IDA account No is 3014.

Example 2: On July 10, 2004 USD 50,000 is transferred from special account to Birr

Pool account. The rate on the date of transfer was 8.5 as per the bank advice. The account No for the pooled Birr account is 4103.

Others Cash at bank Foreign currency

Acct No Debit Credit Debit Credit Debit Credit Example 1 3014 900,000 900,000 100,000 Example 2 4102 425,000 425,000 50,000

The register for pooled Birr account shall be maintained using the local currency format (annex XIV) of the transaction register. To illustrate:

Example 1: On July 10, 2004 Birr 425,000 is transferred from IDA special account to Birr Pool account.

Example 2: On July 12, 2004 Birr 300,000 is transferred to Tigray BoFED. The amount

will be credited to a transfer account 4015. Others Cash at bank

Acct No Debit Credit Debit Credit Example 1 3014 425,000 425,000 Example 2 4015 300,000 300,000

The third type of transaction register will be used for the program MoFED is going to implement. This same transaction register shall be maintained by each implementing agency using the double entry accounting. To illustrate let us assume that the Tigray MoFED shall record the following transactions:

Example 1: On July 12, 2004 Tigray BoFED received Birr 300,000 from MoFED. Example 2: On July 17, 2004 Birr 100,000 is paid for local training.

________________________________________________________________________


26

Others Cash at bank

Acct No Debit Credit Debit Credit Example 1 4015 300,000 300,000 Example 2 6271 100,000 100,000

Those BoFEDs who are not yet using the double entry accounting will use Ge/He 23, which has the same purpose to the Transaction Register. The detail is more or less the same with the transaction register. Using the above example, Tigray PSCAP would register the transactions in Ge/He/23 as follows:

Safe Bank

Acct code (item code) Received Paid Received Paid

Example 1 4015 300,000 Example 2 8501 100,000

The accountant is responsible for the maintenance of the registe r. The register shall be prepared in two copies. The original shall remain with the implementing agency. The second copy shall be submitted to MoFED. Regional BoFED shall keep separate transaction registers for each of the program implemented in the regions. Budget ledger card Budget ledger card shall be maintained for each item of expenditure with approved budget. The format of the budget ledger card shall be the one that is given in the FGE accounting system (annex XV). The approved budget for each expenditure item shall be posted to the budget ledger cards that will be maintained by the budget section. Approval of the budget section shall be obtained before the accounts section makes any payment. The approved budged shall be increased or decreased by mid-year reallocation based on the notice obtained from MoFED. If the implementing agency is a poor-performer the approved budget shall be decreased and, if it is high-performer then the budget shall be increased. Similarly, the approved budget shall be increased if the MCB approves supplemental budget through rapid utilization of future drawing rights. Let us illustrate how implementing agencies can use the budget card. Assume that the budget ledger card is maintained by Oromia region. Example 1: The approved budget for contracted professional service is Birr 500,000. Example 2: A Birr 250,000 contract is signed with a local consultant. No payment is made. Example 3: Birr 350,000 is received from MoFED. Example 4: Birr 100,000 is paid to a second consultant as advance payment. Example 5: Birr 90,000 received from one of the poor-performing regions. Approved

budget Addition to budget

Reduction to budget

Revised budget

Payment received

Unpaid balance

Commit ment

Balance not committed

Example 1 500,000 500,000 500,000 500,000 Example 2 150,000 250,000 250,000

________________________________________________________________________


27

Example 3 350,000 250,000 Example 4 100,000 150,000 Example 5 90,000 590,000 240,000 240,000

In the case of regions using single entry accounting, they can use Ge/Be/we 14/1 although the form is prepared to control recurrent expenditures. PSCAP is a capital expenditure but the detail is the same as a recurrent budget. Ge/Be/We 14/1 is more or less similar to the budget ledger card except that it has no column for commitment. Instead it has column to record actual payments. Let us see how the above example can be illustrated.

Approved

budget

Budget transfer or supplement

Budget deduction or

transfer

Revised budget

Amount

paid

Budget balance

Example 1 500,000 500,000 500,000 Example 2 Example 3 Example 4 100,000 400,000 Example 5 90,000 590,000 490,000

General ledger General ledger is a group of accounts (all cards together) that is used as a second step in the process of recording and summarizing transactions. The primary book of record is the transaction register and the general ledger is the second register. It is between the register and the financial reports and as such prepares information that goes into the reports. The general ledger card in the FGE accounting system is a multi-columnar card. It shall be maintained for each and every account code in the transaction register. The ledger card (annex XVI) shall be used with out any modification in the form. The accountant shall be responsible for the maintenance of the general ledger. There is no equivalent in the single entry accounting system. Model 36 is used as a working paper to list revenues and expenditures item by item in order to prepare the monthly reports. There fore, the single entry using regions shall continue using Mode 36 as working paper since the report they are going to prepare are the Ge/He/29/XXs. Subsidiary ledger Control account balances may need detail in some cases. Subsidiary ledgers shall be maintained to provide that additional detail information. Accounts that needs subsidiary ledger are the expenditure, receivable and payable. Since there will be one cash account and one bank account at the implementing agency and BoFED level for PSCAP, there will be no need to maintain subsidiary ledger for cash and bank accounts. In the transaction register of PSCAP, there is a last column to put in the subsidiary ledger code to which posting is made. Posting to subsidiary ledger shall be made for each transaction. At the end of every month, the total of the subsidiary ledgers in a group of expenditure shall be equal to the total of the amounts posted to the general ledger.

________________________________________________________________________


28

Each regional BoFED shall be responsible to maintain appropriate records for all the projects that will be carried out in the region. For example, the Tigray BoFED shall maintain accounting records for all the six sub programs of PSCAP. Six subsidiary ledgers shall be maintained for each item of expenditure. The subsidiary ledgers shall be differentiated by the budget code. Taking “salary to permanent staff” as an example, the ledger accounts that shall be maintained by the Tigray BoFED shall be:

Project Budget code Account code Civil Service Reform 318/08/01/01/001 6111 Justice System Reform 318/08/01/01/002 6111 Tax System Reform 318/08/01/01/003 6111 Urban Management and Reform 318/08/01/01/004 6111 Information & Communication Technology Reform 318/08/01/01/005 6111 District Level Decentralization Reform 318/08/01/01/006 6111

The accountant shall maintain the subsidiary ledger. Posting to subsidiary ledger shall be made as soon as the transaction is registered in the register. The format given for the general and subsidiary ledgers are similar in all respects. Separate files of general and subsidiary ledgers should be maintained to avoid posting of general ledger information into subsidiary ledger or vice versa. It would be very important to differentiate the two legers using different colours. In a single entry environment, there are no subsidiary ledgers. As mentioned earlier, the records in the Ge/He/23 are summarized in Model 36 and monthly reports are prepared there from.

