Government Owned Fixed Asset Management Manual

1
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Ministry of Finance & Economic Development (MoFED)

December 2007
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MoFED DECEMBER 2007
TABLE OF CONTENT
ACRONYMS
Page
I. PREAMBLE .
1. THE DEFINITION OF FIXED ASSETS
1.1. Assets that fall within the definition of fixed assets ............................
1.2. Assets that have permanent nature but does not fall within the
definition of fixed assets .
1.3. Major maintenance that are capitalized ..
9
13
13
2. STRUCTURE FOR THE MANAGEMENT OF GOVERNMENT

FIXED ASSETS
15
3. THE ICC AND REGISTER MAINTENANCE PROCESS .
28
4. ASSIGNING PIN AND MARKING OF FIXED ASSETS IN

USE ..
39
5. VALUATION OF ASSETS WITH OUT COST ..
49
6. CHANGES IN THE REGISTER ..
71
7. ACCOUNTING TREATMENT OF COST OF ASSETS
82
82
88
90
2.1. The Government Fixed Assets Management Cycle ..

2.2. The role of MoFED GPAD .
2.3. The role of FMAUs in each PB .
2.4. The valuation committees of PBs
3.1. Fixed assets in use ............................................................................
3.2. Filling system for the UC and FAR .
3.3. Fixed assets in store
3.4. Fixed assets under construction
4.1. Property identification Number (PIN) .

4.2. Marking of Fixed Assets ...................................................................
5.1. Fixed assets in use ..

5.2. New fixed assets ..
5.3. Fixed assets under construction .
6.1. New purchases of assets
6.2. Transfer from assets under construction to fixed assets
6.3. Transfer between custodians ..
6.4. Return of used asset
6.5. Gate pass for assets
7.1. Fixed Assets ..

7.2. Cost of Assets
7.3. Fixed Assets under construction
8. INCORPORATING THE INITIAL VALUE OF EXISTING

ASSETS IN THE ACCOUNTING RECORDS
8.1. Fixed assets in use .......
15
19
21
25
29
33
36
36
39
46
50
67
69
71
75
76
77
80
95
95
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8.2. Fixed assets under construction .
9. DEPRECIATION ..
10. ANNUAL PHYSICAL COUNT AND ANNUAL SUMMARY
SCHEDULE ..
10.1. Annual Physical Count ..
10.2. Annual Summary Schedule (ASS) ..
11.
DISPOSAL OF FIXED ASSETS ..
11.1.
11.2.
11.3.
11.4.
11.5.
Why government owned fixed assets should be disposed? .

When government owned fixed assets should be disposed?
How government owned fixed assets should be disposed? .
Disposal committee .
Receipts from disposal .............................................................
Accounting for disposal ..
98
99
105
105
111
119
11.6.
12. REPORTING
120
121
123
130
136
136
138
13. OTHER ISSUES ..

13.1.
Ownership of assets
13.2.
Insurance ..
13.3.
Computerization of the fixed assets management .
138
143
144
144
147
147
12.1.
Reports Prepared to Incorporate the Value of Fixed Asset in
the Accounting Records.
12.2.
Other reports prepared by FAMU ..
Annex I Fixed Assets Count Sheet (FACS)

Annex II Fixed Assets With Users Control Card/ User Card (UC)
Annex III Fixed Assets Register Card (FAR)
Annex IV Fixed Assets under Construction Summary Table (FAUCST)
Annex V Receipt for Fixed Assets Received (RFAR)
Annex VI Receipt for Fixed Assets Requested & Issued (FAIRR)
Annex VII Property Identity Number (PIN) Register
Annex VIII Fixed Assets Transfer Form (FATF)
Annex IX Receipt for Articles or Property Returned (RAPR)
Annex X Used Assets Reissue Receipt (UARR)
Annex XI Gate Pass for Fixed Assets (GP)
Annex XII Journal Voucher
Annex XIII Trial Balance (Modified)
Annex XIV Fixed Assets Report Part One
Annex XV Fixed Assets Report Part Two
Annex XVI Fixed Assets Report Part Three
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MoFED DECEMBER 2007
ACRONYMS
ASS
Annual Summary Schedule
CAD
Central Accounts Department
FACS
Fixed Assets Count Sheet
FAMU
Fixed Assets Management Unit of PBs
FAR
Fixed Assets Registration Card
FAUCST
Fixed Assets Under Construction Summary Table
FATF
Fixed Assets Transferring Form
FGE
Federal Government of Ethiopia
GOFAMM
Government Owned Fixed Assets Management Manual
GPAD
Government Property Administration Department
ICC
Initial Comprehensive count
MoFED
Ministry of Finance & Economic Development
PB
Public Body
PIN
Property Identification Number
RAPR
Receipt for Articles or Property Returned
UC
Fixed Assets With Users Control Card/ User Card
I.
PREAMBLE
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MoFED DECEMBER 2007
roclamation No 57/1996, Federal Government of Ethiopia Financial

Administrative Proclamation defines public body (PB) as any organ of the
Federal Government, which is partly or wholly financed by Government
allocated budget. This manual is developed to provide uniform and advanced

procedures to manage fixed assets owned by PBs.
The existing fixed asset registers maintained by the PBs are incomplete. The register
maintained by one PB is not similar to the register maintained by the other in form
and content and hence, it is not possible to obtained information that will enable the
determination of the total asset owned by the Federal Government. Developing a
uniform register and procedures to register is the main objective of this manual.
The cost of fixed assets is treated as periodic cost. This means that the full cost of
the asset is considered as expense in the current fiscal year even if economic benefit
of the asset is carried over to the next fiscal years. Because of this treatment, it was
not customary to record the value of fixed assets in the fixed assets records. As a
result many of the fixed assets have no value attached to them. The new fixed asset
register that this manual explains is designed to incorporate values of fixed assets. In
addition, procedures are given for attaching value to fixed assets that were acquired
in the previous years and are now with out value.
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The PBs are responsible to present financial reports and to close their accounts to
the CAD of the MoFED. They have been doing this. However, the financial
statements do not show how much worth of assets the PB has and in what
categories. Since such information have not been collected from each and every PB,
the CAD has not been able to calculate and show the total value of assets owned by
the Federal Government. The financial statements that have been prepared were not
complete.
The Government of Ethiopia has under gone an accounting system reform. The new
system, which is known as Modified Cash Basis of Accounting, is introduced in
almost all PBs. Even this system has no room to incorporate the value of assets. In
the years to come, the Government Accounting System has to revolve to Accrual
Basis of Accounting to give solution to all deficiencies of the Modified Cash Basis of
Accounting. But that will take time. Until such time, there is a need to find out a way
of incorporating the value of fixed assets in the accounting records and in the
financial statements so that the value of the Federal Governments assets could be
reflected in the financial statements. This manual outlines the transitory accounting
procedures that are used until the accounting system revolves to the full Accrual
Basis of Accounting.
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The manual is prepared as per the provisions of Proclamation No 57/1996, Federal
Government of Ethiopia Financial Administration Proclamation; Council of Ministers
Regulation No 17/1997, and Government Property Guideline No 6/1998. Revision of
the Proclamation and the Regulation are expected to have very minimal impact on
the procedures provided in this manual. The Guideline might need revisiting to
accommodate the new concepts and procedures included in the manual.
All the formats that are to be used in the management of fixed assets are given in this
manual. The information required in the formats is the minimum common information
that should appear in all registers kept by all PBs. However, PBs can keep additional
information and additional formats to manage their unique assets in a unique way.
This manual is a living document that needs to be reviewed within a reasonable time
as and when required. The GPAD is responsible for the overall revision of the
manual. PBs are strongly advised not to make any amendment to the manual in their
own to ensure that uniform procedures are applied to manage assets owned by the
Government. PBs are, however, encouraged to forward all the points they want to be
reconsidered to the GPAD.
Thank you!
Tesfaye Teferi
Chartered Certified Accountant, Chartered Management Accountant
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THE DEFINITION OF FIXED ASSETS
he Council of Ministers Financial Regulations No 17/1997 provides two

important definitions as follows:
Fixed Assets means tangible asset costing Birr 200 or more that is in
operational use and that has a useful economic life of more than one year,
such as furniture, computers, heavy equipment, vehicles, ships and
aircrafts, buildings, roads, sewers, bridges, irrigation systems, dam.
Supplies means all pubic property other than fixed assets. It includes all
assets that will be used within one year of purchase and costing less than
Birr 200.
The regulation seems intended to cover all types of assets within the above two
definitions. The message is that if an asset is not a fixed asset then it is a supply. But
careful reading of the above two definitions, brings about a third category of assets.
Fixed assets are those costing Birr 200 or more and have useful life of more than one
year. Supplies are those costing less that Birr 200 and have a useful life of less than
one year. Where are assets worth less than Birr 200 but have a useful life of more
than a year categorized? Examples could be paper punchers, staplers, pocket
calculators, paper try, chairs, etc.
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1.1. Assets that fall within the definition of fixed assets
Fixed assets in this manual mean those assets that are defined as fixed assets by
the Federal Government of Ethiopia Financial Administration Proclamation. Currently
it covers all assets that have a cost of more than Birr 200 and have a useful
economic life of a year or more. When the proclamation is revised and this minimum
amount is changed in the future, the fixed assets register is also amended
accordingly.
Cost is defined as the amount paid to acquire an asset and to put it in to use. A cost
of small item like a calculator is the amount paid to purchase it. The cost includes the
Value Added Tax paid on it. A cost of a vehicle includes the amount paid to the
suppler, the custom duty paid on it, transportation of the vehicle from the supplier,
Value Added Tax paid, title transfer cost paid to the Ministry of Transport and
Communication and other costs that are necessary to put the vehicle in to use.
Similarly the cost of machinery is the cost paid to the supplier, the custom duty paid,
the Value Added Tax paid, installation costs paid, other costs to bring the machinery
to the place where it gives service, etc.
All assets that fall in the above definition should be recorded in quantity and value.
The procedures and records given in this manual applies primarily to the assets
captured by the above definition.
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As the purpose of this manual is to provide procedures for the maintenance of fixed
assets records and, as much as possible, to incorporate the value of the assets in the
accounting records, the categories of the government assets that are considered for
maintenance of the records are those given by the FGE Chart of Account. The FGE
Chart of Account has identified the following categories of Fixed Assets1:
Property & Equipment (Account Code 4520-4599)

CATEGORY
ACCOUNT
DESCRIPTION
CODE
Vehicle and other vehicular
4521
Motor vehicles, motorcycles, bicycles, and trailers
Aircraft, boats, etc.
4522
Aircraft and boats for non-military purposes.
Plant and machinery
4523
Equipment for office and workshops including
transport
generators, heavy construction equipment, survey

equipment, medical equipment, and education
equipment.
Military equipment
4524
Military aircraft and boats; small arms, artillery, tanks,

trucks, etc.
Buildings residential
4525
Purchase or construction of houses in the country or

abroad for residential use including dormitories,
personnel residences and camps.
Buildings non residential
4526
Purchase or construction in the country or abroad of
Decentralization Support Activity Project, Ministry of Finance & Economic Development, FGE Accounting
System (Manual 3), FGE Chart of Account (Volume II).
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administrative offices, warehouses, , museums,
monuments, etc.
Infrastructure
4527
All public structures that are not buildings including

roads, bridges, airfields, canals, irrigation systems,
sewerage systems, parks, sport fields, etc.
Military purpose buildings
4528
Residential buildings, non-residential buildings and

infrastructure as defined above but for military
purposes.
Furnishings and fixtures
4529
Exterior and interior lighting fixtures of buildings,

furniture, carpets and drapes, pictures and photo
frames, filing cabinets, shelves, etc.
Livestock
and
transport
4530
transport animals for government purpose.
animals
Office equipments
Livestock for breeding and research purpose and
4531
Equipment for office use including computers,

typewriters, photocopiers, calculators, fax machines,
scanners, tape recorders, television, fridges, heaters,
telephone apparatus, etc
Books
4532
Reference Books in and in the hands of users

excluding books for resale
The last category, office equipment (4531) is the only amendment made on the
classification provided in the Chart of Account. This last category was initially
included in the Plant, Machinery and equipment category. This category categorized
heavy machinery and small calculator together. As the cost of office equipment is
significant deserving separate disclosure and as the economic useful life of the two
are not the same, it is important to make distinction between the two.
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In addition to the above fixed assets, fixed assets under construction are also
included in the definition of fixed assets. The cost of those assets is accumulated
separately and when they are completed, they are capitalized as completed fixed
assets in the appropriate category shown above. The four categories identified in the
FGE Chart of Account are:
Construction in progress (4500-4519)

CATEGORY
ACCOUNT
DESCRIPTION
CODE
Construction of Buildings
4501
Houses in the country or abroad for residential

use including dormitories, personnel
residential
residences and camps, which are under

construction.
Construction of Buildings non
4502
Administrative offices, warehouses, museums,

monuments, etc in the country or abroad, which
residential
are under construction.
Construction of Infrastructure
4503
All public structures that are not buildings

including roads, bridges, airfields, canals,
irrigation systems, sewerage systems, parks,
sport fields, etc which are under construction.
Construction of Military purpose

buildings
4504
Residential buildings, non-residential buildings

and infrastructure as defined above but for
military purposes and which are under
construction.
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1.2. Assets that have permanent nature but does not fall within the definition
of fixed assets
As mention above, there are some assets that definitely serve for more than a year
but have a value of less than Birr 200. If such assets are not considered as fixed
assets and are not controlled like the other fixed assets, there could be misuse of the
asset. For example, a stapler could be considered a stationary item and a new one
could be requested whenever stationary is requested.
To avoid such misunderstandings and to make the control over assets of permanent
nature complete, an internal control system with the necessary records need to be
designed. This manual provides procedures necessary to manage this second
category of assets.
1.3. Major maintenance that are capitalized

The cost of major overhauls to machinery or vehicles should be capitalized provided
that the overhaul amounts to virtually a complete rebuilding of the asset with
replacement of all worn-out parts, the effect of which being to significantly extend the
useful life of the asset. For example, if the engine of a vehicle is completely changed,
it is obvious that the vehicle is going to serve for more years than a vehicle normally
serves. Hence the cost of the new engine is capitalized (added to the current cost of
the asset). Likewise similar overhauls that enable the asset to serve for a longer life
than the original estimate are capitalized.
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The cost of major maintenance can be related to the initial cost of the asset to
determine whether the cost is to be capitalized or not. Percentages for different
categories of assets or a certain percentage for all fixed assets can be developed.
This shall be given by GPAD and shall be included in the Guideline.
Maintenance paid on a fully depreciated asset, even if it is major, is not capitalized. It

is considered as expense in the year in which the amount is paid.
The way how to amend the fixed asset records as a result of costs that are
capitalized is discussed in the relevant section of this manual.
STRUCTURE FOR THE MANAGEMENT OF GOVERNMENT

OWNED FIXED ASSETS
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anagement of Government Property is the process of decision-making

and implementation relating to the acquisition, use, and disposition of
real property. In the Government Property Guideline No 6/1991EC,
Government Property is defined as Fixed Assets and Stock owned by the FGE
excluding money and land. The definition covers those assets obtained by borrowing
or any other reason and are under the custodianship of the PBs. Management of
Government Owned Fixed Assets is mainly concerned about the duties of care,
control and effective use of the fixed asset. The acquisition and disposition of fixed
assets is part of the Stock management system, as it becomes clear from the
discussion in the following section.
2.1. The Government Fixed Assets Management Cycle
The diagram on the next page shows the fixed asset management cycle of the FGE.
Stock management system
Fixed asset management cycle
Stock management system
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Acquisition
Initial count of existing assets
Stock
Supplies
(consumables)
Fixed assets
Supplies
(long-term)
Valuation of existing assets
Entry into the fixed assets

register Card
Entry in to Custodians Card
Returned to
Used-stock store
Fixed assets
Supplies
(long-term)
Annual Fixed assets count
In store
Disposal
Annual Summary Schedules
Value of Fixed Assets included

in financial ledger
Assets reissued for reuse
Figure 1 - GOE Fixed Assets Management System
As shown above, clear distinction is made between the stock management system
and the fixed assets management system. Properties acquired by the PBs are of
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three categories. These are supplies which are for consumption and that do not have
a useful life of more than a year once they are put in to use, supplies that have a
useful life of more than a year but have value less than Birr 200 individually and fixed
asset that have value of Birr 200 or more and that serve for more than a year.
The fixed asset management starts when fixed asset is issued from store. In case of
buildings and similar constructions, the building becomes part of fixed asset when
temporary acceptance is made. Fixed assets in store are just stock. Similarly fixed
asset management ends when the asset is returned, for any reason, to used-stock
store. Fixed asset could be damaged and no more be useful, the user of the fixed
assets might leave the PB and might have returned the asset to store, a project office
might be closed, the asset might be no more useful. Such assets are received in to
the store. From that point on, the fixed asset becomes stock. At time of disposal, the
asset is issued from store through a store issue voucher (currently Model 22) to the
buyer of the disposed asset.
The idea of used-stock store is introduced for many reasons:

1. Under an efficient property management system, it is expected that the PB
keeps only the items it needs in the immediate future. The used-stock store
should as much as possible be kept empty. Having this store encourages
better handling of property as large stock in the Used-stock store is an
indication of inefficient fixed assets management system.
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2. PBs can easily identify which of their stock items are used and which are new
for decision-making purpose. When the quantity of used-stock is significant,
the need to dispose part or all of that stock is considered.
3. At times of disposal, used property is automatically segregated and there is

no need to start another exercise to do so.
4. The chance that new stock items are disguised and disposed, knowingly or
unknowingly, with the old one is minimized.
5. If used-stock is put together with the new one, there is a chance that new
items are reissued at a cost of the old one.
It is highly recommended that all PBs which have significant stock size to have a
separate used-stock store. Those PBs with small size of stock can manage both the
used-stock and the new stock in the same store. This is done to minimize cost of
stock handing. However, even if the used and new stocks are kept in the same store,
they should be segregated and kept/shelved separately with clear marking on them
as used and new. The same storeroom can also be partitioned to keep the used and
new stock items separately.
It is possible that assets are reissued to a different user after they are returned to
store. As soon as they are issued from store, they become fixed assets once more.
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2.2. The role of MoFED GPAD
MoFED is the PB responsible for issuing directives for the custody and control of
property. On the other hand MoFED is also responsible for consolidating financial
reports it receives from the PBs. It is therefore important that the MoFED GPAD
monitors the implementation of this manual. This ensures the uniform application of
the manual, providing faster solutions for problems that occur in the fixed assets
management process, especially in the initial fixed assets register maintenance
exercises.
Not all the procedures necessary for the management of fixed assets could be
included in this manual. Or new approaches may become necessary. Issuance of
new directives as part or amendment of this GOFAMM will be done by GPAD.
During the comprehensive fixed assets count and even thereafter, issues concerning
ownership, valuation and similar other issues might arise. Some of the issues might
need the decision of the policy makers or higher officers. Some of the issues might
need the involvement of external professionals. The GPAD is better situated to deal
with such issues. This will help speedy decision-making and avoids duplication of
effort by different PBs. If each and every PB is allowed to deal with such issues,
uniformity may be lost and cost of dealing with the issues might be high. Training on
the GOFAMM can be better coordinated by GPAD. Once the registers of fixed assets
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are fully maintained in all PBs, information on the summary of assets in all PBs might
be required for decision-making. GPAD shall collect such information from the public
bodies and prepares the summary information needed. For these reasons, the GPAD
should be the main focal point in the management of Government Owned Fixed
Assets.
This GOFAMM provides transitory procedures to attach the value of fixed asset in the
accounts of PBs. This requires much effort to be done on the valuation of fixed
assets. Valuation of new asset is not a problem. But valuation of assets that are in
use is not a simple task. One of the reasons for this is the need for expert knowledge
to attach values to fixed assets. It will be costly to employ experts in each PBs.
However, it is very crucial to employ professionals as staff of GPAD. Such
professionals can have the following Terms of Reference:
1. They oversee the application of valuation methods suggested in the

manual;
2. Revise the existing or develop up-to-date valuation methods for different

categories of assets and disseminate directives to the PBs;
3. Deal with requests on valuation and ownership of assets that are received
from PBs;
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4. When necessary, engage in the valuation of asset of unique nature when

called upon by the PBs;
5. When bulk disposal of Fixed Asset is to be made by any PB, ensure that
valuations made by valuation committees of the public bodies are fair;
6. Participate in the training of PBs on the methods and techniques of

valuations.
The creation of this professional team is very important if the process of attaching
value for fixed assets and hence incorporation of the value of fixed assets in the
financial ledger cards is to be successful. This creates fertile ground for the future
introduction of Accrual Basis of Accounting.
2.3. The role of FAMUs in each PBs
Regardless of the different organization structures that PBs have, there should be a
unit responsible for the management of fixed assets. The Terms of Reference given
to this unit might again differ depending on the nature and structure of PBs. The
minimum Terms of Reference could be as follows. It is important to see the Terms of
Reference in two seasons:
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The ICC season:
When this manual is implemented, the existing fixed asset management system is to
be changed or improved. Fixed assets history and condition is to be maintained in
detail and value is to be attached to the fixed assets. This process demands great
and quick work. The major task is to plan and perform count of all fixed assets in the
custody of the PBs. Once this comprehensive count it completed, effort will be made
to attach value to all assets counted.
As this work could not be done by the staff of the FAMU of the PBs, additional force
is required to be pooled from other departments and may be from outside on
contractual basis. During this time the role of the FAMU shall be:
a)
Plan, manage, direct, coordinate and control the assignment; determine

and obtain the necessary resources required to complete the tasks in a
timely, efficient and effective manner.
b)
Allocate roles and responsibilities to individual teams assigned to each

task, monitor progress and provide support to the teams.
c)
Establish deadlines for completing each task.
d)
Coordinate and engage in the count, registration, tagging and valuation

of the fixed assets counted.
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The normal management season:
Once the comprehensive count, registration, tagging and valuation of fixed assets
are accomplished, the FAMU should come to the normal management process.
During this time the minimum Terms of reference for the unit shall include:
a)
Plan the activities of the unit. Organize the work and manpower of unit
in a way that ensures efficient management of the fixed assets based
on the nature of the fixed asset of the PBs.
b)
Ensure that the activities of the unit are carried out as per the plan,
c)
Make sure that ownership certificates of all fixed assets owned by the
PB are secured.
d)
Update the fixed assets register and subsidiary records when fixed
assets are issued from store to users. Keep the necessary records
about the history of these assets,
e)
Update the fixed assets register and subsidiary records when fixed
assets are returned to used-stock store. Ascertain and label the
condition of the asset.
f)
Undertake annual physical count of fixed assets and reconcile the count
with the register and subsidiary registers. Take appropriate action on
any discrepancies between the two.
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g)
Calculate depreciation on all fixed assets with value and on those that
have not been depreciated fully.
h)
Obtain accumulated cost of construction in progress when the

construction is finalized and the asset is put in use. Include such asset
in the register of fixed assets.
i)
Prepare Annual Summary Schedule of fixed assets and forward copy to

the Finance Department.
j)
Communicate with the GPAD of MoFED when there are issues that
should be resolved to keep the fixed assets register complete.
k)
Compile directives and techniques of valuation to be used by the

valuation committee. Provide the necessary information for the
committee.
l)
Make sure that all fixed assets in use by the PB are put to use through
the fixed asset management system, regardless of the finance source
(budget, donation, grant, etc) they are purchased from.
m)
Ensure that the units staff members are getting the appropriate training
that enables them to manage the assets efficiently.
These Terms of Reference are the minimum activities that should be carried out by
the FAMU. Depending on various factors such as the nature and size of fixed assets,
the geographical dispersion of the branches or stores of the PBs, the activities of the
unit might increase.
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2.4. The valuation committees of PBs
Valuation of fixed asset is carried out at two points for two significantly different
purposes. The first point is to include the value of the fixed asset in the fixed assets
register. The second is when the asset is to be disposed off. A fair estimate of the
cost of the asset should be given as a starting point for bidders and auctioneers.
When the purpose of the valuation is the first one, a very complete and accurate
estimation of cost is not needed. This is because, the purpose is to keep the asset
and not to dispose and hence there is no loss of cash in flow as a result. In addition,
if the value of an asset is understated in the register, the error corrects itself when the
asset is fully depreciated and stated at book value. Thirdly, valuation of assets owned
by the Government becomes an enormous task; if the valuation committee is to find
accurate value, rather than fair estimate, of the asset the entire task of keeping
complete register might not be accomplished successfully.
When the valuation is for sale of the assets to outsiders, there is an immediate loss of
cash flow if the value of the asset to be disposed is understated. Hence, care should
be taken when dealing with valuation for this purpose.
The valuation should be done by committee in order to pool expertise that is lacking
in the FAMU of the PB. The committee could be established with members from
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different departments. It is recommended that the Finance Department, the Garage,
the engineering Department are represented. Additional members could be added
from appropriate technical department depending on the nature of the assets of the
PBs. The representative from the FAMU should be a chairperson for the committee
so that he/she can urge the committee to discharge its responsibility quickly. No
representative from the internal audit department should be a member of the
committee as the department is responsible to examine the work of the committee.
The minimum Terms of Reference for the valuation committee for the purpose of
incorporating the value of the assets in the fixed assets register is given hereafter. No
Terms of reference for the valuation committee for the purpose of disposal of asset is
given, as disposal of asset is not covered in this manual.
a)
Obtain list of asset, categorized by nature, to be valued from the FAMU

of the PB,
b)
Use the techniques of valuation provided in this manual to attach value

to the fixed assets,
c)
If the asset could not be valued using the techniques provided in this
manual, give value in another acceptable and justifiable method. Obtain
the advice and assistance of the professional team in the GPAD.
d)
Compile report to be given to the FAMU of the PB and follow up the

implementation of the recommendations.
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MoFED DECEMBER 2007
27
It is recommended that the valuation committee members should be a minimum of

three and a maximum of five. It is also recommended, if it does not contravene to any
guiding principle, to introduce a meeting allowance in monetary terms so that the
work can be seriously carried out. The justification for this is simply the members are
carrying out this task in addition to the normal job they are employed for.
It is
possible to demand the member to perform this activity outside the normal working
hours.
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MoFED DECEMBER 2007
28
THE ICC AND REGISTER MAINTENANCE PROCESS
he Council of Ministers Financial Regulation No 17/1997, Article 61(3)

provides that the Heads of the public bodies shall ensure that the
custodial responsibility for each fixed asset acquired is assigned to
the primarily responsible for its and that there is a central record of the names
of the custodians and the locations of the fixed assets assigned to them. The
activity of carrying out the initial comprehensive count and register maintenance and
updating process is, therefore, the main activity that is going to be carried out as
soon as this manual is put to use. In this section, the preparatory works, the types of
records and the actual work to be done are explained.
The GPAD shall issue a national calendar depicting the time to start the
comprehensive count and registration maintenance process. The calendar includes
expected date of completion of count and registration, and expected date of sending
final report on the count of assets in use and assets under construction to GPAD. All
PBs might start the process at the same time. If in any case a PB cannot comply with
the national calendar, it needs to develop its own plan and agree that with the GPAD.
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MoFED DECEMBER 2007
29
3.1. Fixed assets in use
Fixed assets in use comprise those assets that are found with the users and that they
are under the custodianship of one of the employees of the PB. Some assets are
easily identifiable with the user. Computers, chairs, tables, shelves are some
examples.
Other assets may not be easily identifiable with the user. Building,
vehicle, machinery are some examples. A department or a division should be the

custodian for those assets that are not identifiable with an individual user.
The ICC process is divided into three stages. These are explain as follows:
I. Before count
a)
Decide on date of count. As mentioned above, the GPAD shall issue a

national calendar for this. If any PB could not go by that, then any other
date shall be agreed with the GPAD.
b)
Inform to the Internal Audit Department that the count is to start. They
should observe the process and give comments to increase the
effectiveness of the process. Internal auditors should not participate in
the detail counting of assets.
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MoFED DECEMBER 2007
30
c)
Organize teams of counters, checkers and supervisors. Each team

should consist at least three persons. There could be more than one
committee of each type in a PB depending on the size, location and
complexity of the fixed assets to be counted. Persons capable of
identifying the type and condition of assets should be include in the
committees.
d)
Issue written count instructions to all concerned and send a copy to

GPAD. GPAD shall communicate its comments on the instructions, if
any.
e)
Brief all personnel involved with the count.
f)
Prepare the necessary Fixed Assets Count Sheets (FACS), Fixed Assets
Registration Cards (FAR), Fixed Assets with Users Control Card (UC),
and other necessary stationary and forms. Count sheets should be prenumbered so that their issue and final return can be controlled.
g)
Tidy up the used-stock stores, and arrange the goods in convenient piles.
If there was no used-stock store before, prepare one (no need to
construct a new store, the available store can be partitioned and used).
h)
Go around the premises of the PB to see if there are assets that are not
identified with any user. Return these assets to store using the existing
system.
i)
As much as possible, issuance of fixed assets should be stopped up to

the end of the count.
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MoFED DECEMBER 2007
31
j)
Third party fixed assets in the premises of the PB should be identified

and note taken on them.
k)
Arrangement to be made to count fixed asset owned by the PB but are

not temporarily with the PB (example vehicle on duty or garage).
l)
If the PB is to engage temporarily employed staff, give proper orientation

for them.
II. During Count

a)
If issuance of fixed assets could not be stopped until the finalization of

the count, make sure that such newly issued assets are included in the
count sheet. Give instruction to the store that fixed assets issued after the
start of the count are listed and the list is sent to the fixed assets
administration unit.
b)
Count sheets to be completed in two copies. Ensure there is legible

handwriting and clear description of items. All columns of the count sheet
should be filled (sample count sheet is given in Annex I).
c)
Ensure careful co-ordination among count teams so that all fixed assets
are counted.
d)
Identify the condition of the fixed asset on the space provided on the
count sheet as Good, Fair, Poor or damaged.
e)
As each individual asset has to be counted, open some sealed packages

for counting and confirming the contents.
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MoFED DECEMBER 2007
32
f)
The members of the count team and the supervisor should sign on each
count sheet. The Head of the FAMU should finally check and sign each
count sheet.
g)
Count should cover all fixed assets in the premises of the PB regardless
of to whom it belongs. Fixed assets owned by third parties should be
identified on the count sheet for latter analysis.
h)
The actual date of the count should be indicated on the count sheets.
i)
Compare counts with UC and recount differences. The UC is believed to

be the most compete fixed assets record in most PBs.
j)
Count supervisors should exercise close control over counters to ensure

accurate counts and strict adherence to instructions.
III. After count

a)
Ensure all count sheets issued to counters have been accounted for
(ether used or discarded. If discarded, the discarded copy needs to be
presented).
b)
Check all the count sheets, complete incomplete details and sign all
count sheets. The FAMU Head should sign all the count sheets.
c)
Prepare a list of poor condition and damaged fixed assets that cannot be
used by the user and ensure that these assets are returned to used-stock
store.
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MoFED DECEMBER 2007
33
d)
Post all fixed assets and supplies (low value but long use assets) that are
in use to the UC (see sample format for UC in Annex II).
e)
Post all fixed assets to the FAR (see sample format for FAR in Annex III).
f)
A final report on the conduct of the count, returning of unusable assets to

store, posting of assets to UC and FAR as applicable to be prepared and
to be submitted to the Head of the PB, the Internal Audit Department of
the PB and the GPAD. The report shall cover the activity performed, the
problems encountered and how they were resolved, the problems that
still need the attention of the Head of the PB and the GPAD with the
proposed solutions.
3.2. Filling system for the UC and FAR
These basic documents are cards. The following are the steps to maintain the UC:
1. Each user or custodian of assets in the PB shall have one UC. If one is not
sufficient additional UC is used but shall be fastened together.
2. Each user or custodian of fixed asset shall be given user number. The user
number is the Identity Number of the User that is taken from the ID card
issued to the user by the PB. ID numbers from Kebele ID, Driving License, etc
should not be used to identify the user.
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MoFED DECEMBER 2007
34
3. The user number is written on the UC. When the user wants service, he/she
has to come with the number so that his/her UC can be easily identified.
4. Filing of the UC is in the arithmetical sequence of the cards as follows:
Figure 2 - User Card filling system

UC - 0003
UC - 0002
UC - 0001
The filling system for the FAR is done on the basis of the categories of assets and
the PIN assigned to each asset. The groups that are to be used are those described
in the previous sections. These are reproduced hereunder:
CATEGORY
ACCOUNT CODE
Vehicle and other vehicular transport
4521
4522
Plant and machinery
4523
Military equipment
4524
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MoFED DECEMBER 2007
35
4525
4526
Infrastructure
4527
4528
4529
Livestock and transport animals
4530
Office equipments
4531
For each group of asset separate storage bin is prepared. Wooden or metallic box is
recommended as it keeps the cards in good condition and safely. It is also easy to
find cards, to take them out and to work on them. The following picture shows how
FAR cards can be kept:
Figure 3 - FAR Cards filling system
The filling system in MoFED could look like the following:
Vehicle
and other
vehicular
transport
4521
BIN 1
Plant and
Machinery
4523
BIN 2
Buildings
non residential
4526
BIN 3
Office
equipments
4531
BIN 4
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MoFED DECEMBER 2007
36
As an alternative, especially when the number of FAR cards is small, cards can be
kept in box files but in the using the same approach.
For each of the above group, summary of assets in the group is prepared. The way
the summary is prepared and the content of the summary is explained in subsequent
sections.
3.3. Fixed assets in store
Fixed assets in store are not yet put to use or are returned after being used. These
fixed assets are part of stock and hence are managed by the stock management
system. For this reason, there is no work to be done at the time of the ICC and
registration of assets.
Fixed assets under construction are not yet fixed assets, as they are not yet put to
use. However, they are not like those fixed assets in store. They are not covered by
the stock management system. Hence special procedure is needed to deal with
them. The following tasks should be done:
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MoFED DECEMBER 2007
37
a)
Identify all construction works in progress. If the FAMU is not responsible for
follow up of construction in progress or it does not have full information on
such assets, a circular letter to all concerned departments of the PB has to be
circularized requesting them to give details of construction works in progress.
The necessary details are:
i. The type of asset (building, plant, road, etc)

ii. Location
iii. Ownership
iv. Date construction started
v. Percentage completed
vi. Expected date of completion
vii. Accumulated value of the construction, if not available estimated value
viii. If contracted out, the contract value and payments made so far
ix. All documents to support the above details.
b)
Summarize the detail in the Fixed Assets Under Construction Summary Table
(FAUCST) (sample format is given in Annex IV). This table is a memorandum
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MoFED DECEMBER 2007
38
record that is kept in the FAMU of the PB. Form this point on; the unit has to
follow up the progress of assets.
c)
A final report on the conduct of the count, to be prepared and to be submitted

to the Head of the PB, the Internal Audit Department of the PB and the GPAD.
The report shall cover the activity performed, the problems encountered and
how they were resolved, the problems that still need the attention of the Head
of the PB and the GPAD with the proposed solutions.
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MoFED DECEMBER 2007
39
ASSIGNING
PROPERTY
IDENTIFICATION
NUMBER
AND
MARKING OF FIXED ASSETS IN USE
4.1. Property identification number
roperty identification number (PIN) as the name implies is used to