3.3.6. REPORTING TYPES AND FREQUENCY OF REPORINTG

MoFED shall be responsible for the preparation of consolidated financial reports. All reports submitted to MoFED must be copied to the MCB Plan and Program Directorate. Reporting from implementation agencies shall be on the pooled account in general with out a need to identify the source of the fund. The source of income shall be identified at MoFED level based on bank transactions and income ledger account. The regular reporting period will be monthly. The monthly report pack shall include an SOE, Bank Reconciliation and the monthly reports that are being prepared under both double and single entry accounting environments. The timetable and channel of reporting shall be:

a) For regional expenditures, BOFEDs to MoFED within two weeks after the end of the month;

b) For federal expenditures, implementing agencies to MOFED within two weeks after

the end of each month;

c) MOFED to donors within three weeks after the end of the month. In the initial period of the project, CFU of MoFED shall prepare statement of Expenditure as a basis for the replenishment. The CFU will decide as to which donor an SOE should go to. The SOEs shall be prepared based on the monthly reports mentioned above.

________________________________________________________________________


29

Report preparation responsibilities MoFED has the overall responsibility of account maintenance and report preparation for PSCAP. The Central Accounts Department (CAD) and the Counterpart Fund Unit (CFU) are jointly responsible for the management of the PSCAP fund. The CAD shall be responsible for collecting periodic reports from the implementing agencies. The federal implementing agencies should send a copy of the reports to MCB at the same time when they submit the reports to MoFED. BoFEDs shall send a copy of their reports to BCB at the same time when they submit their reports to MoFED. This is to avoid any inconsistency between the activity report and financial report. The PSCAP expenditures have to be incorporated in the government accounts at federal levels. The PSCAP monthly report pack is a bit different from the usual report pack. In addition the SOE and Bank reconciliation shall accompany the monthly reports. Hence a separate pack shall be prepared and submitted to CAD as regards PSCAP. At regions level as well, the PSCAP report shall be separately prepared and send to CAD. Method of report preparation The implementing agencies know that there is a pooled Birr account for PSCAP in general and transfers to them shall be made from this pooled account. It is the pooled (common) fund that is channelled to the beneficiaries and not the money from donors identified by name. They have to account for this common money as receipt, spent it according to their approved budget and report on the common account up the reporting line. Hence the source of the money is not relevant at the implementing agency level for accounting purpose. The CAD and CFU can identify at any time the amount of money received from any donor. The way report is presented to donors shall be Statement of Expenditures (SOE) or Financial Monitoring Reports (FMR) as explained below.

After a certain period, the SOE shall be replaced by FMR. This is essentially one report to be presented to the pool of donors. The donors shall decide as to how to share the expenditures. Quarterly financial report This shall be prepared as a ba sis for requesting quarterly transfers Annual report shall include:

• A statement of Receipt and Payments including account balances, • A statement of Uses of Funds, • Notes to the accounts,

Special Account Reconciliation Statement The report shall be ready w ithin six weeks of the end of the year.

________________________________________________________________________


30

Monthly reporting This is the basic reporting period. Quarterly, semi-annual or annual reports can all be prepared on the basis of the monthly reports. The format to be used for monthly reporting determines the formats to be used for Quarterly, semester and annual reports. It is advantageous to use similar formats for all. The monthly reports that are being used in the government reporting system shall be used for PSCAP purpose also. Under double entry accounting system this shall include, Capital Expenditure Report, Transfer Report, Receivable Report, Payables Report and the Trial Balance. Other reports are not relevant for PSCAP. (The specimen reports are given in annex XVII). No modification will be necessary on the supporting schedules that will accompany the monthly Trial Balance. However, the Trial Balance that will be used for PSCAP is a modified version of the Trial Balance in the Government Accounting System. This is done to enable BoFEDs to prepare one Trial Balance for all the sub-programs that are implemented in the region. BoFEDs has to maintain subsidiary ledger for each sub-program they are responsible for. The specific details for each sub program will be presented in the supporting schedules. The total of the supporting schedules will be transferred to the Trial Balance and the total of expenses paid by BoFED and the balance of other transactions for all the sub programs can be obtained from the Trial Balance. This will make easy reconciliation of the ledger balances with the bank balances. (Annex XVIII provides the amended trial balance.) The modified Trial Balance has three sections. The first section shows the expenditures incurred in the current month. This is obtained from the supporting schedules. The second section shows the total of the expenditures incurred in the months before the current month. This can be obtained from the last month’s Trial Balance. The Third section gives the total of expenditures incurred to the date of reporting. This column is important to follow up the expenditures incurred to date and also to easily reconcile the Trial Balance with ledger also with the bank balance. Under single entry accounting, the monthly report pack shall contain Ge/He/29/4/2, Ge/He/29/5/2 and Ge/He/29/3/2. Ge/He/29/4/2 is a summary sheet equivalent to the Trial Balance in double entry accounting. The existing format can be modified slightly to enable BoFEDs to prepare consolidated statement for all sub-programs they are responsible for. Ge/He/29/3, which is capital expenditure report shall be prepared for each sub program that is carried out in the region. The total from each page of the capital expenditure report shall be transferred to the modified Ge/ He/29/4(see annex XIX). The total of the expenditure can then be compared with the cash on hand and at bank. In addition, an information table shall be added at the top. The table shall contain:

Supervising unit Code Name of Public Body Name of Program Name of Sub -agency Name of Sub -program Name of Project Source of finance Bank account No

________________________________________________________________________


31

The above information shall help the CAD to correctly identify report and expenditures included in it. Ge/He/29/5/2 (annex XX) is equivalent to the Transfer Report under double entry bookkeeping. The same information shall be filled in it except that the account codes will be different. Again the above information table shall be printed on the existing format. Ge/He/29/3/2 is equivalent to the Capital Expenditure Summary under double entry bookkeeping. The same information shall be filled in it except that the account codes will be different. The above information table shall be printed on the existing format. In addition, two account code columns shall be used in the report. The first column shall be for the account codes under single entry bookkeeping system and the second column gives the equivalent codes under double entry bookkeeping system. This will increase the correctness of the reports, decrease the time of report processing at CAD and also familiarizes the single entry using regions with the double entry. Proposed format is given in (annex XXI) In addition to the usual monthly reporting, each federal implementing agency and BoFEDs shall attach an SOE as explained below. Bank reconciliation of the pooled accounts maintained for PSCAP purpose shall always accompany the monthly report. Format for the bank reconciliation is given in annex XXII. The timetable outlined above shall be observed to submit reports. Statement of Expenditure (SOE) SOE is a way of requesting reimbursement of payments already made. In the initial period of PSCAP implementation, the SOE procedure shall be used to replenish the special accounts maintained in Ethiopia. Each donor will receive an SOE on the basis of which the donor will replenish its special account. When and to which donor an SOE will be send is a matter to be decided by the CFU. The CFU will establish some sort of mechanism to do this. Then it will prepare and submit the consolidated SOE to each donor alternately. The preparation of the consolidated SOE is the responsibility of the Counterpart Fund Unit (CFU) of MoFED. To ensure the consistency of the accounting records with the expenditures in SOEs, SOEs shall be prepared by each federal implementing agency and by BoFEDs, forwarded to CAD in the monthly report pack and then the CFU will receive the SOEs from the CAD. The CAD shall make preliminary check of the agreement of the SOEs with the other reports and records. A uniform SOE format shall be used by each implementing agency. A proposed format is given in annex XXIII. The SOE shall be clearly filled and approved before it is sent to the CAD. The CFU shall collect the monthly SOEs from CAD and prepare a consolidated SOE. The CFU also returns an approved SOE to the federal implementing agencies and BoFEDs so that the reporting entities could know the amount they have reported is fully accepted or not. The implementing agencies shall compare the SOE approved by the CFU and compare their record. If they agree to the corrections made by the CFU, then they shall amend their records accordingly.

________________________________________________________________________


32

The format for the consolidated SOE shall be the same format as given for the implementing agencies except that columns shall be added to fill foreign currency amounts (See annex XXIV). If it decides that replenishment should be requested, then it will complete the necessary formalities in preparation for the request. This will include the application pre-screening checklist, the Application for Withdrawal, Special Account Reconciliation Statement, copy of Bank Statements and the necessary supporting documents. CFU is well acquainted with the procedures and hence there is no need to discuss the procedures. Financial Monitoring Reports (FMR) FMRs are intended to provide information whether or not funds disbursed to projects are be ing used for the purpose intended, project implementation is on track, and budgeted costs will not be exceeded. The FMR links financial reporting with activity reports and procurement reports. The emphasis of FMR is on the financial aspects of the project. In FMR system, the Accountant is responsible for the preparation of the financial reports, the technical specialists shall prepare the activity progress reports and the procurement staff shall prepare the procurement reports. In PSCAP, MoFED shall be re sponsible for the preparation of the financial reports and the MCB Plan and Program Directorate shall be responsible for the activity and procurement reports. Financial reports under FMR must include a statement showing for the period and cumulatively (project life or year to date) cash receipts by sources and expenditures by main expenditure classifications; beginning and ending cash balances of the project; and supporting schedules comparing actual and planned expenditures. The Statement of Receipts and Payments together with Use of Funds by Sub Program as a supporting schedule (see annex XXV and XXVI) shall be adequate to satisfy the requirements of the FMR. The CAD in collaboration with CFU shall be responsible to prepare these reports. The monthly reports gathered from implementing agencies shall be processed to update the records of PSCAP in general that is implemented in CAD. Based on that information the periodic Statement of Receipts and Payments with the supporting schedule shall be prepared. As the special account is maintained in USD, the Statement of Receipt and Payments need also be prepared in USD. The records of PSCAP are maintained in Birr. At first, the Statement of Receipt and Payments shall be prepared in Birr. Then it will be translated to USD. The rate that will be used to translate the report shall be:

• Opening balance of Special Accounts, at a rate ruling on that date, • Closing balances of Special Accounts, at a rate ruling on that date, and

• Expenditures during a reporting period, at simple average rate of transfers from Special

Account to Pooled Birr Account during the reporting period. The FMR prepared in this way shall be the report that is going to be presented to all donors.

________________________________________________________________________


33

Before presenting it to the donors, the Statement of Receipt and Payment and the supporting schedule shall be sent to the Plan and Program Directorate of MCB for the latter to compare it with the activity progress and procurement report it is compiling. Similarly, CAD shall receive copies of the activity and procurement reports prepared by MCB to check and agree that the reports are consistent with the financial report. When MCB and MoFED agree that the report can be presented to donors, the reports shall be submitted. The frequency for presenting FMR to donors shall be six monthly and the report shall be submitted within 45 days from the end of the reporting period. Quarterly financial reports These reports are used as a basis to make transfers to federal implementing agencies and BoFED. The for mat and the purpose are fully explained in previous section. Annual reports These are mainly prepared for audit purpose. Annual reports are not separate reports from the FMRs that will be prepared periodically (at lease six-monthly). Rather they are similar except that the periodic FMRs shall be consolidated to give the annual reports. To facilitate consolidation and to reduce degree of error in compiling the annual accounts, the periodic reports shall be prepared for periods that start on July 8 (Hamle 1) of the year and ends July 7 (Sene 30) of the next year. If, for example, FMRs are prepared quarterly, the four quarter of the year will be: July 8 – October 7; October 8 – January 7; January 8 – April 7; and April 8 – July 7. The annual report will then become the consolidated report of the four quarters. FMRs may not be introduced as a disbursement mechanism during the initial period of the project implementation. For the annual accounts purpose however, the two financial reports, Statement of Receipts and Payments and Use of Funds by Sub Program, will be prepared starting from year one. Whenever there are figures that need additional explanations, notes to the accounts shall be prepared. The notes to the accounts shall also be used to give brief information about the nature of the project, the accounting policies followed in the preparation of the financial statements and any additional information relevant for the reader of the financial statements. The two annual financial statements shall be the one that will be presented to the auditors to start their annual audits.

3.4. TRAVEL EXPENSES

Travels are usually pre-planned. The traveller shall fill travel advance request and authorization form (Form 1 as shown in annex XXVII). The officer approving the trip shall sign the form. The form shall be distributed to the finance section, personnel section and property section.

Each travel has to be requested and authorized in advance of the travel. The traveller has to liquidate the travel advance when returning from the trip. The government Perdiem rate shall be used for local travels.

________________________________________________________________________


34

Upon return from the trip, travel expense report form (Form 2 as shown in annex XXVIII) shall be filled. The Budget and Accounts Head of the agency shall sign the form after checking the accuracy. This form states the actual expenditure of the trip and the amount due to or from the agency. The amount due to the traveller shall be paid by check or in cash depending on the amount. The amount due to the agency shall be collected by cash receipt or shall be deducted from the traveller’s salary. There is another form (Form 3 in annex XXIX) that should be filled upon return from trip. It is Perdiem Payment Control and Work Performed Record. This form, although given number three, has to be filled before form 2. It explains the detail of the travel and the work performed during the travel. The form shall be signed by the traveller and shall be approved by the supervisor. This should be the basis to approve the expenses by the Budget and Finance Head.