uniquely identify assets. It is not practicable to identify assets in words like
this chair is owned by government, currently being used in MoFED
Finance Department in Addis Ababa. A logical and systematic number is assigned to

assets for ease of reference and for summarizing and analyzing information on fixed
assets. In Property Identification number (PIN) development, alphabets, numbers
and other characters are used; the name number should not be misunderstood.
The following principles are followed when developing PIN for the FGE:
1. All assets owned by the Federal Government, Movable or immovable should

be easily recognized even if they change location.
2. The effort of improving the fixed assets management system is to enhance the
effectiveness of the existing control, to introduce new methods and records
and to lay the ground for incorporating the value of fixed assets in the financial
accounts system.
A unified coding system that enables summarization of
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MoFED DECEMBER 2007
40
assets under the custody of all PBs into the categories of the fixed assets
given in this manual is necessary.
3. PIN needs to be easy to understand and logical.
Taking these basic principles in to account, the structure of the PIN for FGE is the
following:
What
does it
indicate
Code
Public
Body
Code
MOFED
Source
of
budget
101
Department
Group Make
of the or sub Location or Section
Code
or Division
Asset group
Code
Code
of
assets
4521
01
HO
FD
Specific
Code of
the
asset
0001
Public Body Code Assets need to be identified by PB. Assets owned by a ministry
like MoFED are given just that code the short form of the ministrys name. In the
Ministry of Education, it is usual to abbreviate its name as MoE. Likewise, codes
like MoJ, MoR, BoFED, etc are being used and are easily recognized. These codes
should be used as the Public body Code. Once the code is selected, it should be
used consistently.
Source of budget Assets could be bought using the capital budget obtained from
the government. Similarly assets can be bought using other donors fund or assets
could be obtained in kind from the donors. To help identification of assets in the
name of each and every donor or the government, three digits code shall be used.
The code is used as follows:
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MoFED DECEMBER 2007
41
The first digit in the three digit number indicates whether the fund is from government
source or from other sources.
If the code is 100 the source is government. If the code is 200 the source is other
source than government.
When the capital budget is used to purchase the asset the last two digits become
101; when the asset is obtained in kind from the government, the last two digits
become 102; and if there are other government sources, the last digit will be
changed.
In a similar way all funds obtained from donor sources, be it loan or grant, the first
digit becomes 2 and the last two digits shall be used to identify the donor. Each
public body shall prepare a chart showing the different sources of funds to purchase
assets. The chart shall be updated from time to time when the number of sources
increases. The Chart shall be prepared in the following way:
Source of budget
Code
Government
100
Capital budget
In kind contribution
Transfer from other Government agencies
101
102
103
Non Government
200
IDA
UNFPA
WHO
USAID
201
202
203
204
etc
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MoFED DECEMBER 2007
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Group of the Asset Code this code is given to the asset on the basis of the
category it belongs to. The fixed assets categories are those given in section one of
this manual. These are:
CATEGORY
Plant and machinery
Military equipment
Infrastructure
Office equipments
ACCOUNT CODE
4521
4522
4523
4524
4525
4526
4527
4528
4529
4530
4531
Fixed assets should fall in one of the categories indicated above. No additional fixed
assets category should be created without the authorization of the GPAD. When
there is a need to crate new categories, the GPAD in consultation with the CAD,
creates and make the new category known to all PBs.
Make or sub group of assets code - _ This code is used to identify sub groups of
assets. For example, furnishings and fixture is a general group. Within it, there are
sub groups like, chairs, tables, cupboards, curtains, etc. Similarly within vehicle, sub
groups could be Tractor, Busts, Dumper, Bulldozer, etc. For each sub group a two
digits code shall be assigned. Each public body shall develop a chart showing
standard two digits code for sub groups of assets. The following is an example as to
how to prepare the chart.
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MoFED DECEMBER 2007
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Group of the Asset
Group of the Make or sub Code

Asset Code
group of assets
Vehicle and other vehicular 4521
Light vehicles
01
transport
Buses
02
Bulldozer
03
Tractor
04
Location Code this code is used to identify where the fixed asset is situated. The
location code is given based on the geographical location of the PB and its branches,
regional offices, and other such structures. Each PB will have its own way of
organizing this location code. The guiding principle is that in PIN development,
there should be a location code and the size of the characters in the code
should be kept to a minimum. In the example above HO stands for Head Office. If
the PB has say offices in different towns of the country, the location code could be
Bahar Dar (BD), DireDawa (DD), Awassa (AW), etc.
Department or Section or Division Code this stands for the specific location of
the asset in the premises of the PB. This code is developed using the organization
structure of the PB. If there are no or few subdivisions of a department, the
department reference code can be used. For example, Finance Department can be
written as FD, Administration Department can be written as AD. However, if the
subdivisions of a department are many, it may become difficult to identify the asset in
the department easily. For that reason, the subdivision code is used. For example,
under Finance Department, subdivisions could be Budget Section, Treasury Section,
General Accounts, and Project Accounts. In this case, if the code used refers to
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MoFED DECEMBER 2007
44
Finance Department, then identifying the asset becomes time taking if not
impossible. Hence the code used should refer direct to the specific section like, BG
for budget section, TR for Treasury, etc. The guiding principle is that each PB
shall develop its own Department or Section or Division code and once
developed the code should be used for a longer period consistently.
Specific Code of the asset this code is used to refer to the specific asset. The
code also counts the number of assets. If the code is assigned to computers, the last
number tells how many computers are in use in a department or a section. When
aggregated, the code could also be used to provide the total number of a certain
category of assets in use in the PB. The system to assign the code is simply to give
consecutive counting number starting from one. In the example above, four digits
(0001) numbering system is used. This system is important and should be used.
Coding should not start with numbering system like 1. Because when the number of
assets is more than nine, two digits numbering system is going to be used. When the
assets number is more than ninety-nine, then a three digits numbering system is
going to be used. This approach is not systematic. Hence, if the maximum number of
assets is estimated to be 9999, the first asset should be given 0001. Each PB has to
decide again how many digits to use in its coding system. The guiding principle is
that the category of assets with the maximum estimated number should be the
determining one when deciding the numbering system. If four digits numbering
system is used for one category of assets, then the same system should be used for
all other categories regardless of the number of the assets in that category.
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The combined code of an asset looks like the following:
MoFED-101-4521- 01-HO-FD-0001
The combined code has seven parts. As discussed above these seven parts of the
code should appear in every asset of every PB. The third part 4521 is the same for
all PBs. The first, second and the fourth to sixth parts of the code differ from PB to PB
although the principle and the meaning should remain the same. Let us take the
following examples:
Example 1 PIN development
1. The code for the first vehicle in Ministry of Education (MoE). The vehicle is used
in Head Office. The responsibility for the custody of the vehicle is that of the
General Service (GS). MoE has about 7500 vehicles and this number will not
increase significantly in the next years. The vehicle was purchased using
government budget. The PIN should look like:
MoE-101-4521-01-HO-GS-0001
2. The Ministry of Defense wants to assign PIN to its Radio Equipments. One of
them is found in the Military Communication section, which is found in Addis
Ababa. Other such sections are found in different parts of the country. The total
number of the Military Equipments, including Radio Equipments is estimated to be
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MoFED DECEMBER 2007
46
200,000 and this might increase in the next years. This equipment was purchased
by IDA. The PIN should look like:
MoD-201-4524-01-AA-COM-000001
The assignment of PIN to assets should start when the fixed assets ICC is finished
and that FAR is opened for each and every fixed asset. The maximum number of
assets in each category is known when this process is completed. Any attempt to
assign PIN before these two important steps are completed might not bring the
required result and hence should be avoided.
PIN is developed only for those assets, which are in use during the time of the ICC.
Those assets that are in the store are not given the PIN. When the existing assets
and newly purchased assets are issued from store after the ICC, they are given PIN
before they are delivered to the user.
4.2. Marking of Fixed Assets
Control over the custody of assets is only complete if PIN is marked on the assets.
Marking of PIN could serve the following purposes:
a)
Fixed Assets with out PIN could indicate that the fixed asset is not included
in the FAR.
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MoFED DECEMBER 2007
47
b)
Annual Physical Count is completed with the help of PIN.
c)
Employees of the PB can identify the asset issued in their name and they
do not attempt to put any other kind of mark on the assets.
Several techniques are available to physically mark fixed assets including:
a)
Painting the property identification number
b)
Pre-numbered plastic stickers
c)
Marker pens
d)
Pre-numbered metal plates riveted into the fixed asset
e)
bar codes
A barcode (also bar code) is a machine-readable representation of information

(usually dark ink on a light background to create high and low reflectance which is
converted to 1s and 0s). Originally, barcodes stored data in the widths and spacing of
printed parallel lines, but today they also come in patterns of dots, concentric circles,
and text codes hidden within images. There are different types of barcodes known as
barcode symbologies. An example is the UPC (Universal Product Code) barcode
scanned at the cash register. Some symbologies are fixed length, others variable
length; some are numeric-only and others are alphanumeric (letters and numbers).
Barcodes enable automated work processes without human intervention. The use of
barcodes eliminates many errors and often saves time and money.
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MoFED DECEMBER 2007
48
can use barcodes like book land symbols, which is based on ISBN numbers, as
affixing PIN on each book is time taking. During count also, it becomes difficult to
count each and every book manually. Where there are lending, the barcode can be
used to track the issuance and return of the book from the library.
PBs can use any of the above techniques or a mixture of them. Painting could be
used on Vehicles as they are washed frequently; they are mobile that the numbers
could reflect the image of the PB. Using plastic stickers has a risk of being removed.
Using permanent markers with beautiful handwriting is a good option for all office
furniture and equipments. Pre-numbered metal plats are good looking and
permanent but are costly especially when there are many assets. The general
principles to be applied in choosing any of the above or a mix of options are
neatness, permanency, control over assigned numbers and cost efficiency.
The PIN should be written on the body of the asset where the PIN can be checked
without difficulty at the time of annual physical count or at any time before that.
Writing PIN at a place where it cannot be seen with out overturning or with out
disturbing the position of the asset should as much as possible be avoided. If the PIN
is written in such a difficult part of the body of the asset, physical count of the asset
becomes cumbersome and time taking.
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VALUATION OF ASSETS WITH OUT COST
aluation of fixed asset means finding the cost of the asset and assigning
that value to it. The cost at which fixed assets should normally be valued
is the historical cost; the cost incurred at the time the fixed asset was
purchased or constructed. The single entry accounting system that was in use in PBs
and the current modified cash basis of accounting treat the cost of fixed assets as
periodic cost, i.e., the cost that relates to the current accounting period only.
However, the fixed assets serve for more than one accounting period. Hence
obtaining the value of fixed assets from the accounting records might be possible for
the recently purchased fixed assets but might not be easy for assets purchased years
ago.
Fixed assets owned by the Government where so far controlled mainly physically.
The cost data were not seriously kept. In addition fixed assets under the custody of
one PB might not be obtained for cash. They might have been obtained in donation,
through transfer from other PBs, confiscated or through any other ways. Finding
documentations to arrive at the cost of such assets is unthinkable. The best way to
go round the problem is to identify all fixed assets under the custody of the PB, to
register them and then to assign value using various methods. The Council of
Ministers Financial Regulations No 17/1997, Article 61 (6) provides that where
the actual cost of public property is not determinable, its cost shall be
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MoFED DECEMBER 2007
50
estimated in accordance with the directives from the Minister of Finance. The
purpose of this section is to provide some helpful methods.
Considering the problems associated with valuation, very accurate valuation of fixed
assets is not expected. What the PBs are encouraged to do is to assign value to all
assets under their custody rather than accurate value to some assets. As we shall
see in the subsequent sections, after valuations are attached to fixed assets,
depreciation will be calculated reducing the value to book value. As times goes by,
the effect of incorrect values attached to fixed assets now shall become lesser and
lesser. Finally, the value of assets that are obtained from now on shall dominate the
value of the old assets and the total valuation becomes correct.
Based on the categories of fixed assets identified in the chart of account of the FGE,
the following groups of assets could be established.
Group 1 - Livestock and transport animals

Group 2- Military equipment, Military purpose buildings, Aircraft
Group 3 - Vehicle and other vehicular transport
Group 4 - Boats,
Group 5 - Plant and machinery, Furnishings and fixtures, Office equipments
Group 6 Buildings residential, Buildings non residential, Infrastructure
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51
The possible source of values could also be the following:
Industrial Project Studies (Government owned enterprise)

Ministry of Defense
Ethiopian Building Design Enterprise
Ministry of Infrastructure
Road Transport Authority
PBs
Group 1 - Livestock and transport animals
Determination of the cost of this asset group is not difficult. Alternatives are:
1) The actual cost of purchased could be found from the accounting records.
2) If that is not available, the cost of livestock and transport animals currently
purchased can be used to assign the value to animals, which have no value.
3) The third option when it is not possible to establish values using the other two
methods is to collect current market value from the market.
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Group 2- Military equipment, Military purpose buildings, Aircraft
These are very much-specialized assets. The Ministry of Defense should be the focal
PB in attaching value for this group of asset as it is the main owner of such assets. If
there are other PB like the Federal Police Commission, that could have the same
group of assets and if they need help, they should refer the case to GPAD. GPAD
should approach the Ministry of Defense to obtain the information and provide it to
such PBs.
Group 3 - Vehicle and other vehicular transport
The Road Transport Authority provides professional services that include the
estimation of values for vehicles and other vehicular transport. It is the competent
and recognized authority in Ethiopia to undertake valuations of this nature. The
professional services of the Road Transport Authority may be utilized by providing
them the relevant details to obtain estimated values. A similar approach may be
applied using the services of Addis Ababa Transport and Communications Authority
to obtain estimated values.
If for any reason, it becomes difficult to obtain the valuation information form the
Road Transport Authority, another alternative could be to refer to the guideline issued
by the Federal Democratic Republic of Ethiopia Office of the Prime Minister. This
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MoFED DECEMBER 2007
53
guideline is referred to as Guideline to dispose vehicles and machinery, Megabit
1989 Addis Ababa. Although this guideline was issued to deal with disposal of
vehicles and machineries, it is a very good guide to establish values for fixed asset
registration purpose too. This guideline is still effective.
As per the guideline, the cost of vehicle and machinery is arrived at using the
following formula:
Co=AxRxYxMkxCtxMdxC
Where:
Co
= cost of a vehicle or machinery
= adjustment factor for cost (value between 0.2-0.5 is given)
= replacement cost of a similar asset. This is the current value of the asset
and can be found from the suppliers.
= Year factor with reference to the year of service
Mk
=Make of the vehicle or machinery and demand for the make in the
market
Ct = Country of origin
Md = Model of the vehicle or the machinery
C = Condition of the vehicle
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MoFED DECEMBER 2007
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The value for each of the above factors are provided in the following tables:
Service year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25 years & over
Y =Year factor is obtained from this table

Motorcycle Tractor
Harvester
Vehicle & other
machineries
0.792
0.792
0.792
0.900
0.622
0.622
0.622
0.800
0.494
0.494
0.494
0.700
0.422
0.422
0.422
0.633
0.392
0.392
0.392
0.567
0.350
0.350
0.350
0.500
0.308
0.308
0.308
0.475
0.265
0.265
0.265
0.450
0.222
0.222
0.222
0.425
0.190
0.190
0.190
0.400
0.170
0.170
0.170
0.380
0.150
0.150
0.150
0.360
0.140
0.340
0.130
0.320
0.120
0.300
0.280
0.260
0.240
0.220
0.200
0.190
0.180
0.170
0.160
0.150
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MoFED DECEMBER 2007
55
No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Mk = the following values are given for the make of the vehicle
Make
Factor
Automobile
0.90
Station wagon
1.10
Bus (both small or big)
1.10
Pickup
1.10
Lorry
0.95
Lorry with crane
0.85
Trailer
0.90
Earth moving machinery
0.75
Crusher
0.75
Asphalt mixer
0.75
Asphalt boiler
0.75
Concrete mixer
0.75
Concrete vibrator
0.75
Pump
0.90
Compressor
0.85
Generator
0.75
Crane (tower)
0.75
Forklift
0.75
Motorcycle
0.85
Tractor
0.90
Harvester & thrasher
0.75
No
1
2
3
4
Ct= Country of origin

Make
Western Europe & America
Japan
Russia & Eastern Europe
Others
No
1
2
3
4
5
6
7
8
Model
Mercedes
Toyota
Nissan
Isuzu
Mitsubishi
Mazda
Honda
Suzuki
Factor
1.0
1.0
0.8
0.8
Md= Model of the vehicle or the machinery
Automobile, station wagon, Minibus, pickup
1.25
1.15
1.05
0.95
0.95
0.95
0.95
0.95
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MoFED DECEMBER 2007
56
9
10
11
12
13
14
15
16
17
18
19
Puget
Renault
Volkswagen
Audi
BMW
Opel
Fiat /IVECO
Land rover
Ford
Lada
Niva
0.95
0.95
0.95
0.95
0.95
0.95
0.95
0.95
0.80
0.80
0.80
No
1
2
3
4
5
6
7
8
9
10

Model
Mercedes
Nissan
Isuzu
Mitsubishi
Fiat /IVECO
Volvo
Scania
Daf
Hino
kamaze
No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Model
Earth moving machine
Caterpillar
1.2
Komatsu
1.0
Mitsubishi
0.9
Dresser
0.9
Fiat Alice
0.8
Champion
0.8
Wabeko
0.9
Galion
0.9
Volvo
1.1
Michigan
1.1
Hitacha
1.0
Kaz
0.9
TSM
0.9
Furukawa
0.9
Hanomag
0.8
Truck & bus