3.5. PROCURMENT

Procurement usually starts by a purchase requisition. A purchase requisition form shall be filled by the user department and shall be approved by the department head. In PSCAP, the responsible person for PSCAP in the implementing agency shall approve the purchase requisition (see annex XXX). Prior to the approval by the responsible officer, the request shall be presented to the budget section for checking of the availability of the budget. If there is adequate budget for the item requested and the request is approved, the procurement process starts. Procurement of the consultancy service shall start when the user department requests for the service by referring to the appr oved procurement plan. The request shall be in writing. Then the procurement process starts as per the provisions of the PIP. Final or staged payments for services shall be made when the concerned department declares that the consultant have successfully delivered the service.

3.6. RECEIPT AND ISSUANCE OF GOODS

Procurement in PSCAP shall be carried out in accordance with the procedures explained in the Program Implementation Manual. Payment for purchases of goods and services shall be made if the procurement procedures are satisfied and duly approved payment request accompanied by the necessary documents is received.

A Store Receiving Voucher shall evidence receipt of goods by the store of the implementing agencies. Final payment for goods acquired shall only be made after the goods purchased are received in good condition and a copy of the receiving voucher is sent to the accounts. Issuance of stock for use shall be requested via store requisition and shall be issued via Store Issue Voucher.

________________________________________________________________________


35

Purchased goods shall be inspected by the store before receiving. Inspection is made to check the goods brought to store do agree with the order put both in quantity and specification and that they are received in good condition. The concerned user should check specialist items, as the storekeeper might not have the appropriate knowledge of the items. After the items are checked, Receipt for Articles or Property Received-Model 19 (annex XXXI) shall be prepared to receive the goods in the store. One copy of the voucher shall be sent to the accounts section. The voucher shall be attached or adequately cross-referenced to the Payment Voucher through which the final payment to the supplier is made. Writing the Receipt for Articles or Property Received No on the Payment Voucher and vice versa can be adequate cross-referencing. At this point, the accountant shall reverse all advance payments kept as debtors, if any, to the appropriate expense account using Journal Voucher. This is an important step as expenses incurred might otherwise be only partly reported. The user shall request issuance of stock through Store Requisition -Model 20 (annex XXXII). The Stores Head shall check the existence of stock and authorizes the issuance on a Delivery Order – Model 21 (annex XXXIII). The stores clerk shall issue the requested item to the user through Receipt for Articles or Property Issued Model 22 (annex XXXIV). Stock cards having detail of quantity and price shall be maintained by the store. Each receipt and issuance of goods shall be entered in the Stock Card – Mode 70C (annex XXXV). A person other than the Storekeeper shall maintain stock cards for each item. In addition to a Stock Card, the storekeeper may maintain registers of stock – Model 70A. Bin cards (annex XXXVI ) for each item shall also be maintained. Periodic inventory of the stock on hand shall be made and shall be reconciled with the Stock Card balance. Immediate action has to be taken on any stock shortage or overage. 3.7. MANAGEMENT AND CONTROL OF PROGRAM ASSETS All assets that will be purchased for PSCAP shall be expensed upon purchase. This is important because, the program is run using donor funds who will need report of all expenditures as and when incurred. The process to acquire, receive and issue fixed assets shall be the process for receiving stock. After fixed assets are issued to the user, assets shall be included in a fixed assets register (annex XXXVII) with all the ne cessary details to know about the location and user of the assets.

Fixed assets constitute assets that have the expected useful life of more than one year. Fixed assets shall be expensed upon purchase. Follow up record, Fixed Assets Register, shall be maintained to control the whereabouts of the assets.

________________________________________________________________________


36

Each fixed asset shall be identified using tag numbers organized in such a way that enables identification of the implementing agency, the program, and the nature of the asset, the user department and the asset number. For example, a computer purchased under PSCAP for BCB procurement desk can be assigned a tag as

“BCB/PSCAP/ PD /C /001”

A specific tagging system is not recommended in this manual as the implementing agencies have the ir own tagging system already. The important thing to do is to make sure that PSCAP is included in the numbering so that the program assets can be easily identified.

3.8. INTERNAL CONTROLS

Each implementing agency shall ensure that adequate internal controls are put in place and that the controls are adhered to consistently. Among others, the internal control system should ensure that all transactions are recorded, the recorded transactions have substance, they are recorded at correct amounts in the correct period in the correct accounts and that they are posted and summarised correctly. (For further explanation please refer the Project Implementation Plan).

3.9. AUDITING

3.9.1. EXTERNAL AUDIT The Office of the Federal Auditor General shall audit the annual financial statements of PSCAP or shall cause the accounts to be audited by independent auditors in accordance with the TOR for audit that will be agreed with the MCB. The Project Implementation Plan has provided sample TOR for audit. The annual financial stateme nts for audit shall be ready within eight weeks after the end of the budget year. The audit shall be finalised with in nine months after the presentation of the financial statements.

3.9.2. INTERNAL AUDIT

As one of the programs in which the government has invested money in, the MoFED Inspectors shall be involved to carry out internal audit of the PSCAP. They shall include audit of PSCAP in their annual audit program. The internal audit reports referring to PSCAP shall be submitted to the MCB/ and MoFED. Corrective actions shall be taken based on the recommendations. Subsequent audit reports shall mention about the actions taken on the previous recommendations. As one of the programs managed by an implementing agency, the federal implementing agencies internal auditors shall include PSCAP in their annual audits. The report of the implementing agencies internal auditors shall be addressed and submitted to the head of the agency.

________________________________________________________________________


37

3.10. RETAINING OF DOCUMENTS

According to Financial Documents Preservation Guideline No 5/1999 of MoFED, financial documents shall be preserved for ten years from the date they were created or up to two years after the audit by the Auditor General is completed, which ever comes last. For further detail please refer the guideline. It would be very difficult and time consuming to transfer documents to a central point. All documents shall be kept with the respective federal implementing agency and BoFEDs. Documents refer to all the ledger cards, registers and supporting documents. The PSCAP documents shall be kept separately and shall be filed in a way that makes referring to the documents very easy. The filing system should enable the auditors of PSCAP and any one who is authorized to check the documents of PSCAP to easily and systematically trace the documents and information they are looking for.

3.11. USING COMPUTERS

As discussed in this manual, the final report preparation is the responsibility of the CAD and CFU. At the implementing agency level, there is no need for new way of compiling the financial information for PSCAP purpose except that a separate budget and account codes will be used. What this entails is that, the existing system in each implementing agency, be it manual or computerized, will continue to be used for PSCAP. Simple templates for budget tracking and report preparation can be prepared on Microsoft Excel centrally and can be distributed to the implementing agencies’ accountants with appropriate training. This would speed up the process for decision making and re porting.

3.12. REVISION OF FINANCIAL MANUAL

The procedures described in this section may need revision from time to time so that they can address the practical difficulties that may be encountered during the actual implementation of the program, and to increase the efficiency and effectiveness of the financial management function. Any of the stakeholders in the PSCAP, may propose amendments to any of the procedures and/ or additional procedures. The auditors, both internal and external, may also propose amendments. Proposed changes shall be addressed to MoFED who will summarises the proposed changes and present it to the MCB. The MCB shall examine or shall cause examination of the proposed change and shall approve the change. The change shall be effective from the date of the approval. The change shall be adequately cross referenced to the relevant section of this manual and shall be annexed to the manual until a full revision of the entire financial management procedures may be made.

Upon due approval of MCB, amendment to and/ or introduction of new procedures shall be annexed to the existing procedures until full revision of the procedures is necessitated and made.

The retention of documents shall be governed by Financial Documents Preservation Guideline No 5/1999 of MoFED. Proper filing system shall be introduced.

________________________________________________________________________


38

3.13. ANNEX ANNEX Budget Tracking Report I. Disbursement Request II. Quarterly Reports III. Cash Receipt Voucher IV. Bank Payment Voucher V. Cash Payment Voucher VI. Petty Cash Book VII. Suspense Payment Voucher VIII. Model 6 IX. Ge/He/23 X. Journal Voucher XI. Model 64B – Journal voucher for non-cash trascations XII. Foreign currency Transactions Register XIII. Local currency Transactions Register XIV. Budget Ledger Card XV. Financial Ledger Card XVI. Monthly report formats XVII. Trial Balance XVIII. Ge/He/29/4/2 XIX. Ge/He/29/5/2 XX. Ge/He/29/3/2 proposed format XXI. Bank Reconciliation Statement of PSCP Bank Account XXII. Statement of Expenditure (SOE) XXIII. Consolidated Statement of Expenditure (SOE) XXIV. Statement of Receipts & Payments XXV. Use of Funds by Sub Program XXVI. Travel Advance Request and Authorization Form XXVII. Travel Expense Report Form XXVIII. Per Diem Payment Control And Work Performed Record XXIX. Purchase Requisition XXX. Receipt for Articles or Property Received-Model 19 XXXI. Store Requisition - Model 20 XXXII. Delivery Order – Model 21 XXXIII. Receipt for Articles or Property Issued Model 22 XXXIV. Stock Card XXXV. Bin Card XXXVI. Fixed Assets Register XXXVII. Chart of account - summarized XXXVIII. Excerpt from the PIP – Section IV Resource Allocation & Management

XXXIX.

________________________________________________________________________


39

Annex I

THE FEDERAL DEMOCRATIC REPUBIC OF ETHIOPIA MOFED PSACAP

BUDGET TRACKING REPORT

Implementing agency: MOR/BoFED Month: July 2004

Budget lines

Account code

Approved

revised budget

Expenditure to date

Budget balance

Birr Birr Birr Tax systems reform Goods & services 6200 100,000 10,000 90,000

Office supplies 6212 50,000 5,000 45,000 Printing 6213 20,000 2,000 18,000 Educational supplies 6215 10,000 1,000 9,000 Other material and supplies 6218 20,000 2,000 18,000

Contracted service (Consultants, audit) 6250 90,000 50,000 40,000 Contracted professional service 6251 30,000 35,000 (5,000) Freight 6255 30,000 5,000 25,000 Fees and charges 6256 30,000 10,000 20,000

Training 6270 100,000 25,000 75,000 Local training 6271 50,000 - 50,000 External training 6272 50,000 25,000 25,000 Grand total 290,000 85,000 205,000

Prepared by: ________________ Agreed by: _______________ Budget accountant Accountant

Checked by: _____________ Budget & accounts head

PSCAP 1

Comment • The budge for goods and service in general appears to be spent according to physical plan. • The budget for contracted service is spent very fast. The budget for contracted service is

over spent. This is due to price change and not out put increase. • The budget for local training is not spent although the activity plan shows that the activity

had to be performed in the month of July.

________________________________________________________________________


40

Annex II


DISBURSMENT REQUEST

Implementing agency/Region: MOR/SNNPR BoFED QUARETER: 2 (October 8 to December 8, 2004) Request No: ____2__

Birr Birr Budget for the next quarter (attached) XXX Less: Purchases to be made centrally (XXX) XXX Less: Balance of cash at bank XXX

Balance of cash on hand XXX XXX Amount requested for transfer XXX

Prepared by: ________________ Checked by: _____________

Accountant Budget & accounts head Authorized by: _______________ Approved by: _______________

Implementing agency head BoFED Head

PSCAP 2

________________________________________________________________________


41

Annex III


QUARTERLY REPORT

Implementing agency/Region: MOR/SNNPR BoFED QUARETER: 2 (October 8 to December 8, 2004) Request No: ____2__

Expenditures

Budget lines

Account code

Previous quarter

Current quarter

Cumulative

Next Quarter Budget

Birr Birr Birr Birr Tax systems reform

Goods & services 6200 10,000 90,000 100,000 150,000

Office supplies 6212 5,000 45,000 50,000 25,000 Printing 6213 2,000 18,000 20,000 30,000 Food 6216 1,000 9,000 10,000 70,000 Other material and supplies 6218 2,000 18,000 20,000 25,000

Contracted service (Consultants, audit)

6250

50,000

40,000

90,000

200,000

Contracted professional service

6251

25,000

5,000

30,000

150,000

Insurance 6254 5,000 25,000 30,000 10,000 Fees and charges 6256 10,000 20,000 30,000 40,000

Training 6270 25,000 75,000 100,000 250,000 Local training 6271 - 50,000 50,000 60,000 External training 6272 25,000 25,000 50,000 190,000 Grand total 85,000 205,000 290,000 600,000

Prepared by: ________________ Checked by: _____________

Accountant budget & accounts head

Authorized by: _______________ Approved by: _______________ Implementing agency head BoFED Head

PSCAP - 3

________________________________________________________________________


42

Annex XVIII

y£úB ¥m²z¾

Trial Balance m¼£ 27 ymNG|T m¼b@t$

|M_______________________ mlÃ q$_R

______ wR______

Name of Public Body:______________________

Code ______ Month

yPéG‰Ñ |M_____________________________

mlÃ q$_R

______

Name of Program: ________________________

Code ______

y|‰ KFl# |M_____________________________

mlÃ q$_R

______

Name of Sub Agency: _____________________

Code ______

yN;#S PéG‰Ñ |M________________________

mlÃ q$_R

______

Name of Sub Program: ______________________

Code ______

yPéjKt$ |M_____________________________

mlÃ q$_R

______

Name of Project: __________________________

Code ______

yÍYÂNS MNu_____________________________

mlÃ q$_R

______

Source of Finance: ________________________

Code ______

yÆNK £œB

PSCAP - 4

________________________________________________________________________


43

q$_R_____________________________ Bank Account Number:

______________________

¾›G<’< ¨

Current Month ÁKñƒ ¨^ƒ Previous

months •eŸ ›G<” É[e Cumulative

y£œB mdB

y£œB mGlÅ Áb!T KÊÄ!T ÉU Áb!T KÊÄ!T ÉU Áb!T KÊÄ!T ÉU

Account Code

Account Description Debit Credit Total Debit Credit Total Debit Credit Total

xgR WS_ gb!½ :RÄ¬½ BDR £œB ¶±RT Revenues/Assistance/Loan: (From Revenue/Assistance/Loan Report)

wÀãCÝ( Expenditures:

mdb¾ wÀ ¼kmdb¾ wÀ £œB ¶±RèC DMR¼ Recurrent expenditure (Total of Recurrent Expenditure Reports)

yµpE¬L wÀ ¼kµpE¬L wÀ £œB ¶±RèC DMR¼ Capital expenditure (Total of Capital Expenditure Reports)

Civil Service Reform ¾c=y=M ›ÑMÓKAƒ ThhÁ

Justice System Reform ¾õƒI e`¯ƒ” ThhÁ

Tax System Reform ¾•¡e e`¯ƒ” ThhÁ

Urban Management Reform ¾Ÿ}T ›e}ÇÅ` ThhÁ

Information & Communication Technology Reform ¾›=”ö`T@i” ¢S<’>Ÿ?i” ‚¡•KAÍ= ThhÁ

District Level Decentralization Reform u¨[Ç Å[Í ¾eM×” T"óðM e[›ƒ” ThhÁ

ZWWéC ¼kgNzB ZWWR £œB ¶±RèC DMR¼ Transfers: (from T ransfer Report)

tsBúb! £œïC ¼ktsBúb! £œB ¶±RèC

________________________________________________________________________


44

DMR¼ Receivables: (from Receivables Report)







tkÍY £œïC ¼ktkÍY £œB ¶±RT¼ Payables: (from payables Report)







l@tR åF KÊÄ!èC ¼b£œB mdB kx-”§Y mZgB¼ Letters of Credit: (by account code-from General Ledger)



Tax System Reform

________________________________________________________________________


45

¾•¡e e`¯ƒ” ThhÁ Urban Management Reform

¾Ÿ}T ›e}ÇÅ` ThhÁ



5601 ytÈ‰ hBT ¼kx-”§Y l@jR¼ Net Assets/Equity (form General Ledger)

_Ê gNzBÂ y_Ê gNzB Xk#L êU Ã§cW ¼ b£œB mdB kx-”§Y l@jR¼ Cash & Cash Equivalents (by account code-from General Ledger)

4101 bœ_N Ãl gNzB Cash on hand

4102 bÆNk Ãl yWu MN²¶ gNzB Cash at bank in foreign currency

4103 bÆNK Ãl gNzB Cash at bank

DMR

Total

________________________________________________________________________


46

ANNEX XIX

THE FEDERAL DEMOCRATIC REPUBIC OF ETHIOPIA

(MOFED) PSACAP

TRIAL BALANCE SUMMARY REPORT ¾¾ \ ¾Ñu=“ ¾¨Ü H>Xw Te• mÁ

GE/HE/29/4

¾-----------------------¨ 19 ------ ¾H>dw ›p^u= S/u?ƒ ¢É ¡õM 4 TÖnKÁ

pê ÑH> 29/4

T°/S”Óeƒ/¡MM µ” ¨[Ç › •eƒ ”®<e ›`•eƒ ”®<e”®<e › •eƒ ¾Ñ”²u< M¡ U`S SÓKÝ }kuMŸ< cÖG< ¡õM 3 "ú•M ¨Ü Civil Service Reform

¾c=y=M ›ÑMÓKAƒ ThhÁ

T[ÒÑÝ Justice System Reform ¾õƒI e`¯ƒ” ThhÁ




Ÿ²=I uLÃ ¾}SKŸ}¬ TÖnKÁ“ Ÿ²=I Ò` ¾}ÁÁ²<ƒ c”Ö[¼‹ ¾ -------- ¨` 19-------¾Ñu=“ ¨Ü ƒ¡¡K— H>dw ¾T>ÁSK¡~ SJ“†¬” uò`T‹” •“[ÒÓ×K”::


¾uLÃ vKeM×”

¾H>dw g<U

¾Ñ”²w Á»

¡õM 5 K"ú•M ¨Ú 4012 ò`T ðce 4020

T°[Ó K” wÉ` KS”Óeƒ W^}™‹ 4101

K?L (W”Ö[» }ÁÃ³DM) 4102 ¾XØ” Ñ<ÉKƒ 4201 Ç=þ¸ƒ Ñ<U\¡ (W”Ö[» }ÁÃ³DM) 5300

Tdcu=Á K?L 5400 ¾I pê ¾T>ÁÑKÓK¬ KÓUÍ u?ƒ Ñu=“ ¨Ü Te• mÁ w‰ ’¬

"Kð¬ ¨` ¾µ[ W’É 4004 "Kð¬ ¨` ¾µ[ v”¡ 4003 Ÿ¨Ü k] uXØ” uØ_ Ñ”²w 4001 K}Ÿ•Â ¨ ¾T>µ` uv”¡ 4003 Ÿ¨Ü k] uXØ” uØ_ Ñ”²w 4001 Ÿ¨Ü k] uc’É 4004 TS³²—

PSCAP - 5

________________________________________________________________________


47

Annex XXI


MONTHLY CAPITAL EXPENDITURE REPORT

Project Code Head Sub-Head Project

Account title Double entry Single entry Refund Expenditure Birr Birr Office supplies 6212 8303 Printing 6213 8303 Food 6216 8303 Fuel and lubricants 6217 8303 Other material & supplies 6218 8303 Miscellaneous equipment 6219 8303 Research & development supplies 6223 8303 Purchase of vehicles 6311 8205 Purchase of equipment 6313 8204 Purchase of building s, furnishings & fixture 6314 8206 Contracted professional services 6251 8101 Rent 6252 8303 Advertising 6253 8303 Insurance 6254 8303 Fees and charges 6256 8304 Electricity charges 6257 8303 Telecommunication charges 6258 8303 Water & other utilities 6259 8303 Perdiem 6231 8501 Transport fees 6232 8501 Official entertainment 6233 8303 Local training 6271 8501 External training 6272 8501 Training related Perdiem 6273 8501 Training related transport fee 6274 8501 Salaries to permanent staff 6111 8301 Wages to contract staff 6113 8302 Wages to causal staff 6114 8302 Wages to external contract staff 6115 8302 Allowance to permanent staff 6121 8301