1.20
1.00
1.00
0.90
1.20
1.10
1.10
1.10
0.95
0.80
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MoFED DECEMBER 2007
57
16
17
18
19
20
21
22
23
24
25
26
27
Skye
Dynapack
Bomag
Engrsoleranede
Hyster
Vinomask
Marini
Vetili
Ham
Atlas kopko
Demag
ABG
1.1
1.1
1.1
1.1
1.1
1.0
1.0
0.9
0.9
1.1
1.1
1.1
No
1
2
3
4
5

Model
Yamaha
Suzuki
Honda
Ural
Others
Motorcycle
1.1
1.0
1.0
0.8
0.8
No
1
2
3
4

Model
Masse Ferguson
Fiat
Ziti
IMT
Tractor
1.25
1.00
0.85
0.85
No
1
2
3
4

Model
Harvester & Thrasher
Jone Deer
1.1
Zemai
1.0
E-512/E-514
1.0
Niva CK-5
0.8
C= Condition of vehicle or machinery
No
1 Operating vehicle
2 Non-operating but with all major components &
major parts
3 Non-operating with incomplete major parts
Factor
0.7-0.8
0.5-0.6
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MoFED DECEMBER 2007
58
(based on the level of incompleteness)
4 Non-operating with major components missing
0.3-0.49
0.05-0.29
The valuation committee decides on the above factors and calculates the estimated
value of the Vehicle or Machinery. If the vehicle or machinery name is not mentioned
in the tables above, the committee with the help of a technical person (who should be
a member of the committee at the outset) shall select the most similar item for that
and complete the valuation. Let us see how the formula works with examples:
Example 2 - valuation formula
1. MoFED has one Toyota station wagon obtained by transfer from one of the
restructured institutions. The car was made in Japan and was purchased in
1990. The car is still operating and in good condition. According to MOENCO,
similar new brand car costs Birr 600,000 this year.
The values are:
A = let us take the highest as the car is in good condition 0.5.
R= Birr 600,000
Y = 2006 less 1990 is 16 years. So factor is 0.280.
Mk= Station wagon 1.10.
Ct= Country is Japan 1.0.
Md= Model is Toyota 1.15.
C = Condition is good 0.7.
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MoFED DECEMBER 2007
59
Using the formula:
Co=AxRxYxMkxCtxMdxC
74,382=0.5x600,000x0.28x1.1x1x1.15x0.7
So the value to be attached for the vehicle is Birr 74,382. For simplicity, values
should be taken to the nearest Birr.
2. A Tractor purchased from Nazareth Tractor factory by Ministry of Agriculture &

Rural Development in 2000 is without value. The tractor is not operating
because major parts were missing. The Engineer in the valuation committee
ascertains that NATFA is similar to ITM. New NATFA costs Birr 200,000.
Co=AxRxYxMkxCtxMdxC
2,570.4=0.2x200,000x0.35x0.9x0.8x0.85x0.3
The value to the nearest Birr is therefore 2,570.
Group 4 - Boats,
These are owned by a few PBs. It will not create major problem in the entire process
of valuation of Government Owned fixed assets. The respective PBs should find the
cost of the Boats from accounting records. If it is not possible to get the actual cost,
cost for similar boats can be taken and discounted to take into account the time
___________________________________________________________________________
MoFED DECEMBER 2007
60
elapsed and the condition of the specific boat. A rough guide could be taken from the
factors given for Vehicles and machineries. The modified table is:
C= Condition of the boat
No
1 Operating boat
2 Non-operating but with all major components &
major parts
3 Non-operating with incomplete major parts
4 Non-operating with major components missing
Factor
0.7-0.8
0.5-0.6
0.3-0.49
0.05-0.29
The current value can be obtained from the latest purchase documents or from the
suppliers of the boats.
Example 3 -Valuation of boat
If a boat, which is operating, has no value but the current market price of similarly
boat is found to be is Birr 150,000, then the value that is taken for the boat is Birr
105,000 (150,000x0.7).
It does not mean that the above cost is the accurate estimate of the value of the boat.
But the purpose of valuation is not to arrive at the accurate cost but to attach fair
value to the boat. When considering the entire valuation effort nationwide, the
number of boats and the total value of boats will not be significant. That is why the
above simple technique is recommended.
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MoFED DECEMBER 2007
61
Group 5 - Plant and machinery, Furnishings and fixtures, Office equipments
This constitutes one of the major asset groups in the Government fixed assets.
Where the original cost of furniture, fixtures and office equipment is not available,
different valuation approaches may be applied to estimate the value.
Plant and machinery constitutes those assets that are not covered by machinery
such as earthmoving machine under the vehicle and vehicular transport. This
category includes asset such as printing machines, medical equipments, surveying
equipments, coffee machines, etc.
Office furniture and fixtures comprises items such as desks, tables, chairs,
bookshelves, filing cabinets, curtains, etc.
Office equipment comprises photocopiers, fax and binding machines, computers,

printers and other computer equipment, calculators, etc.
Approaches to estimating the value of this group of assets could be the following:
1. Finding the cost of assets from the accounting records, especially for
significantly larger assets such as printing machine, medical equipment
and the like, is the best option.
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MoFED DECEMBER 2007
62
2. The service of Industrial Projects Studies (IPS) could be requested. This is

a Government owned public enterprise that provides consultancy services
including valuation of fixed assets.
The GPAD could approach this
organization to conduct study on a selected sample government

organization and to develop index for valuation of fixed assets.
3. If the cost could not be found from the accounting records, and involving
IPS is difficult, quotation from suppliers for the same asset could be found.
If not quotation for a similar asset should be found. This cost can be
discounted to account for time elapsed and condition of the asset. The
following rough discounting guide can be applied on the assets:
Office Furniture and Fixtures
Discount from current

Condition of asset
market value
Good condition:
25%
Fair condition:
50%
Poor condition:
75%
Damaged condition, non-operable
Return it to store
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MoFED DECEMBER 2007
63
Office Equipment
Condition of equipment might not be a good guide to assign value to

equipment. A ten-year-old computer might look in good condition. Hence
referring to the age of the equipment could result in a fair valuation. The
following table gives the discount rates based on age.

Year of service
market value
1 year
10%
2 years
20%
3 years
30%
4 years
40%
5 years
50%
6 years
60%
7 years
70%
8 years
80%
9 years
90%
10 years
Damaged non-operable
Birr 10
Return it to store
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MoFED DECEMBER 2007
64
If for any reason, it is difficult to determine the year of service, then the following
discounting factory should be used.
Condition of asset
Good condition:
Fair condition:
Poor condition:
Damaged condition, non-operable

market value
25%
50%
75%
Return it to store
Plant and machinery

The discounting factors for plant and machinery could be the following. According to
Income Tax Regulations of 19622, Plant and machinery used to depreciate for tax
purpose at 16% first year and then 12% for subsequent years until the introduction of
the new income tax proclamation No 286/2002 that is in effect know. Although the
purpose of the proclamation is clearly not for valuation purpose, that can be used as
guide to develop the following discount rates to attach value for plant and machinery:
Year of service
1 year
2 years
3 years
4 years
5 years
6 years
7 years
8 years
Damaged non-operable

market value
16%
28%
40%
52%
64%
76%
88%
Birr 10
Return it to store
Legal Notice No 258 of 1962, Income tax regulation, regulation issued pursuant of the Income Tax
Proclamation 1961.
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MoFED DECEMBER 2007
65
Group 6 Buildings residential, Buildings non residential, Infrastructure
Finding the cost of buildings from the accounting records is obviously difficult. Unlike
for other assets, payments for the construction of buildings are not made at once.
There are a number of progress payments made until the construction is completed.
In the accounting records, payments are not accumulated, rather payments are made
when they are due and included in the accounting period in which the payment was
made. The possible approaches to attaching value could be:
1. When there is a specialized department, which followed up the construction of

buildings, then contracts signed with the construction company could be
found. The value of the building could be obtained from that document.
2. The construction company of the building is known and it could be approached

to provide information on the contract value at the time of construction.
3. When the PB is self-constructing its buildings, the department concerned

could be called up on to provide the estimated cost of the building.
4. When the building was owned by another entity, that entity could be
approached to provide information on the cost.
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MoFED DECEMBER 2007
66
5. When the above are not possible, the Ministry of Infrastructure or Ethiopian
Building Design Enterprise could be approached to provide construction cost
per square meter for different locations in Addis Ababa, for different towns and
for different types of buildings based on their own professional classification of
the buildings.
Once the cost of the building is determined in one of the above ways, then the value
could be discounted using the following rates. According to Income Tax Regulations
of 1962, and new income tax proclamation No 286/2002 depreciation for building is
given as 5% straight line. This is used as a base to develop the discount rates to be
applied on the building.
1 year
2 years
3 years
4 years
5 years
6 years
7 years
8 years
9 years
10 years
11 years
12 years
13 years
14 years
15 years
16 years
17 years
18 years
19 years
20 years
Year of service

market value
95%
90%
85%
80%
75%
70%
65%
60%
55%
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
Birr 10
___________________________________________________________________________
MoFED DECEMBER 2007
67
In attaching valuation to fixed assets, the role of GPAD is significant. It can help PBs
by finding valuation information and providing them when they have difficulties to
attach values. This avoids haphazard way of dealing with fixed asset valuations.
All PBs should collect the supporting documents they used for valuation and keep the
documents safely for future reference. The Valuation committee should write report at
the end of the exercise explaining how it did the valuation, what problems were
encountered and how they were solved. The report should be kept with the FAMU
and copied to GPAD.
5.2. New fixed assets
Valuation of new fixed assets should be at cost.
An item of property, plant and equipment that qualifies for recognition, as an asset
shall be measured at its cost.3 Cost of an asset comprises:
a) Its purchase price, including import duties and non-refundable purchases

taxes, after deducting trade discounts and rebates.
International Financial Reporting Standards (IFRSs), 2004, International Accounting standard (IAS) 16,
Property, Plant and Equipment.
___________________________________________________________________________
MoFED DECEMBER 2007
68
b) Any cost directly attributable to brining the asset to the location and
condition necessary for it to be capable of operating in the manner
intended by management.
c) The initial estimate of the costs of dismantling and removing the item and
restoring the site on which it is located, the obligation for which an entity
incurs either when the item is acquired or as a consequence of having
used the item during a particular period for purposes other than to produce
inventories during that period.
Asset obtained in donation shall be valued at the current value of an asset at the date
they are received.
For assets purchased, the receiving section of the store should ask for copies of all
documents; suppliers'invoices, copies of receipts for additional payments made to
bring the asset in use. The total of those costs should be calculated. That total cost
should be filled in the Receipt for Articles or Property Received (Model 19). The
following is an example:
Example 4 - Cost of an asset
MoFED purchased one Vehicle from MOENCO. The vehicle is delivered at the
MOENCO store in Addis Ababa. The cost of the vehicle was Birr 500,000. VAT of Birr
___________________________________________________________________________
MoFED DECEMBER 2007
69
75,000 was paid in addition. 2% or Birr 11,500 for title transfer was paid. In addition
Roof Rack and Tape-recorded were bought for a total of Birr 5,000. The total cost of
the vehicle that should be entered in the Model 19 is Birr 591, 500 as follows.
Cost of vehicle
VAT on it
2% paid for title transfer
Cost of tape and roof rack
Birr
500,000
75,000
11,500
5,000
591,500
This same cost is used to issue the item from store through Receipts for Articles or
Property Issued (Model 22) and then to include it in the FAR.
When assets are obtained in donation, the store section should attempt to get the
copy of the gift certificate. This is usually available as it is the basis for custom
clearing. If not, the donor should be approached timely to provide cost of the asset
donated. That is the amount to be filled in the Model 19, Model 22 and hence in the
FAR.

As discussed above the cost of fixed asset constructed is the total cost incurred from
the initial preparation work up to its completion. Directly attributable cost include:
___________________________________________________________________________
MoFED DECEMBER 2007
70
a. The cost of site preparation and clearance,

b. The estimated cost of dismantling and the removing old asset and
restoring the site
c. Professional fee to lawyers, architects and engineers in connection with
the construction,
d. Compensation paid to the previous occupants,
e. All costs during the construction. If it is a self-construction, salary of
employees engaged in the construction is included.
The cost information in the case of PBs is available with the Finance Department. It is
unfair to give the cost accumulation work to the store or FAMU.
As soon as a new construction is started, the details are provided to the Finance
Department advising it to open a separate ledger account for the construction and
accumulate all costs paid by the department for the construction. The accounting
treatment is explained a latter section.
When the construction cost is completed and the FAMU is asked to receive the
constructed asset, it then requests the Finance Department what total cost is
accumulated in connection with the asset. That accumulated cost is the cost of the
asset that goes into the FAR. We shall see how the Finance Department closes the
ledger for the construction in progress that is capitalized in subsequent sections.
___________________________________________________________________________
MoFED DECEMBER 2007
71
CHANGES IN THE REGISTER
outine fixed asset management regains after the ICC, the registration of
the fixed assets in the FAR and UC and valuation process is completed.
New fixed asset issuance will continue; assets under construction are
finalized and capitalized, transfers of assets from one custodian to the other can be
made, damaged and unwanted assets will be returned to the used-stock store. This
section explains the procedures and formats that will be applied in this day-to-day
fixed assets management process.
6.1. New purchases of assets,
Fixed assets are purchased like any other stock item following the Government
purchase policy. This is part of the purchasing activity of the PBs. Purchased fixed
assets are taken to store. It does not matter how the fixed asset is acquired; be it
using the government budget of donors money, be it purchased for normal
government activity or for projects run by government, be it in donation or transfer, all
fixed assets newly obtained should go through the store system. No one should be
allowed to use fixed asset that has not gone through the store system.
When the store receives the asset the storekeeper issues Receipt for Fixed Assets
Received (RFAR). The format (See sample in Annex V) is developed to be used only
___________________________________________________________________________
MoFED DECEMBER 2007
72
for fixed assets. This form is not used to receive consumable stocks. The distribution
shall be:
Original to Deliverer
2nd Finance
3rd Copy to
!"#
FAMU
$ %
( %
&'
4th Store
) * +,
- .'
5th Pad
The history of the asset should be kept with the FAMU. As the store is getting copy of
all documents like the copy of the supplier invoice, copy of the contract, copy of the
packing list, copy of tax declarations, those copy are copied and attached with the
third copy of the RFAR. This Model together with the supporting documents shall be
filed in box files in the FAMU. When one wants to refer to the history of the asset, it
can easily be obtained in those files.
When fixed assets are issued from the store, Receipt for Fixed Assets Requested &
Issued (FAIRR) (See sample in Annex VI) is used. This format is to be used only for
fixed assets. It should not be used to issue consumable stocks.
___________________________________________________________________________
MoFED DECEMBER 2007
73
The distribution shall be:
Original to recipient
!"#
#
$ %
( %
%0
&'
2nd Copy to FAMU
3rd Copy Gate Pass
4th Store
) * +,
- .'
5th Pad
The third copy is the one that is used in the fixed assets management process. One
FAIRR is used to issue one or more fixed assets to only one custodian. As soon
as the issue voucher is received, the FAMU performs the following tasks:
i. Identify the appropriate category of the fixed asset fixed asset categories
are as explained in the previous sections. The correct category should be
identified so that the quality of information on the fixed asset is enhanced. If there
are unique items that come for the first time, the category should be given in
consultation with GPAD.
ii. Assign PIN for the asset PBs shall maintain PIN register. The purpose of this
register is to indicate the last number issued to a certain category of fixed assets.
Using this register avoids assigning the same PIN to different assets or jumping
PIN numbers unused. (See sample PIN register in annex VII). The person
assigning the PIN to newly issued fixed asset should refer to this register and put
___________________________________________________________________________
MoFED DECEMBER 2007
74
a mark on the register. PIN is assigned to all fixed assets including those that are
below the minimum amount given in the definition for fixed assets (currently Birr
200) but that can be used for more than a year.
iii. Register the asset on the UC This is the complete record of assets as it
includes both fixed asset above the threshold and asset below the threshold but
with permanent nature. All the necessary details required by the UC should be
filled.
iv. Register the asset on the FAR if the item worth more than the minimum
threshold for fixed asset. Assets which costs less that the minimum amount
given to the fixed assets but which can use for more than a year are not
registered in the FAR. Only those assets that clearly satisfy the definition of fixed
assets are registered in the FAR.
v. Print the PIN on the fixed asset. This is done as per the instruction given in the
previous sections of this manual and the method chosen by the PB. Whatever
method is selected for printing the PIN on fixed asset, it is important that PIN is
printed before the asset is issued to the user. This is helpful to avoid delay in
assigning PIN to assets because of distance of the users location. If can also be
forgotten.
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MoFED DECEMBER 2007
75
vi. Issue the fixed asset to the user. This is the last task. All the previous tasks
should be completed before fixed assets are issued to the user.
6.2. Transfer from assets under construction to fixed assets
One source of fixed assets other than purchase of the ready fixed assets is to get the
asset constructed or constructing the asset by own force. Building is the common
example.
During the ICC, the FAMU has maintained summarized Fixed Assets Under
Construction Summary Table (FAUCST). The table gives the detail of the assets
under construction. When the constructions of those assets are competed and the
FAMU is asked to receive, the accumulated cost information is requested from the
Finance Department of the PB. Based on that cost, the fixed asset registration
process will be conducted. Like any other asset, the constructed asset is registered in
the UC and the FAR. The UC is opened in the name of the responsible department to
keep such assets, usually the General Service section or Premises and offices
section.
When assets are constructed for the first time, the FAMU shall include such asset in
the FAWCST. Until construction is completed, no registration is done in the UC and
FAR. As construction is completed, the above process will be carried out.
___________________________________________________________________________
MoFED DECEMBER 2007
76
The history of the constructed asset is kept with the FAMU in a file opened for each
such asset. The history could include the construction contract, correspondence to
and from FAMU and other relevant correspondences, temporary or final acceptance
letter, the letter written to the Finance Department requesting the accumulated cost,
the letter written from the Finance Department advising the cost and other relevant
details.
6.3. Transfer between custodians
Assets might be transferred from one custodian to the other without physically
returning the asset to the used-stock store. The following steps are followed:
1. The surrendering user and the recipient user should come to the FAMU to
explain their intention.
2. If the FAMU accepts the request, a FATF (see sample in Annex VIII) shall
be filled in three copies by the two users and presented to the FAMU.
3. The FAMU assigns one of its staff members to inspect the asset in person
and to finalize the transfer.
4. The FAMU head approves the transfer by signing on the FATF.
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MoFED DECEMBER 2007
77
5. The FAMU is filled in three copies and distributed as follows:
1st Copy for the surrendering user
2nd Copy for the recipient user
3rd Copy for FMAU
6. Using the third copy, the FMAU makes the necessary correction in the UC.
The name of the user is changed to the new user. Other changes are not
required. The PIN should not be amended unless there is a change of
location.
7. Amendment is made in the FAR too. When there is a change of
department or location that is the major change that is made in the FAR.
The detail of the new location and the new PIN, if it is changed because of
the change in location, shall be entered in the FAR. It is advisable to
prepare new FAR instead of overwriting on the old FAR.
6.4. Return of used asset,
In the fixed asset management system, return of the used asset to the store is the
final step. When an asset is returned to store, it stops being fixed asset and becomes
part of stock. Other actions on the fixed asset, such as disposal and cannibalization
might continue. Those actions should not affect the fixed assets system.
___________________________________________________________________________
MoFED DECEMBER 2007
78
A voucher called Receipt for Articles or Property Returned (RAPR), (see sample in
Annex IX) is introduced in the fixed asset management system (it can also be used
in the stock management system) to be used when fixed assets are returned to the
used-stock store.
The following steps are followed:
1. The user who wanted to return the assets shall come to the FAMU and
requests for the return of the asset. The department in which the user works
should write a note to the FAMU or a clearance letter or equivalent should be
copied to the FAMU so that the process could go to the next step.
2. The FMAU assigns one of its staff members to physically inspect the assets.
3. The UC of the particular user should be referred to ensure that the asset is in
the name of the user.
4. If assets are as per the UC, the RAPR shall be filled in four copies and
presented for the approval of the head of the FAMU.
The distribution of the RAPR shall be:
!"#
Original to FAMU
12 3 4 2nd copy to Store