Reporting entity Code Federal/Region Head Sub-Head

Ge/He/29/3/2 – PSCAP 6

Supervising unit Code Public Body Program Sub-agency Sub-program Project

________________________________________________________________________


48

Annex XXI (continued)

Allowances to contract staff 6123 8302 Allowance to external contract 6124 8301 Government contribution to permanent staff pension 6131 8301 Maintenance & repair of vehicle 6241 8303 Maintenance & repair of equipment 6243 8303 Maintenance & repair of building, furnishings & fixtures 6244 8303 Total to be carried forward to Ge/He/29/4/2

________________________________________________________________________


49

Annex XXII

THE FEDERAL DEMOCRATIC REPUBIC OF ETHIOPIA PSCAP

BANK RECONCILIATION STATMENT Implementing agency: MFA For the month ended on: August 8, 2004 Birr Opening Bank Balance as per ledger (8/7/04) 100,000 Transfer received from BoFED/MoFED 400,000

Total cash available 500,000 Total expenditures for the month (350,000) Cash at bank Balance as per ledger (8/8/04) 150,000 Bank balance shown in the Bank statement (8/8/04) 160,500 Add: Deposits in transit

CRV 006 – Refund from a supplier 10,000 CRV 009 – Refund of travel advance 1,500

11,500 172,000 Less: Checks written but not presented for payment

BD 12345 6,000 BD12349 7,000 BD12400 9,000

(22,000) 150,000 Prepared by ______________________ Checked By________________

Accountant Budget &Accounts Head

PSCAP 7

________________________________________________________________________


50

Annex XXIII


MONTHLY STATEMENT OF EXPENDITURE (SOE)

Project Code Head Sub-Head Project

For the month of _________________Year ___________ SOE No _____________

Item No Reference No Payment Voucher or Model 6

Brief description of Goods, Works or Services

Name and address of suppliers

Total amount of contract

Invoice amount (Model 6)

Birr Birr

NB: Supporting documents should be attached if a payment is greater than the allowable threshold. P repared by: ________________ Checked by: _____________

Accountant budget & accounts head

Authorized by: _______________ Approved by: _______________ Implementing agency head BoFED Head

Reporting entity Code Federal/Region Head Sub-Head

Supervising unit Code Public Body Program Sub-agency Sub-program Project

PSCAP 8

________________________________________________________________________


51

Annex XXIV


CONSOLIDATED STATEMENT OF EXPENDITURE (SOE)

FOR THE PERIOD FROM ____________ TO________________

Item No

Reference No Payment Voucher or Model 6

Brief description of Goods, Works or Services

Name and address of suppliers

Total amount of contract

Invoice amount (Model 6)

Eligible percentage of Finance

Amount Eligible for

Finance

Remark

Birr Birr Birr US Grand Total

PSCAP 9

Page Of Application No Credit/assistance No Currency Rate

Counter Part Fund Unit Prepared by: Approved By: Position: Position: Signature: Signature:

________________________________________________________________________


52

Annex XXV

THE FEDERAL DEMOCRATIC REPUBIC OF ETHIOPIA MOFED PSCAP

CONSOLIDATED STATEMENT OF RECEIPTS AND PAYMENTS FOR THE MONTH ENDING SEPTEMBER 8, 2004

Previous months Current month Birr Birr Birr Birr RECEIPTS

IDA FUNDS 1,000,000 1,000,000 GOVERNMENT FUNDS 1,000,000 1,000,000 DFID 1,000,000 1,000,000 SIDA 1,000,000 1,000,000

Total Financing 4,000,000 4,000,000 Less: Expenditures by subprograms Federal PSCAP

Civil Service Reform 100,000 200,000 District level Decentralization 100,000 200,000 Justice System reform 100,000 200,000 Urban management Capacity Building 100,000 200,000 Tax System Reform 100,000 200,000 Information & communications Tech 100,000 200,000 Program support 100,000 200,000

700,000 1,400,000 Regional PSCAP (detail for each region)

Civil Service Reform 100,000 200,000 District level Decentralization 100,000 200,000 Justice System reform 100,000 200,000 Urban management Capacity Building 100,000 200,000 Tax System Reform 100,000 200,000 Information & communications Tech 100,000 200,000 Program support 100,000 200,000

700,000 1,400,000 Total Payments 1,400,000 2,800,000 Excess of Receipts over payments 2,600,000 1,200,000 Add: Opening cash balances

Pooled Birr account - 1,000,000 Special Accounts _______- 1,600,000

________- 2,600,000 Net available cash 2,600,000 3,800,000 Comprising

Pooled Birr account 1,000,000 1,500,000 Special Accounts 1,600,000 2,300,000

2,600,000 3,800,000

PSACP 10

________________________________________________________________________


53

Annex XXVI


PSCAP CONSOLIDATED USE OF FUNDS BY SUB PROGRAM

FOR THE MONTH ENDING SEPTEMBER 8, 2004

Current months Cumulative Planned Actual Variance Planned Actual Variance Birr Birr Birr Birr Birr Birr Federal PSCAP

Civil Service Reform 250,000 200,000 50,000 300,000 300,000 - District level Decentralization 250,000 200,000 50,000 300,000 300,000 - Justice System reform 250,000 200,000 50,000 300,000 300,000 - Urban management Capacity Building 250,000 200,000 50,000 300,000 300,000 - Tax System Reform 250,000 200,000 50,000 300,000 300,000 - Information & communications Tech 250,000 200,000 50,000 300,000 300,000 - Program support 250,000 200,000 50,000 300,000 300,000 ______-

1,750,000 1,400,000 350,000 2,100,000 2,100,000 ______ Regional PSCAP (detail for each region)

Civil Service Reform 200,000 200,000 - 350,000 300,000 50,000 District level Decentralization 200,000 200,000 - 350,000 300,000 50,000 Justice System reform 200,000 200,000 - 350,000 300,000 50,000 Urban management Capacity Building 200,000 200,000 - 350,000 300,000 50,000 Tax System Reform 200,000 200,000 - 350,000 300,000 50,000 Information & communications Tech 200,000 200,000 - 350,000 300,000 50,000 Program support 200,000 200,000 _____- 350,000 300,000 50,000

1,400,000 1,400,000 ______ 2,450,000 2,100,000 350,000 Total Project Expenditures 3,150,000 2,800,000 350,000 4,550,000 4,200,000 350,000

PSCAP 11

________________________________________________________________________


54

Annex XXX


PURCHASE REQISITION

Implementing agency/Region: MOR/SNNPR BoFED Requested by: ___________________________ Request Approved by: ________________________________ Budget checked by: ____________________________________ No Description Unit of

Measure Quantity Budget

code Budgeted

price Delivery

Date

Remark

PSCAP - 12

________________________________________________________________________


55

Annex XXXVI


BIN CARD

Implementing agency/Region: MOR/SNNPR BoFED Stock Item: _______________________________ Store No: _________________________________ Shelf No: _________________________________

Quantity Date

Ref No

Description Received Issued Balance

Remark

PSCAP - 13

________________________________________________________________________


56

Annex XXXVII


FIXED ASSETS REGISTER

Implementing agency/Region: MOR/SNNPR BoFED

Issued

Remark

Tag

Number

Description

Date of

purchase

Document Reference

Cost (Birr)

Voucher

No

Date To

(Name of user)

PSCAP - 14

________________________________________________________________________


57

ANNEX XXXVIII


MOFED PSACAP

SUMMARIZED CHART OF ACCOUNT

1. BUDGET CODES (For Both Double Entry And Single Entry Users)

BUDGET CATAGORY

CODE

Public body MCB 15/318 MFA 15/118 MoFED 15/152 MOR 15/156 ICTDA 15/325 Federal Supreme Court 15/122 Program PSCAP 08 Sub- agency Plan and Program Department 01 Federal implementing agencies other than MCB 00 Sub-program PSCAP - Tigray 01 PSCAP – Afar 02 PSCAP – Amhara 03 PSCAP – Oromia 04 PSCAP – Sumali 05 PSCAP – Benishangul gumuz 06 PSCAP – SNNPR 07 PSCAP – Gambela 08 PSCAP – Harari 09 PSCAP – Addis Ababa City 10 PSCAP – DireDawa Administration Council 11 Federal implementing agencies 00

2. PROJECT CODE FOR DOUBLE ENTRY USERS

Project Civil Service Reform 001 Justice System Reform 002 Tax System Reform 003 Urban Management Reform 004 Information & Communication Technology Reform 005 District Level Decentralization Reform 006 Expenditure Management & Control Reform 007 Program Support 008

PSCAP - 15

________________________________________________________________________


58

ANNEX XXXVIII

3. PROJECT CODE FOR SINGLE ENTRY USERS Project Civil Service Reform 01 Justice System Reform 02 Tax System Reform 03 Urban Management and Reform 04 Information & Communication Technology Reform 05 District Level Decentralization Reform 06 Expenditure Management & Control Reform 07 Program Support 08

4. ACCOUNT CODE FOR DOUBLE ENTRY USERS

Account title

Donor Category

Double entry

Remark

Balance sheet accounts

Cash on hand 4101

Cash at Bank – Foreign Currency -IDA 4102 Cash at Bank – Foreign Currency – XXX 4102 Cash at Bank – Foreign Currency - XXX 4102 Cash at Bank – Pooled Birr Account 4115 Cash at Bank – Implementing agencies 4103 Cash shortage & overage 4202 Other advance within government 4210 Advance to consultants 4252 Advance to suppliers 4253 Due to MoFED 5027 Other payables within government 5028 Transfers - cash 4015 Transfers –non cash 4050 - 4099 Net asset equity 5601 Revenue - External assistance 2000-2999 Revenue - External loan 3000-3999 Control account Goods and Services Goods 6200 Subsidiary accounts Office supplies 6212 Printing 6213 Food 6216 Fuel and lubricants 6217 Other material & supplies 6218 Miscellaneous equipment 6219 Research & deve lopment supplies 6223 Control account Fixed assets Goods 6310 Subsidiary accounts Purchase of equipment 6313 Purchase of building s, furnishings & fixture 6314

________________________________________________________________________


59

Control account

Contracted services

Consultant services

6250

Subsidiary accounts Contracted professional services 6251 Control account

Contracted services

Consultant services

6100

Subsidiary accounts Salaries to permanent staff 6111 Wages to causal staff 6114 Wages to external contract staff 6115 Allowance to permanent staff 6121 Allowances to contract staff 6123 Allowance to external contract 6124 Government contribution to permanent staff pension 6131 Control account Contracted services Operating

costs 6230

Rent 6252 Advertising 6253 Insurance 6254 Fees and charges 6256 Electricity charges 6257 Telecommunication charges 6258 Water & other utilities 6259 Control account Traveling & official entertainment service Operating

costs 6230

Subsidiary accounts Perdiem 6231 Transport fees 6232 Official entertainment 6233 Control account Training Training 6270 Subsidiary accounts Local training 6271 External training 6272 Training related Perdiem 6273

Training related transport fee 6274 Control account

Personnel service

Operating costs

6100

Subsidiary accounts Wages to contract staff 6113 Control account


Operating costs

6240

Subsidiary accounts Maintenance & repair of vehicle 6241 Maintenance & repair of equipment 6243 Maintenance & repair of building, furnishings & fixtures 6244

________________________________________________________________________


60

ANNEX XXXVIII

5. ACCOUNT CODE FOR SINGLE ENTRY USERS

Account title

Donor Category

Single entry

Asset Accounts Cash 4005 Cash at bank 4006 Staff debtors 4101 Cash shortage 4201 Custom deposit 5300 Other payable 5400 Transfers – capital 4015 Other cash transfers 4020 Control account Goods and Services Goods Subsidiary accounts Office supplies 8303 Printing 8303 Food 8303 Fuel and lubricants 8303 Other material & supplies 8303 Miscellaneous equipment 8303 Research & development supplies 8303 Control account Fixed assets Goods Subsidiary accounts Purchase of equipment 8204 Purchase of building s, furnishings & fixture 8206 Control account

Contracted services

Consultant services

Subsidiary accounts Contracted professional services 8101 Control account

Personnel service

Consultant services

Subsidiary accounts Wages to causal staff 8302 Wages to external contract staff 8302 Allowance to permanent staff 8302 Allowances to contract staff 8301 Allowance to external contract 8302 Government contribution to permanent staff pension 8301 Control account Contracted services Operating

costs

Rent 8303 Advertising 8303 Insurance 8303 Fees and charges 8304 Electricity charges 8303 Telecommunication charges 8303 Water & other utilities 8303 Control account Traveling & official entertainment service Operating

costs

Subsidiary accounts Perdiem 8501

________________________________________________________________________


61

Transport fees 8501 Official entertainment 8303 Control account Training Training Subsidiary accounts Local training 8501 External training 8501 Training related Perdiem 8501

Training related transport fee 8501 Control account

Personnel service

Operating costs

Subsidiary accounts Salaries to permanent staff 8301 Wages to contract staff 8301 Control account


Operating costs

Subsidiary accounts Maintenance & repair of vehicle 8303 Maintenance & repair of equipment 8303 Maintenance & repair of building, furnishings & fixtures 8303