3rd Copy to Deliverer
$ %
) * +,
- .' &#
6 - 4th Copy Pad
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MoFED DECEMBER 2007
79
5. The cost that is filled in the RAPR shall be the book value of the asset at the
time it is returned to store.
6. The assets are transported to the used-stock store.
7. Using the copy of the FAMU, the fixed asset records shall be amended. The
UC is amended if the user returned only some of the assets he was using. The
UC shall be voided if the user has returned the entire asset under his custody.
8. The FAR shall be segregated and kept in a separate file under the name
Fixed Assets Returned to Store.
9. When fixed asset are reissued, Used Assets Reissue Receipt (UARR) (see
annex X) shall be used to document the issuance. The cost to be filled in the
UARR shall be the book value of the fixed asset. UARR is prepared in copies
and distributed as follows:
!"#
#
$ %
( %
%0
&'
2nd Copy to FAMU
3rd Copy Gate Pass
4th Store
) * +,
- .'
5th Pad
___________________________________________________________________________
MoFED DECEMBER 2007
80
10. In case the fixed asset is reissued to a different user but under a similar
location like the previous user, then the FAR shall be reactivated.
11. When assets are reissued, the PIN written on the asset could be used unless
the location is different from the previous location of the asset.
12. If the asset is reissued to a different location, the FAR shall be amended
(preferably replaced) by a new FAR.
6.5. Gate Pass for assets
Assets may be taken out side the premises of the PB for repair, on temporary
lending purpose etc. A voucher called Gate Pass for Fixed Assets (GP) ( See
annex XI), shall be prepared and distributed as follows:
%0 71st Copy Gate Pass

72nd copy FAMU
% 93
% 93 5 73rd Copy - Pad
The requesting user shall go to the FAMU and request the form. FAMU shall
study the condition and allow the form to be filled. The requesting user and his/her
immediate supervisor shall sign the GP and bring it to the FAMU. FAMU shall
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81
authorize the delivery of the assets and gives one copy of the GP to the user who
is carrying the asset. That copy of the GP is given to the security staff at the gate.
Both the security and FAMU shall keep file of GP. When the assets are returned,
the GP shall be cancelled by the security staff who allowed the goods to get in.
Similarly the FAMU shall cancel the copy of GP it kept to certify the return of the
assets. Cancellation is done by writing Returned on the face of the GP.
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ACCOUNTING TREATMENT OF COST OF ASSETS
7.1. Fixed assets
he current modified cash basis of accounting in use does not cover fixed
assets. All assets and liabilities are not recognized in the modified cash
basis accounting system. Only those receivables and payables included in
the chart of account are included in the system.4 The accounts included are cash,
cash equivalents, receivables, payables, letter of credit and net asset or equity.
The cost of fixed assets will be capitalized in the future when this system evolves to
accrual basis of accounting. Upgrading the budget system, amending the budget
manual, upgrading the accounting basis amending the chart of accounts are
preconditions to the full-fledged accrual system of accounts. Let us see with example
why the accrual system could not be introduced now.
In the accrual basis of accounts when payments for fixed asset are made, it is not
charged direct to expenses. It is capitalized as fixed asset as follows:
FGE Accounting System Manual 3, Volume I Accounting for Modified Cash Basis Transactions, PP6.
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Example 5 -Fixed asset treatment, Accrual Basis
Assume that MoFED purchased one computer for Birr 15,000 in cash. The
accounting entry under accrual basis would be:
Code
Debit
Computer
4531
15,000
Cash
4101
Credit
15,000
At the end of the year depreciation has to be calculated and charged to

Expenditures. Assuming a depreciation rate of 10%:
Depreciation
Accumulated depreciation Computer
Code
Debit
6313
1,500
4531-1
Credit
1,500
The problem with the above treatment is that, the budget allowed for the year for the
purchase of computer was Birr 15,000 and that amount was fully used. However,
because of the accounting treatment, only Birr 1,500 deprecation is shown as
expenditure instead of the full amount. In the following years, there will be no budget
for the computer purchased this year but the expenditure statement will continue to
show deprecation of Birr 1,500 per annum for the next nine years. The comparability
of the budget with actual expenditure is disturbed.
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Until the full-fledged accrual system is employed the financial statements will not
reflect the cost of fixed assets (also cost of investment, stock, goods in transit and
long-term loan). This makes the use of the financial statements limited. In this manual
an attempt is made to put in place a transitional arrangement until the complete
accrual basis of accounting is introduced. This arrangement is partly based on the
concept incorporated in the FGE Accounting System Manual 3, Volume III,
Accounting for Other Assets and Liabilities.
The concept of the transitional arrangement is to append the cost of fixed

assets in the financial statements without disturbing the current budgetary and
accounting system in use. This is done for information purpose only, i.e., the
PB will know how much worth of fixed asset it has employed.
The Finance Department of the PB opens the following ledger accounts:
For fixed assets - the following ledger accounts are used

CATEGORY
Plant and machinery
Military equipment
Infrastructure
Office equipments
ACCOUNT CODE
4521
4522
4523
4524
4525
4526
4527
4528
4529
4530
4531
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For accumulated deprecation on fixed assets - the following ledger accounts

are used:
CATEGORY
Plant and machinery
Military equipment
Infrastructure
Office equipments
ACCOUNT CODE
4521-1
4522-1
4523-1
4524-1
4525-1
4526-1
4527-1
4528-1
4529-1
4530-1
4531-1
For fixed assets fund - the following ledger accounts are used
CATEGORY
Plant and machinery
Military equipment
Infrastructure
Office equipments
ACCOUNT CODE
5721
5722
5723
5724
5725
5726
5727
5728
5729
5730
5731
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For fixed assets contra - the following ledger accounts are used:
CATEGORY
Plant and machinery
Military equipment
Infrastructure
Office equipments
ACCOUNT CODE
5721-1
5722-1
5723-1
5724-1
5725-1
5726-1
5727-1
5728-1
5729-1
5730-1
5731-1
The nature of the accounts is as follows:
Fixed asset
Accumulated deprecation
Fixed assets fund
Fixed assets fund contra
Account Number
Debit
Credit
4520 to 4531
4520-1 to 4531-1
5720 to 5731
5720-1to5720-1
Increases
Decreases
Decreases
Increases
Decreases
Increases
Increases
Decreases
When fixed assets are registered, the following entry is made:

Debit
Fixed asset
Fixed assets fund
Increases
Credit
Increases
When depreciation is charged (see the detail in subsequent sections) the following is
the entry:
Debit
Credit
Increases
Increases
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When fixed assets are returned to store two entries are made:
1. To remove the cost of the fixed asset

Debit
Fixed assets fund
Fixed asset
Decreases
Credit
Decreases
2. To remove the accumulated depreciation

Debit
Decreases
Credit
Decreases
The above process enables the cost of fixed assets to be included in the financial
statements. The effect of the accounting process on financial statements is zero but
the information is reflected. Let us see it using example:
Example 6 - including fixed assets in the financial statements
MoE purchased one vehicle with a total cost of Birr 300,000. The payment was
made in check.
1. The normal accounting entry that is made under the modified cash basis
accounting is:
Vehicle & other vehicular transport
Bank
Account No
6311
4102
Debit
300,000
Credit
300,000
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2. In addition to the above normal entry, MOE wanted to show the fixed asset in
the financial statements. The following entries will be made:
Fixed asset
Fixed assets fund
Account No
4521
5721
Debit
300,000
Credit
300,000
In the above entry the cost of fixed assets has increased. But this is compensated by
an increase in the fixed asset fund leaving zero effect in the accounts. The purpose
of the above entry is to reflect the cost of the vehicle as fixed asset in the financial
statements. In this way, if all fixed assets are treated in a similarly way, then the total
amount invested in fixed assets is shown and the financial statements become more
informative.
7.2. Cost of Fixed Asset
The cost of an asset includes its purchasing price, import duties and non-refundable
purchase taxes, and any costs directly attributable to bringing the asset to the
location and condition necessary to start operation.5
To illustrate the above let us assume that a vehicle is imported from Japan. The
following costs were paid in connection with the import:
International Financial Reporting Standards (IFRS), International Accounting Standard (IAS) 16, Property,
Plant and Equipment.
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Birr
Cost of vehicle
Cost of spare parts imported with vehicle
Sub total
Custom duty
Custom
VAT
Withhold tax
Bank charge
Insurance
See fright
Port handling
Inland transport
Cleaning, greasing and oiling & maintaining damage on the door
Two percent paid to Road Transport Authority
Sub total
Grand total
300,000
100,000
400,000
150,000
45,000
6,000
3,000
2,000
7,000
2,000
2,500
1,500
10,000
229,000
629,000
The major costs are the cost of the vehicle and the cost of spare part. The cost of the
vehicle is the cost of the Fixed Asset. The cost of Spare parts should not be included
in the cost of the vehicle as the spare parts are not immediately needed to bring the
vehicle in to use. The cost of spare parts should be treated as inventory of
consumables.
A total of Birr 224,000 clearing cost was paid. Of this only Birr 10,000 paid to Road
Transport Authority was directly associated with the vehicles. The remaining Birr
219,000 has to be apportioned to the vehicle and the spare parts so that the total
cost could be known. Birr 164,250 (300,000/400,000X219000) is allocated to the cost
of the vehicle and the remaining Birr 54,750 is allocated to the cost of spare parts.
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The cost of the vehicle becomes Birr 474,250, including amount paid to Road
Transport Authority, and the cost of spare parts becomes Birr 154,750.
This method of apportioning cost is also used when fixed assets are purchased in
large number or in set. The initial cost of each asset is taken from the suppliers
invoice. The total clearing cost is allocated to each asset based on the cost of each
asset.
Included in the above cost is VAT and Withhold tax paid on the purchases. As public
bodies are not VAT registered, these costs should be considered as cost. However,
there are certain donors whose fund is free from any tax. If that fund is used to
purchase the asset, the VAT should not be included in the cost of the vehicle. Rather,
it should be treated as receivable from the concerned government office and refund
should be obtained.
Fixed assets under construction are classified as fixed assets even before they are
completed. Under modified accounting system, costs incurred towards constructing
fixed asset are directly expensed and the cost of the construction is not reflected in
the accounts. In the transitional arrangement this manual depicts, the cost of fixed
asset under construction are also reflected in the financial statements.
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The following fixed assets under construction ledger accounts shall be opened by
Finance Department of the PB:
CATEGORY
Construction of Buildings residential
Construction of Buildings non residential
Construction of Military purpose buildings
ACCOUNT CODE
4501
4502
4503
4504
The following fixed assets under construction fund account shall also be opened:
CATEGORY
ACCOUNT CODE
5801
5802
5803
5804
The nature of the accounts is as follows:

Account Number
Fixed asset under construction
Fixed asset under construction fund
4501 to 4504
5801 to 5804
Debit
Credit
Increases
Decreases
Decreases
Increases
When payment for construction of asset is made, two entries are made. One is the
normal entry to recognize the payment and the other is the additional entry to reflect
the cost of the fixed asset under construction in the above accounts.
Example 7 - accounting for fixed assets under construction
Assume that MoFED has signed construction contract of an office building for Birr
10,000,000. An advance payment of Birr 1,000,000 is made. In addition the
contractor submitted a payment request for additional Birr 500,000. The payment was
approved and paid. The entries would be:
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MoFED DECEMBER 2007
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To record the advance payment

Account Number
Debit
6323
1,000,000

residential
Bank
4102
Credit
1,000,000
To record the first payment

Account Number
residential
Bank
6323
4102
Debit
Credit
500,000
500,000
The above two entries are the usual entries that are made under modified accounting
system. In addition to the above, the following entries shall be made to reflect the
cost of the fixed asset under construction in the categories of asset in the financial
statements.
To record the advance payment

Construction of Buildings fund non
residential
Account No
Debit
4502
1,000,000
5802
Credit
1,000,000
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To record the first payment

Account No
Debit
4502
5802
500,000

Construction of Buildings fund non residential
Credit
500,000
As a result of the above entries, the financial statements will show, Birr 1,500,000
being accumulated cost of construction of building non residential. This provides
useful information to users of the financial statements.
When construction is finalized, the accumulated cost of the fixed asset under
construction should be transferred to fixed asset account. Continuing the above
example, if the building is completed at the estimated cost of Birr 10,000,000, the
following entry is required to transfer the cost to fixed asset:
To close the fixed assets under construction account:
Account No
Construction of Buildings fund non
residential
Debit
Credit
5802 10,000,000
4502
10,000,000
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To record the cost (capitalize) of the completed building in the fixed assets ledger:
Debit
Credit
4526 10,000,000
5726
10,000,000
Account No
Buildings fund non residential
Once the constructed asset is transferred from the fixed assets under construction
account to the respective fixed asset account, then depreciation is calculated and
charged every year as discussed above. The detailed explanation on depreciation is
provided in subsequent sections.
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INCORPORATING THE INITIAL VALUE OF EXISTING ASSETS

IN THE ACCOUNTING RECORDS
s explained in the previous section, this manual provides transitional

arrangement to include the value of fixed assets in the financial
statements. This section provides the practical steps that should be
followed and the tasks that are done to provide the cost information to the Finance
Department of the PB. The Finance Department takes action when information is
received from the FAMU of the PB. These two units of the PB should work very
closely so that procedures in this manual could be implemented effectively.

After the ICC is completed and the fixed assets valuation is done, the FAMU shall
prepare a summary of fixed assets with the total value for each category of the fixed
assets. As much as possible all fixed assets should be given value but this
summary shall be done even if all assets are not given values. The summary is
prepared as follows:
1. For each category of asset the PB has, summary of assets shall be prepared.
The entries in the summary are:
a. Description (name) of the asset
b. PIN number
c. Date of issuance
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d. Cost of asset
e. Accumulated depreciation
f. Current year depreciation
g. Book value
It is recommended that this summary be maintained on the computer using Microsoft
excel. On excel, the summary could look like the following:
No
Description (name) of the

asset
1 Toyota Station wagon

2 Motor Cycle
3 Mitshibusi
4 Niva
5 Toyota Corolla
6 Hyudi
7 Landover
8 FIAT
9 Lada
10 Kamaze
Grand Total
PIN number
GOV-MoFED-4521-HO-FD-0001
Date of
issuance
6/6/1990
6/7/1990
6/8/1990
6/9/1991
6/10/1991
6/11/1991
7/2/1993
7/3/1993
7/4/1993
7/5/1993
Cost
300,000
30,000
250,000
150,000
180,000
140,000
400,000
700,000
45,000
650,000
2,845,000
Accumulated Current year

depreciation depreciation
Total
Depreciation
0
0
0
0
0
0
0
0
0
0
-
Book value
300,000
30,000
250,000
150,000
180,000
140,000
400,000
700,000
45,000
650,000
2,845,000
2. The summary is totaled. The total cost gives the total cost of the assets in the
category, the total accumulated deprecation of the assets in the category and
the book value of the assets in the category. (At this stage, depreciation is not
calculated. Once this initial registration is complete, then depreciation shall be
calculated annually.)
3. The totals are transferred to another summary as shown hereunder. This
summary shall be duly checked and approved by the Head of the FAMU. The
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MoFED DECEMBER 2007
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copy of it shall be sent to the Finance Department as a source document to
incorporate the value of the fixed assets in the accounting records.
PUBLIC BODY: XXXXXXXXXXX

SUMMARY OF FIXED ASSETS
DATE: Hidar 26, 1999 EC
CATEGORY
ACCOUNT CODE

Plant and machinery
Military equipment
Infrastructure
Office equipments
Grand total
Birr
4521
4522
4523
4524
4525
4526
4527
4528
4529
4530
4531
2,845,000
________XXXXXXX_
To: Finance Department

From: FAMU
The FAMU of the XXXXX Public Body has finalized the Initial Comprehensive
Count (ICC) of the fixed assets under its custody. It has maintained the Users
Cards (UC) and the Fixed Assets Registration Cards (FAR). It has assigned PIN to
all the fixed assets. It has attached value for all/most fixed assets. This is therefore
to advise you to incorporate the values of the fixed asset in the accounting
records.
Name of head of FAMU
Signature
Date
4. When the Finance Department receives the above summary of fixed assets, it
prepares a Journal Voucher to recognize the entries. The Journal Voucher to
be used to record the cost of fixed assets is the one that is used in the
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modified cash basis of accounting system. No amendment is needed on the
format. (See the format in annex XII).
Fixed assets under construction are summarized in the FAUCST explained in

previous section. A copy of the summary is sent to the Finance Department advising
it to open accounts for fixed assets under construction and to record the values in the
FAUCST. The Finance Department prepares a Journal Voucher to summarize the
information in the FAUCST and then posts it to the fixed assets under construction
accounts.
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DEPRECIATION
epreciation is defined as a systematic allocation of the depreciable

amount of an asset over its useful life. An entity is required to depreciate
an item of property, plant and equipment when it is available for use and
to continue depreciating it until it is derecognized6
In the previous sections, the transitional arrangement for including the cost of assets
and fixed assets under construction in the financial statements is explained. If the
cost is included and no depreciation is calculated, the financial information that is
obtained as a result will be distorted. The value of fixed asset becomes ever
increasing even after the asset stops being used. There needs to be a way of
depreciating the value of assets.
Unlike business enterprises or unlike under the full-fledged accrual basis of

accounting, the purpose of the depreciation that is explained in this manual is not to
charge the portion of the cost to the income and expenditure account. It is just an
attempt to report a fair value of the fixed asset from time to time.
International Financial Reporting Standards (IFRS), International Accounting Standard (IAS) 16, Property,
Plant and Equipment.
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The depreciation system that is employed must be simple taking in to account the
following points in the form of summary:
1. The purpose of depreciation is not to calculate the accurate value of use that is
derived out of the fixed assets;
2. The purpose of the deprecation calculated is not to charge it to the income and
expenditure statements and hence to calculate the result of operation;
3. Depreciation calculation is a new phenomenon in the Government Accounting

System. There is no practice of calculating depreciation in almost all PBs. If the
depreciation system is complicated, the rate of error could be high and the rate of
reception of the method among the employees would be low;
4. The effort is to arrive at the fair value of total assets owned by PBs and not to
calculate the correct book value.
There are various methods of depreciation. The simplest of all is the Straight-line
method of depreciation. Straight-line method of depreciation assumes that the
usefulness of the asset is the same over the entire life of the asset. The cost of the
asset is distributed evenly over the useful economic life of the asset. Let us assume
that a car is purchased for Birr 500,000. The useful economic life of the asset is
assumed to be five years. The annual depreciation will be:
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500,000/5=100,000
At the end of the fifth year, the book value of the car becomes zero.
Straight-line method had been used in Ethiopian in the past many years, as it was
the method proposed by the income tax proclamation7 to calculate depreciation for
tax purpose. Currently the Income Tax Proclamation No 286/2002 has proposed
pooling method of depreciation for tax purpose. This method is more complicated
than the strength line method.
Straight-line depreciation method shall be used in this manual. All PBs have to
use this method of depreciation unless they have valid reason to employ
another method of depreciation and unless they get the permission of GPAD to
use a different method.
The following depreciation rates shall be used for depreciating Government

Owned Fixed Assets. The rates are developed on the basis of the rates that had
been widely used in Ethiopian in the past many years with some modifications.
The rates are:
CATEGORY
7
DEPRECIATION RATE
20%
20%
Legal Notice No 258 of 1662, Income tax Regulation, Article 24(a)
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Plant and machinery
Military equipment
Infrastructure
Office equipments
Books
12.5%
20%
5%
5%
5%
5%
10%
20%
10%
25%
Applying these rates on the cost of fixed assets enables getting of a fair amount
of book value at the end of each year. The following rules shall be applied when
calculating the depreciation:
1. Depreciation shall be calculated on each and every asset, which has FAR.
2. The FAMU is responsible for calculating the depreciation and posting it to
the FAR.
3. Depreciation on assets purchased in the middle of the year is calculated
proportionally.
4. In the last year of depreciation of an asset, the amount of depreciation shall
be reduced by Birr 10 so that the book value becomes Birr 10. A fully
depreciated asset shall have a book value of Birr 10.
5. Maintenance on fully depreciated asset is not capitalized. It is treated as
expense of the year in which it is paid.
The process of depreciation calculation is shown in the following example.
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Example 8 - calculation of depreciation
The Ministry of Infrastructure has completed the ICC and has maintained FAR for all
its assets. It purchased a Printing machine worth Birr 160,000 on Tahassas 1,
1999EC. The depreciation calculation in the FAR shall be as follows (for exercise
purpose depreciation for the whole useful life of the asset is calculated).
MINISTRY OF FINANCE & ECONOMIC DEVELOPMENT

PUBLIC BODY_________________________
FIXED ASSETS REGISTER CARD (FAR)
Description of the asset: Printing Machine
Serial No: 0000000000234
PIN: GOV-MoFED-4523-HO-GS-0069
Plate No_________________________
Engine No_________________________
Supplier Name____________________
Date of Purchase _________________
Accounts Ref______________________
Model 19 No_____1234_____________
Date______________________________
Model 22 No_____4321_____________
Date ______________________________
Purchase cost Birr _____160000_____
No of unit________1_______________
Unit cost_ 160,000__________________
Location: Head office General Service Depreciation Rate: 16% 1st Year, 12% there after
No of Units
Year of
Accumulated
Cost
Depreciation Depreciation Depreciation
160,000 30/10/1999
20,000
20,000
30/10/2000
20,000
40,000
30/10/2001
20,000
60,000
30/10/2002
20,000
80,000
30/10/2003
20,000
100,000
30/10/2004
20,000
120,000
30/10/2005
20,000
140,000
30/10/2006
19,990
159,990
Book Value
140,000
120,000
100,000
80,000
60,000
40,000
20,000
10
Remark
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It must be noted that Depreciation is not meant to accumulate replacement fund for
assets. It is not also meant to indicate the exact value of the fixed assets at any time.
The exact value of an asset is determined by the market when it is sold. When a fixed
asset user lost the asset issued to him/her, he/she will be requested to replace the
item based on the replacement cost of similar asset (not new asset). The book value
or the depreciated value of an asset should not be used for this purpose.
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ANNUAL PHYSICAL COUNT AND ANNUAL SUMMARY

SCHEDULE
t the end of every year, fixed assets are counted. The Council of
Ministers Financial Regulations No 17/1997, article 61(5) provides
that all inventories of public property shall be physically verified
against records at least annually. of The time to count fixed assets could start a
bit earlier than the fiscal year end that is Sene 30, so that the count could be finalized
immediately after the fiscal year ends. This will become important after the
implementation of this manual because the FAMU has to give information on the cost
of fixed assets and fixed assets under construction to the Finance Department. The
procedures for conducting the annual physical count of assets are explained below.
Following that, the annual summary schedule preparation process is explained. At
the end of the section, presentation of cost of fixed asset in the Trial Balance is
explained.
10.1.
Annual Physical Count
The following are the procedures to be applied when conducting annual physical
count.
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i. Before count
1. Decide on date of count. The count should be made once at the end of
the fiscal year (the Ethiopian budget year). The physical count should
be made at a very convenient time for the PB and should take the
minimum possible dates to finalize. The count can take place preferably
a bit before the fiscal year ends. If this is not possible, it should take
place immediately after the end of the fiscal year.
2. Inform to the Internal Audit Department that the count is to start. They
should observe the process and give comments to increase the
effectiveness of the process. Internal auditors should not participate in
the detail counting of assets.
3. Organize teams of counters, checkers and supervisors. Each team

should consist at least three persons. There could be more than one
committee of each type in a PB depending on the size, location and
complexity of the fixed assets to be counted. Persons capable of
identifying the type and condition of assets (technicians, engineers, etc)
should be included in the committees.
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4. Issue written count instructions to all concerned and send a copy to

GPAD. GPAD shall communicate its comments on the instructions, if
any.
5. Brief all personnel involved with the count.
6. Prepare the necessary Fixed Assets Count Sheets (FACS) and other
necessary stationary and forms. Count sheets should be pre-numbered
so that their issue and final return can be controlled.
7. Tidy up the used-stock stores, and arrange the goods in convenient

piles. If there was no used-stock store before, prepare one (no need to
construct a new store, the available store can be partitioned and used).
8. Go around the premises of the PB to see if there are assets that are not
identified with any user. Return these assets to store using the RAPR.
9. As much as possible, issuance of fixed assets should be stopped up to

the end of the count.
10. Third party fixed assets in the premises of the PB should be identified
and note taken on them.
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11. Arrangement to be made to count fixed asset owned by the PB but are
not temporarily with the PB (example vehicle on duty or garage).
12. If the PB is to engage temporarily employed staff, give proper

orientation for them.
ii. During Count
1. If issuance of fixed assets could not be stopped until the finalization of

the count, make sure that such newly issued assets are included in the
count sheet. Give instruction to the store that fixed assets issued after
the start of the count are listed and the list is sent to the FMAU.
2. Count sheets to be completed in two copies. Ensure there is legible

handwriting and clear description of items. All columns of the count
sheet should be filled (sample count sheet is given in Annex I).
3. Ensure careful co-ordination among count teams so that all fixed assets
are counted.
4. Identify the condition of the fixed asset on the space provided on the
count sheet as Good, Fair, Poor or damaged.
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MoFED DECEMBER 2007
109
5. As each individual asset has to be counted, open some sealed

packages for counting and confirm the contents.
6. The members of the count team and the supervisor should sign on
each count sheet. The Head of the FAMU should finally check and sign
each count sheet.
7. Count should cover all fixed assets in the premises of the PB

regardless of whom it belongs to. Fixed assets owned by third parties
should be identified on the count sheet for latter analysis.
8. The actual date of the count should be indicated on the count sheets.
9. Compare counts with UC and recount differences. The UC is believed

to be the most compete fixed assets record in most PBs.
10. Count supervisors should exercise close control over counters to

ensure accurate counts and strict adherence to instructions.
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MoFED DECEMBER 2007
110
iii. After count
1. Ensure all count sheets issued to counters have been accounted for
(ether used or discarded. If discarded, the discarded copy needs to be
presented).
2. Check all the count sheets, complete incomplete details and sign all
count sheets. The FAMU Head should sign all the count sheets.
3. Prepare a list of poor condition and damaged fixed assets that cannot
be used by the user and ensure that these assets are returned to usedstock store.
4. Compare count sheets with the UC and FAR.
5. Post fixed assets found during the count but were not included in the
UC. Establish the reason why such assets were not included in the
fixed assets records earlier and take corrective actions.
6. Maintain FAR for fixed assets found during the count.
7. Summarize fixed assets not found during count and severely damaged
due to negligent use or poor custodianship and take appropriate actions
for the replacement of the fixed assets physically or the value recovered
from the responsible user.
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MoFED DECEMBER 2007
111
If value of fixed assets is to be recovered from the user, the

amount to be recovered should be the replacement cost of the
asset. The Book Value of the asset should not be used for this
purpose.
8. After action is taken on step 7 above, adjust the UC and FAR
accordingly.
9. Prepare the Annual Summary Schedule (ASS).
10. Send the annual summary to the Finance Department of the PB with a
copy to the Head of the PB.
10.2.
Annual Summary schedule (ASS)
The ASS is the basic communication tool between the FAMU and the Finance
Department of the PB. At the end of every year, after the physical count of fixed
assets is completed and all the reconciliation and updating work of the UC and FAR
is completed, the next job of the FMAU shall be preparation of the ASS.
The following are the steps to be followed in the preparation of the ASS:
a) All UC and FAR are updated based on the result of the physical count
for the year.
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MoFED DECEMBER 2007
112
b) Depreciation for the year is calculated and posed to each FAR.

c) The accumulated deprecation and the book value of each asset are
calculated on the FAR.
d) Summary of asset for each category of assets is prepared.
e) The ASS is prepared by FAMU and a copy is sent to the Finance
Department of the PB. The ASS is prepared as follows:
PUBLIC BODY: XXXXXXXXXXX
ANNUAL ASSET SUMMARY
(ASS)
FOR THE FISCAL YEAR ENDED
PART ONE: FIXED ASSETS
CATEGORY
Vehicle and other vehicular
transport
Plant and machinery
Military equipment
Infrastructure
Office equipments
Grand total
PART TWO: ASSETS UNDER
CONSTRUCTION -COMPLETED
CATEGORY
Construction of Buildings
residential
ACCOUN
T CODE
COST
ACCUMULATED
DEPRECIATION
4521
4522
4523
4524
4525
4526
4527
4528
4529
4530
4531
ACCOUN
T CODE
4501
Birr
4502
___________________________________________________________________________
MoFED DECEMBER 2007
BOOK
VALUE
113
residential
Construction of Military purpose
buildings
To: Finance Department
From: FAMU
4503
4504
We have finalized the annual physical count of fixed assets. We have updated the UC and
FAR. We have calculated depreciation on each asset. The summary of the fixed assets in
part one of this form is the final cost, accumulated depreciation and book value of all assets.
Please amend your records accordingly. Indicated in part two of the form are the value of the
fixed assets under construction that are capitalized as fixed assets this year. Please amend
your fixed assets under construction account as per part two of this form.
Name of head of FAMU
Signature
Date
Upon receiving the ASS, the Finance Department prepares a Journal Voucher to
amend the accounting records. The following are the accounting entries required:
1. The cost, accumulated depreciation and book value information provided to
the Finance Department is the cumulative figure. It is not the additional figure
for the year. The cost is the total cost of all assets that were found during the
ICC plus the cost of asset purchased since then, less the cost of assets
returned to used-stock store. Likewise, the depreciation figure is the
accumulated depreciation since the time depreciation calculation started. The
book value is therefore the book value of all assets under the custody of the
PBs. This is done to simplify the process. What the Finance Department is
required to do is to reverse the balances in the fixed assets ledger cards and
the fixed assets fund ledger cards. The following is the standard accounting
entry that is made (some of the assets indicated below might not exist in a PB.
Entries should be made only for those categories of asset that have balances):
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MoFED DECEMBER 2007
114
Description
Vehicle and other vehicular transport fund
Aircraft, boats, etc. fund
Plant and machinery fund
Plant and machinery
Military equipment fund
Military equipment
Buildings residential fund
Buildings non residential fund
Infrastructure fund
Infrastructure
Military purpose buildings fund
Furnishings and fixtures fund
Livestock and transport animals fund
Office equipmentsfund
Office equipments
Account
Code
5721
4521
5722
4522
5723
4523
5724
4524
5725
4525
5726
4526
5727
4527
5728
4528
5729
4529
5730
4530
5731
4531
Debit
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
Credit
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
2. In a similarly way like the above, the balances in the accumulated depreciation
and the fixed assets fund contra accounts should be reversed. The following
entry is required:
Description
Accumulated Depreciation Vehicle and other
vehicular transport
Vehicle and other vehicular transport fund Contra
Accumulated Depreciation Aircraft, boats, etc.
Aircraft, boats, etc. fund Contra
Accumulated Depreciation Plant and machinery
Plant and machinery fund Contra
Accumulated Depreciation Military equipment
Military equipment fund Contra
Account
Code
4521
5721
4522
5722
4523
5723
4524
5724
Debit
XXXX
XXXX
XXXX
XXXX
Credit
XXXX
XXXX
XXXX
XXXX
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115
Accumulated Depreciation Buildings residential
Buildings residential fund Contra
Accumulated Depreciation Buildings non
residential
Buildings non residential fund Contra
Accumulated Depreciation Infrastructure
Infrastructure fund Contra
Accumulated Depreciation Military purpose buildings
Military purpose buildings fund Contra
Accumulated Depreciation Furnishings and fixtures
Furnishings and fixtures fund Contra
Accumulated Depreciation Livestock and transport
animals
Livestock and transport animals fund Contra
Accumulated Depreciation Office equipments
Office equipmentsfund Contra
4525
5725
XXXX
4526
5726
4527
5727
4528
5728
4529
5729
XXXX
4530
5730
4531
5731
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
3. When the above two entries are posted, the balance of fixed assets becomes
zero. Then the new balances as per the latest ASS shall be recorded.
Separate Journal Voucher is required for that. The following is the entry that is
made:
Description
Plant and machinery
Military equipment
Infrastructure
Infrastructure fund
Account
Code
4521
5721
4522
5722
4523
5723
4524
5724
4525
5725
4526
5726
4527
5727
4528
5728
Debit
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
Credit
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
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MoFED DECEMBER 2007
116
Office equipments
Office equipmentsfund
4529
5729
4530
5730
4531
5731
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
4. The ASS also contains information on accumulated depreciation of the assets.

The accumulated deprecation should also be recognized. The following entry
is required:
Description
Contra
Accumulated Depreciation Vehicle and other
vehicular transport
Aircraft, boats, etc. fund Contra
Accumulated Depreciation Aircraft, boats, etc.
Plant and machinery fund Contra
Accumulated Depreciation Plant and machinery
Military equipment fund Contra
Accumulated Depreciation Military equipment
Buildings residential fund Contra
Accumulated
Depreciation
Buildings
residential
Buildings non residential fund Contra
Accumulated Depreciation Buildings non
residential
Infrastructure fund Contra
Accumulated Depreciation Infrastructure
Military purpose buildings fund Contra
Accumulated Depreciation Military purpose
buildings
Furnishings and fixtures fund Contra
Accumulated Depreciation Furnishings and
fixtures
Livestock and transport animals fund Contra
Accumulated Depreciation Livestock and
transport animals
Office equipmentsfund Contra
Accumulated Depreciation Office equipments
Account
Code
5721
Debit
XXXX
4521
5722
4522
5723
4523
5724
4524
5725
4525
Credit
XXXX
XXXX
XXXX
XXXX
XXXX
5726
4526
XXXX
5727
4527
5728
4528
XXXX
XXXX
5729
4529
XXXX
5730
4530
XXXX
5731
4531
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
XXXX
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MoFED DECEMBER 2007
117
5. When the new cost and accumulated deprecation figures are recorded, the
accounting record becomes up to date. The book value of assets is not
separately recorded. The book value is the difference between the cost and
accumulated depreciation figures. No separate accounts are maintained for
book value.
6. The ASS also provides information on fixed assets under construction. The
Finance Department has accounts opened to accumulate the cost of fixed
assets under construction as explained in the previous sections. When fixed
asset under construction are completed, the FAMU requests the Finance
Department to provide the accumulated cost information. Based on that
information, the FAMU capitalizes the asset and also opens the UC and FAR.
In the ASS part one, the cost of those assets capitalized during the year are
included. In Part two of the ASS, the costs of those assets are given. Based
on the information in Part two of the ASS, the Finance Department prepares
the following Journal entries to reverse the balances of fixed asset under
construction account and the corresponding balance in the fixed assets under
construction fund accounts. No additional entries are required, as the
capitalization process has taken place in step one to four above.
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MoFED DECEMBER 2007
118
CATEGORY
ACCOUNT
CODE
5801
4501
5802
4502
5803
4503
5804
4504
DEBIT
XXXX
XXXX
XXXX
XXXX
CREDIT
XXXX
XXXX
XXXX
XXXX
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MoFED DECEMBER 2007
119
Disposal of Fixed Assets

ouncil of Ministers Financial Regulation No 17/1997 states that disposal
of public property shall be done in accordance with directives of the
Ministry of Finance. It also demands deletion of public property where the
property is considered to be of no use in the public body or elsewhere. In this
chapter, the why, when, and how to deal with disposal of Government Owned Fixed
Assets are explained.
Currently Government owned fixed assets are disposed in accordance with the
provisions in the Government Property Guideline No 6/1998. The guideline provides
a three methods of disposals for government owned fixed assets. These methods
have been used by PB so far.
It is felt that there is a need to revise the guideline to incorporate other methods of
disposals and to include procedures that would expedite the process of disposal.
However, providing those new procedures in the form of manual before the guideline
is revised could be putting the cart before the horse. It might also open up
dangerous loopholes in the process and might jeopardize the existing procedures of
disposal. For this reason, this manual is limited to explaining the procedures in the
existing guidelines. Nevertheless, the existing procedures will be linked with the
accounting procedures explained in earlier sections.
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MoFED DECEMBER 2007
120
11.1.
Why government owned fixed assets should be disposed?
The Government Owned Fixed Assets Management cycle is complete only if disposal
of assets is possible. A public body acquires fixed assets, uses it and when it is no
more needed or when it is no more functional, the public body must be able to
dispose it in an economic, legal and transparent manner. Otherwise, the
management of assets becomes complicated, uneconomic and inefficient.
There are four commonly known reasons to start the fixed assets disposal process.
These are when the asset is Unserviceable, obsolete, surplus and abandoned.
Unserviceable because of many factors including normal usage of the assets, old
age or accident, the cost of repairing the asset might become much
more expensive than the use the public body can drive out of it. In
such cases it becomes a rational decision to dispose the asset
instead of incurring additional repair cost.
Obsolete
- Obsolescence could happen due to several factors. An asset could

be rendered obsolete due to technological change. It may not fit
with other assets in use. The out put of the asset might not be
accepted by the end user. Similarly, using the asset might not be
economical in terms of cost and time. Hence, the asset needs to be
disposed.
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MoFED DECEMBER 2007
121
Surplus
- Even if the asset is in a good condition, and is not obsolete, the

public body might not use it currently and in the near future for some
reason. Other public bodies might need such assets. In such cases
it is generally economical to dispose the asset rather than keeping it
and making it obsolete or unserviceable.
Abandoned assets - These are assets held under police or other legal institutes
custody, or assets the owners of which are not known or are unable
to satisfy some legal requirements to become the final owner of the
assets. This includes assets kept by customs and police. The public
bodies that keep these assets are not using the items as fixed
assets. Rather the assets are held due to the normal course of
operation of those public bodies. Hence the assets can be
considered as stock and should be dealt with under consumable
stocks management system.
11.2.
When government owned fixed assets should be disposed?
First of all, a public body needs to segregate the fixed assets that should be disposed
of for one of the reasons mentioned above. Segregation of fixed assets is done by
FAMU through out the year and especially during the ICC and the annual physical
count. The disposal process is therefore started after assets are segregated and kept
in a way that expedites the disposal process.
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MoFED DECEMBER 2007
122
Segregation of assets enables making the decision as to when the disposal process
should start. The cost of the disposal in terms of expenditures needed to move the
asset to the place of disposal, to advertise for disposal, to arrange the items, and the
staff time to deal with these is significant. So the disposal process should be started
when there is an accumulation of enough quantity of assets to be disposed. On the
other hand keeping some assets more than a certain period might cause
environmental and health hazard. Such assets should be disposed of as soon as
possible.
Assets for disposal should not contain material that is not intended for disposal.
Examples of material that should be cleared from assets before disposal are:
stationeryparticularly printed stationery, which could be misused, or used for

fraudulent purposes;
software, the unauthorized movement of which could breach license

agreements;
classified information contained in hard or floppy disks;
records, files, papers or whiteboards containing information which, if disclosed,

could breach privacy legislation, and/or cause embarrassment or problems for
the public body; and
Hazardous assets the transfer of which could create legal liabilities.
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MoFED DECEMBER 2007
123
The public body should ascertain that all the assets it intends to dispose are owned
by it. If not, transferring such assets back to the owner should be considered. If the
owner could not be identified clearly or it does not exist, GPAD should be requested
to authorize disposal of the assets.
The right time to start the disposal process should be determined after considering
the above factors.
11.3.
How government owned fixed assets should be disposed?
Disposal of fixed assets could be made in any one of the three ways that enable the
public body to achieve the best available net return when sold; to treat correctly
assets requiring special consideration in their disposal; and to be even-handed, open
and honest in all dealings.
The options given hereunder might not be suitable for some special assets, such as
armaments, that need special procedure of disposal. PBs that own such assets need
to discuss special disposal procedures with GPAD.
11.3.1.
Transfer to other public bodies
When a public body decides to dispose assets, the first thing it should consider
should be demand for assets by other public bodies. The items to be disposed could
be such asset that could not be easily obtained in the market due to various factors. If
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MoFED DECEMBER 2007
124
the asset is of that nature, other public bodies should be given priority to acquire the
assets.
When the asset to be disposed is expected to have possible heritage or cultural
value, the public body needs to determine:
Whether an asset has heritage or cultural significance;
Which public body is suitable custodians for the asset; and
Whether to sell, donate or lend the item on a long-term basis.
It is reasonable to transfer such assets free of charge or to accept an offer which is

less than the market value in order to ensure that items of genuine heritage
significance are preserved in an appropriate form.
The other reason why public bodies should consider transfer of the property that they
want to dispose of is the cost of disposal. Advertisements need not be announced,
arrangements for public tenders are not required, etc.
Therefore, when there is expectation that the proceed to be obtained from the
disposal of the asset is not enough to cover the expenses that will be paid for
disposal, when the asset to be disposed is unique and that the appropriate way is to
transfer it to other public bodies, invitation to those public bodies needs to be made
with details of:
Descriptions of the property to be disposed
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MoFED DECEMBER 2007
125
The transfer value of the property. Transfer value should be equal to

estimations of marketable value. There should be no subsidy or profit based
on the transfer value as a result of a transfer
A closing date for enquiries from other public bodies.
A consideration equal to the estimated marketable value shall be made on transfer of
assets between public bodies. All such transfers shall be funded by budget.
11.3.2.
Disposal by sale
Sale of public property can be made in one of two commonly known ways. Selecting
between the two methods need to be made after considering the advantage and
disadvantage of the two methods under the circumstance of the public body in
question. The decision should also be based on practical and financial considerations
such as achieving the best price (net of costs) and the speed with which the
arrangements for sale can be made. The two methods are explained below:
1. Sale by public auction

Sales by auction is a public sale of assets by competitive bidding where the price is
determined by the highest acceptable bid. Auctions are usually the most suitable
outlet for high-volume, low-value assets;
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MoFED DECEMBER 2007
126
Public bodies shall advertise the public auction and include the following details in
the advertisement:
Name and address of the institution
General description of the type and quantity of goods
Place where the goods will be on display
Place where the detailed list of goods will be available
Date, time and location of the public auction
Date and location that the bids will be opened
Required payment period
Statement that the institution can accept or reject any bid and may cancel the
auction at any time
The auctioneer shall state the reserve price before the auction begins. If this reserve
price is not met, the institution will retain the items. The disposal committee shall
then reconsider the most appropriate method of disposal.
2. Sale through public tender
Sales through tender is a public request for tender to dispose of assets, usually
achieved through advertising in the press or in a notice board.
This procedure is more resource-intensive than selling by auction but is an effective
way of selling high-value and unusual goods, items located out side main towns or in
remote areas and assets that have a geographically dispersed potential market.
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MoFED DECEMBER 2007
127
Public bodies shall advertise the sale by tender and include the following details in
the advertisement:
Name and address of the institution
General description of the type and quantity of goods
Place where the goods will be on display
Place where the detailed list of goods will be available
Final date for submission of bids
Location of the tender box, exact date and time that it will be closed
Date, time and location that the bids will be opened
Level of the bid bond
Statement that the bid bond will be enforced if bidders withdraw their
bids after bid opening
Required payment period
Statement that the institution can accept or reject any bid and may
cancel the tender at any time
The period that will be given to bidders to bid shall be set by the disposal committee
and shall be between 15 and 30 days.
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MoFED DECEMBER 2007
128
The institution shall secure a separate tender box that shall remain open until the
time indicated in the advertisement of sale. At that time disposal committee shall
seal the tender box. Any bids received after the tender period shall be returned
unopened to the tender.
The institution shall request a bid bond as security for the tenders. The institution
shall fix bid bond for each sale requiring a tender. The disposal committee shall set a
fixed level of bid bond for each sale. Bid bonds shall be returned to losing tenders as
soon as the winning bidder is chosen.
The tenders shall be opened in public, in the presence of the bidders or a

representative of the bidders if the bidders choose to attend and members of the
disposal committee. The names and bids of the bidders shall be read out by the
chairman of the disposal committee and recorded by the Secretary of the disposal
committee.
The disposal committee shall decide which bid to accept. If the highest bid is above
the reserve price set, the disposal committee shall accept the highest bid. If it is not,
the disposal committee shall reconsider the most appropriate method of disposal. In
all matters the disposal committee proposes to the Head of the institution a
recommended decision for approval.
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MoFED DECEMBER 2007
129
According to Government Property guide line No 6/1998, the method of advertising

for the sale depends upon the total estimated reserve price of a batch:
If the reserve price for all items of public property in one batch is less than Birr
10,000 the institution shall advertise the sale by public notice board for at
least 7 consecutive days or in a known government newspaper for at least 2
consecutive days.
If the reserve price for all items in one batch is higher than Birr 10,000, the
institution shall advertise in a known government newspaper for at least 2
consecutive days.
11.3.3.
Sale as scrap
If at any stage of disposal it is estimated that the receipts will not be enough to cover
the costs of disposal, or if the asset could not be sold as an asset in its own right, the
property shall be scrapped.
Recently, MoFED has issued an instruction (Letter reference No 1/7/124/19/9 dated

Hidar 27, 1999) for disposal of scrap metal at Birr 1.35 per kilogram at the place
where the scrap is found. So all scrap metals need to be collected in an appropriate
place and be sold for the five factories identified in the letter. The names of the
factories are: Abyssinia Steel; Walya Steel; Sheba Steel; Ethiopian Steel and Steele
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MoFED DECEMBER 2007
130
Steel. But public bodies need to follow up other developments in this regard. The
price or the factories could be reviewed.
Furniture and equipment could also be considered scrap if they can not be sold in
their own right for the reason that they are broken or they are too outdated. Those
scraps could be sold through auction or tender as the case may be.
Assets like books which are not suitable for other method of disposal may be
recycled. The recycling option, wherever available, is preferable to dumping goods.
11.4.
Disposal Committee
Assets are segregated for disposal and report on assets that are proposed to be
disposed of shall be prepared by FAMU in collaboration with store. The report shall
be prepared at least once in a year after the conduct of the annual physical count.
The report shall show the list of the assets, the book value of the assets, the reason
for disposal and the estimated market value of each asset when ever possible to
assign market value. The head of the FAMU shall present the report to the head of
the public body how shall instruct the disposal process to continue. The head of the
public body might instruct all the assets or only some of the assets in the report to be
disposed of. Upon obtaining the approval of the head of the public body, FAMU shall
present the report to the Valuation Committee.
The Valuation Committee shall go through the report carefully, inspect the condition
of the assets and assess the fairness of the market value proposed by the FAMU.
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MoFED DECEMBER 2007
131
After through review of the report, the valuation committee shall decide on reserve
price for each and every asset in the report. The committee shall give the approved
report to the FAMU with a copy to a disposal committee and the process will
continue. The involvement of the Valuation committee in the process shall stop at this
stage.
A Disposal Committee should be established at each institution to serve

management as an advisory body in the disposal of fixed assets in accordance with
the regulations in this regard.
The functions of the Disposal Committee should include:

1. Review the reports presented by the FAMU;
2. Recommend appropriate method of disposal for the assets or approve the
recommendation of the FAMU;
3. Follow up the process of bid advertisement, bid collection, bid opening to
ensure that the process is carried our transparently and even-handedly;
4. Attend public auctions;
5. Recommend sales of assets after evaluating the bid documents or attending
the auctions;
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MoFED DECEMBER 2007
132
6. Recommend disposal of assets in any other method other than tender and
auction;
7. Act as a body of inquiry or arbitration in the settlement of disputes on fixed
assets disposal.
8. Prepare and submit minutes of its meetings to the head of the public body with
a copy to FAMU.
The functions and powers of the Disposal Committee are limited to the capacity of an
advisory body and the acceptance or rejection of the Committees proposals remains
within the domain and prerogative of the head of the public body.
The Disposal Committee will report to the head of the public body who will appoint its
members and Chairman. The Committee should comprise Divisional Heads from
appropriate Divisions such as Procurement, Planning, Finance, Legal, Technique and
Property.
The Heads of other Divisions or their delegates may also be called by the Committee
to provide advice and assistance relevant to its proceedings.
The Committee will hold meetings as frequently as the demands of public body will
dictate. The Chairman will preside over all meetings, and in his absence the
members present will elect among themselves an acting Chairman for that particular
meeting, provided that such meetings by substitution of the permanent Chairman
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MoFED DECEMBER 2007
133
shall not exceed two consecutive meetings and not more than three times during a
fiscal year.
Members of the Committee may send their delegates when under pressure of their
regular business. The permanent Chairman, who acts as the sole liaison between the
Committee and the head of the public body or his delegate, should always present
resolutions and proposals of the Committee to the head of the public body.
The members of the committee may not exceed five. Attendance by four members in
the absence of the permanent Chairman will constitute a quorum. If the permanent
Chairman is present, the presence of three members (including the Chairman) will
constitute a quorum. Each member including the Secretary and delegated staff will
have one vote resolutions will be passed by simple majority. In case of a tie, the
presiding Chairman will have a deciding vote.
The Secretary will be the head of the FAMU and will assist the Chairman in calling
meetings and be responsible for the receipt of reports, preparing minutes and
maintaining all of the Committees records. Committee meetings will generally be
held at the Head Office but may also be held at branch offices when necessary.
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MoFED DECEMBER 2007
134
The Committees primary duty is to assist top management in the review, evaluation
and verification of reports, recommendations or requests submitted by FAMU on the
disposal of fixed assets with a view to:
1. Ascertaining that existing internal policies and other governmental regulations

concerning the disposal of property are strictly adhered to
2. Relating and overseeing the contemplated disposal action with the financial
position and overall plans of the institutions programmed activities, so that
isolated actions will not impede progress and achievements of long term
objectives
3. Determining and advising whether retention or disposal will serve the best
interests of the institution.
Disposal actions for fixed assets whose total estimated market value or reserve
price is equal to or less than Birr 1 million, are approved by the head of the public
body.
The head of the public body should obtain the go ahead of the GPAD for disposal
actions for fixed assets whose total reserve price is greater than Birr 1 million.
Estimating the Market Value of Property for Disposal
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MoFED DECEMBER 2007
135
FAMU and the valuation committee should estimate the current marketable value of
every item of public property identified for disposal.
Where it feels it necessary, the committee can approach other specialized public
bodies and enterprises for advice on the marketable value.
The estimation of current marketable value should take into consideration:

The current market value of similar items
The current condition of the items for sale
The age of the items for sale.
The historical statistical data on price offers received from bidders for property
not sold at a previous auction or tender process
The methods descried in chapter 5 shall be used as appropriate to assign reserve
price to the assets.
Book Value should not be taken as market value or reserve price.
The estimation of current marketable value should be used to decide whether or not it
is justified to auction the items and to calculate the reserve price at auction.
___________________________________________________________________________
MoFED DECEMBER 2007
136
11.5.
Receipts from Disposal
When public bodies sell public property they will receive a cash receipt. The
institution should account for the cash received and keep as a receipt, not as a
reduction in expenditures. This means that any cash received from disposals and
kept by the institution form part of the institution'
s budgetary allocation not an addition
to it. This cash can therefore be spent only upon any activities approved in the
budgetary estimates.
The public body can deduct expenditures incurred to dispose the assets such as
advertisement cost, transportation to the palace of disposal, perdiem and transport
paid to committee members to attend auctions and bid opening ceremonies, from the
cash collected from sales of the asset. This means only the net amount shall be
transferred to MoFED.
In the case of disposal of vehicles, however, 50% of the net profit from disposal can
be used to replace disposed vehicles. Approval to use for this purpose should be
requested from GPAD.
11.6.
Accounting for disposal
When the assets to be disposed are returned to store, they are taken out from the
fixed assets management process. The FAR are kept separately until the assets are
disposed of and are delivered to the buyer. After the assets are disposed, report of
___________________________________________________________________________
MoFED DECEMBER 2007
137
disposed assets shall be prepared by the disposal committee. Based on this report,
the FAR of assets disposed of shall be kept in a separate file. This action will ensure
that assets disposed of will not be included in the report of assets in use. As the
annual summary is done after physical count is conducted and disposed assets will
not be obtained during count, the cost and accumulated depreciation of the disposed
assets will automatically be removed from the accounting records.
If a report of disposed assets is required for various reasons, it can be prepared from
disposed assets file.
The collection from sales of assets is accounted for as other income. Cash or bank
as appropriate will be debited and other income shall be credited. If there are
expenditures paid for disposal, that expenditure account will also be credited to
reduce it to zero.
Example: A vehicle with a reserve price of Birr 20,000 was sold for Birr 30,000
through auction. Birr 2,000 was paid for advertisement. The collection from
sales was made in cash. The accounting entry shall be:
Debit
Cash
Advertisement expense
Other income
Credit
30,000
2,000
28,000
___________________________________________________________________________
MoFED DECEMBER 2007
138
REPORTING
he whole effort of fixed asset valuation, incorporating the values in the

FAR, calculating depreciation, opening ledger accounts in the financial
system is to incorporate the final balances in the financial statements of
the PBs. The Council of Ministers Financial Regulations No 17/1997, Article

61(7) provides that cost of fixed assets shall be included in the Public
Accounts in accordance with directives of the Minister of Finance. This section
explains how this can be achieved. In addition to the finance related reports, other
reports need also be prepared and disseminated by FAMU. The number and type of
reports that are prepared by FAMU is to be determined by the demand for the reports
by the management of the PB, GPAD and other concerned bodies. The most
common once are explained in this section.
12.1. Reports Prepared to Incorporate the Value of Fixed Asset in the

Accounting Records.
The monthly report in the modified cash basis accounting system of the FGE is the
Trial Balance, including the supporting schedules or reports. The balance of fixed
assets and the corresponding fund balance should appear only in the Trial Balance
for the month of Sene so that MoFED can incorporate the balance of fixed assets of
each and every public body in its consolidated report. In the month of Hamle of the
following year, the public bodies shall reverse the entry that was passed in the month
___________________________________________________________________________
MoFED DECEMBER 2007
139
of Sene. This will make the ledger balance of fixed assets nil. Again at the end of the
following year, physical count of asset is taken, ASS is prepared by FAMU and a new
balance shall be sent to the finance section of the public body that will incorporate it
in the Trial Balance for Sene.
The format of the Trial balance (ME/HE 27) remains the same except that four lines
will be added as follows (the amended version of the Trial Balance is given in Annex
XIII):
Account
code
-
Account description
Net Book Value of Fixed assets (Total of fixed assets
report Part one)
Fixed assets under construction (Total of fixed assets
report Part three)
Fixed assets fund (Total of fixed assets report Part two)
Fixed assets under construction fund (Total of fixed assets
report Part three)
Debit
XXX
Credit
XXX
XXX
XXX
The figures that go into the debits and the credits of the above lines are the Total of
the Fixed Assets Report. These reports are developed for this purpose. The complete
forms of the fixed asset reports are provided in annex XIV, XV and XVI. The
explanation on the report is given hereunder.
Part one of the report is prepared to summarize the ledger balances of cost of fixed
assets and the accumulated deprecation. In the debit side the balances of the fixed
assets cost ledgers are filled. In the credit side, the balances of the accumulated
___________________________________________________________________________
MoFED DECEMBER 2007
140
depreciation ledgers are filled. The total of the debit side and the total of the credit
sides are written on the respective side on the Total raw. The difference between
the two columns (the debit and the credit sides) is written on the debit side of the
report on the Net amount (total to Trial Balance raw. This net amount is the net
book value of the assets as at a certain date.
PART ONE
Account
code
4521
4522
4523
4524
4525
4526
4527
4528
4529
4530
4531
4521-1
4522-1
4523-1
4524-1
4525-1
4526-1
4527-1
4528-1
4529-1
4530-1
4531-1
Account description
Plant and machinery
Military equipment
Infrastructure
Office equipments
Plant and machinery
Military equipment
Infrastructure
Office equipments
Column total
Net amount (to Trial Balance)
Debit
Credit
__________________-
__________-
___________________________________________________________________________
MoFED DECEMBER 2007
141
Part two of the report is prepared to summarize the ledger balances of fixed assets
fund and the fixed assets fund contra account. In the debit side the balances of the
fixed assets fund ledgers are filled. In the credit side, the balances of the fixed assets
contra ledgers are filled. The total of the debit side and the total of the credit sides
are written on the respective side on the Total raw. The difference between the two
columns (the debit and the credit sides) is written on the credit side of the report on
the Net amount (total to Trial Balance raw. This net amount is the net fund balance
of the assets as at a certain date.
PART TWO
Account
code
5721
5722
5723
5724
5725
5726
5727
5728
5729
5730
5731
5721-1
5722-1
5723-1
5724-1
5725-1
5726-1
5727-1
5728-1
5729-1
5730-1
5731-1
Account description
Plant and machinery
Military equipment
Infrastructure
Office equipments
Plant and machinery
Military equipment
Infrastructure
Office equipments
Column total
Debit
Credit
______-
___________-
___________________________________________________________________________
MoFED DECEMBER 2007
142
Part three of the report is prepared to summarize the ledger balances of fixed
assets under construction and the fixed assets under construction fund account. In
the debit side the balances of the fixed assets under construction ledgers are filled. In
the credit side, the balances of the fixed assets under construction fund balances
ledgers are filled. The total of the debit side and the total of the credit sides are
written on the respective side on the Total raw. The two sides should always be
equal. The total of each side is taken to the Trial Balance.
PART THREE
Account
code
4501
4502
4503
4504
5801
5802
5803
5804
Account description
Column total
Debit
______To Trial
Balance
Credit
_____To Trial
Balance
The basic rule to prepare the fixed asset report is that fixed asset and fixed
assets under construction balances are reported to MoFED once in a year. The
report is therefore prepared only for the month of Sene of every year. Fixed
asset figures are not incorporated in the Trial Balances for the months of
Hamle of one year to Ginbot of the next year.
___________________________________________________________________________
MoFED DECEMBER 2007
143
12.2. Other reports prepared by FAMU

FAMU shall prepare different reports on demand during the year. It can prepare
report on:
1. Lost and damaged assets and action to be taken;
2. Disposed assets, indicating the value at which the assets were sold for or
the way they were disposed of;
3. Assets that need maintenance, the budget required for the maintenance,
the planned time for the maintenance;
4. And other such reports.
As these reports are prepared on demand and as the types of assets owned by each
PB is different, FAMU can prepare these and other reports in response to the specific
request it received.
___________________________________________________________________________
MoFED DECEMBER 2007
144
OTHER ISSUES
13.1.
Ownership of assets
ne of the difficulties that may be faced in the process of counting,

valuing and recording fixed asset is ascertaining ownership. It will not
always be practical for institutions to ascertain the ownership status of
their fixed assets. Where the status of the ownership of an asset is unclear, the PB
should act according to the recommendations outlined below:
The level of the problem associated with ownership could be different based on the
kind of asset:
1. Ownership of building should be ascertained beyond reasonable doubt even if
ownership certificates could not be obtained.
a. A PB might have occupied a building that it has not constructed,
purchased or rented. If the PB has reliable and justifiable information
that the owner could not come back to claim ownership of the building
in the foreseeable future, it can include the cost of the building in the
FAR. The cost at which the building can be recorded is calculated
based on the guidelines given in previous sections.
___________________________________________________________________________
MoFED DECEMBER 2007
145
b. The PB might not have reliable information about the status of the
ownership of the asset. It should write a letter to GPAD stating how it
occupied the building, the reason why it has problem to record the
asset as its own and the decision that should be made by the GPAD.
The GPAD shall look into the case and, if there are similar cases
forwarded by other PBs, summarizes similar cases and seek
guidelines from higher authorities. The GPAD should inform the PB
that it has received the request and that it will give reply to the request.
The GPAD can also suggest any other action.
c. The PB might be certain that the building that it occupied belongs to
another person and that the person is entitled to claim the ownership
back. In this case the PB should not register the building as its own
asset.
d. Lack of ownership certificate alone should not be a reason not to
record a building as an asset.
2. Ownership of Vehicle, equipment, machinery that exist in the premises of the
PB and that have been used for a number of years in the past is not that
controversial. Although the legal owner could be any person other than the
PB, the likelihood that such asses will be returned to the owner in any case is
so small that the PB can confidently consider it as its own asset. The
following are some of the scenarios:
___________________________________________________________________________
MoFED DECEMBER 2007
146
a. Assets abandoned by other persons/organizations long ago where

those person/organizations do not exist. If this is known, the PB should
record the asset as its own asset;
b. Assets purchased by projects that were carried out under the
supervision of the PB or another PB where it is clear that the project
has phased out and there are no claimants of the asset, the PB should
record the asset as its own asset;
c. Assets owned by projects which are still active but because of the
agreement signed with either the PB or the Government the ownership
of the assets shall be passed to the PB at the end of the project, these
are owned by the PB and should be recoded as such. In the FAR, the
project name should be clearly written.
d. According to the Ethiopian civil code the Government owns any asset
that has no owner. If the PB is not able to confidently record fixed
assets in its books, it has to summarize those assets and request
guidance on how to record them from the GPAD.
There could be other issues related to ownership of certain assets. The reference
point should be GPAD. GPAD should collect those queries from the PBs, summarize
the issues and present to the concerned body to seek solutions. Such issues should
___________________________________________________________________________
MoFED DECEMBER 2007
147
not be left open as they materially contribute the effectiveness of the management of
Government owned assets.
13.2.
Insurance
The Council of Ministers Finance Regulations No 17/1997, Article No 62

provides that the Heads and employees of public bodies are responsible for
the protection and preservation of public property. In the previous sections, how
fixed assets can be recorded and controlled is explained. One of the protection
methods for fixed assets is purchasing appropriate insurance policy against
unforeseen calamities.
The Heads of PBs and the FAMU should assess for which of the assets the PB
should buy insurance cover and timely buy the insurance cover. Once purchased, the
policy should be renewed every year in advance of its expiry date.
13.3.
Computerization of the fixed assets management
The procedures and formats provided in this GOFAMM are for managing fixed assets
manually. In the future, however, the management system might evolve to
computerized system. This manual could serve as a basis for computerization of the
system.
___________________________________________________________________________
MoFED DECEMBER 2007
148
Using fixed asset management software enables quick and accurate inventory of
fixed assets. It is possible to keep track of the current location of the assets and
whom they are currently assigned to. PIN codes can be replaced by barcodes.
Software enables scanning and printing barcodes; maintain supplier information,
asset disposals, employee data, and maintenance records. Fixed asset management
software eliminates the headaches of calculating asset depreciation by automatically
generating both monthly and annual depreciation tables using the straight-line,
double-declining balance, or sum of years digits depreciation methods. Using the
software it is possible to manage large number of locations and assets.
Software can be acquired in one of the two usual ways - In-house developed
software or off-the-shelve software. The decision to go for one of the software or
even the decision to computerize itself needs proper consideration of various factors
including, cost, availability of manpower, training to users, and availability of support
where there are difficulties in using the software, etc. Such a decision might be costly
if each PB wants to make it in its own. It is therefore highly recommended that the
decision to computerize and the decision to develop or to buy fixed asset
management software be made by the GPAD or in consultation with GPAD.
----/// The End///---
___________________________________________________________________________
MoFED DECEMBER 2007
149
Annex I Fixed Assets Count Sheet (FACS)

(FACS)
FIXED ASSETS COUNT SHEET (FACS)
Public Body _________________________________
For the fiscal year
ended____________________________
!
"
#
Date of Count ______________________________
9;# 1
Premises________________________________
%0 <=*
FAIR
/
@#
PIN
Serial/Part
No
No
#
Date
+,
Section
Name
Supplies
FG -$
Fixed Assets
Description
Damaged
<.
Poor
DE
No
>?% '#'# *
.
Department___________________________
% &' (X)
(
! $
Custodian
Condition (X)
Category
Fair
<.
Good
- A 8 =B
C
!)
No ________
______
./
Owned by
Remark
0 !1
___________________________________________________________________________
MoFED DECEMBER 2007
150
! 223
Supervisor
23 :
Counted by:
Name
8
45
6 78
FAMU Head
Signature
2
3
1 0H
FG >?
I&%
# JJ CK +,
E 1 L M = 1
*
F
+=
=%HH
N 4
% >?%
> " EO
2
P * > " EQ
C HH
Note: Supplies under category refers to supplies with a cost less than Birr 200 but has a useful life of one year or more.
Owned by indicates to whom the asset belongs or the source of fund used to buy the asset.
___________________________________________________________________________
MoFED DECEMBER 2007
151
Annex II Fixed Assets With Users Control Card/ User Card (UC)

_ 2
PUBLIC BODY _____________________________
D? R K >S F
EO
EO
TK
U6 D
/#* (UC)
FIXED ASSETS WITH USERS CONTROL CARD (UC)
D?
@- #
User
No____________________
Name: _____________________________
9;# 1
. +, :
Premises: __________________________
Department:________________________
Room No:
9 :
:
Building No:_________________________
V
;;;;;;;;;;
!)
No
>?% '#'#
Description
W
PIN
/
@- #
Serial/Part
No
FAIR
%0 <=*
@- #
Number
5
Date
/< 1
Unit of
measure
Q
Quantity
D9FF = >
Total Cost
! $
?
8
Signature of
user
___________________________________________________________________________
MoFED DECEMBER 2007
Remark
0 !1
152
C X7Note:
D? R K
Y%
TK
1N
' D 9NYI HH
User of fixed assets should properly use the fixed asset under their custody.
<D
2 < FZ ! %=
[#
* 1
P & HH
In case of damage or loss of asset, the user should immediately inform the FAMU.
P5\ ]
4
F D?
F
P;^
=%HH
It is prohibited to transfer fixed assets to other users before the transfer is authorized by the FAMU
_ 9; 8
93 M&ST
\ D? % &# 4
F%
>S 5 6 HH
This form shall be prepared in two copies. One copy shall be retained by the user and the other by FAMU.
___________________________________________________________________________
MoFED DECEMBER 2007
153
Annex III Fixed Assets Register Card (FAR)

_ 2H
PUBLIC BODY__________________________________
@ A 1 B ( (FAR)
FIXED ASSETS REGISTER CARD (FAR)
C /D :
Description of the asset:________________________
* :
E 3 `<
:
Serial/ Chassis No: ______________________
PIN: __________________________
' >
F !
Engine No:_________________________
Plate No
9.
G
HI
J
K:
Supplier Name:______________________
Accounts Ref:______________________
G
#
RFAR:______________________________
Date:_____________________________
%0
:
#
FAIR No:___________________________
Date:_____________________________
E 1 L M H
! L"
# G
Year
of Service:____________________
Date of Purchase:____________________
a
Eb
M' :
- N
O
T :
Location: ___________________________
Depreciation Rate: _________________
1 0
Description
I& Cost
- N
O
!P 7/
c
Year of
Depreciation
- N
O
Depreciation
- N
O
Accumulated
Depreciation
5 I&
Book
Value
1 0H
I&%
% .
>
a
>#S 9 Z <F%
<.
% 2* #
P 2
NY%HH
Note: The person who fill the cost in this form and who calculated the annual
depreciation should sign in the remark column.
___________________________________________________________________________
MoFED DECEMBER 2007
Remark
154
Annex IV Fixed Assets Under Construction Summary Table (FAUCST)

P
" C . ' 7Q 1/
$ /1 P
R
FIXED ASSETS UNDER CONSTRUCTION SUMMARY TABLE
2:
Public Body: ________________________________________________
C /D
Description
No
(
Category
of Asset
Eb
M'
Location
./
Owner
.d
Contractor
C .'
!S
"
#
Date construction
started
C .' ?
1
"
#
Expected
date of
completion
D9FF
=>
S
Contract
value/budgeted
total value
1/ # ?
1 NC
" TU
Percentage
completed
Total /(
1 > S ? Y FAMU <.
Prepared by (FAMU):
Z [ # ? Y FAMU fF]e
Approved by (Head of FAMU):
Name
6 78 \
Position
Signature
#
Date
___________________________________________________________________________
MoFED DECEMBER 2007
Cost
incurre
d to
date
- VLW
J2?
JX
155
Annex V Receipt for Fixed Assets Received (RFAR)

E M
>
g,
= h#

E " =B
I
This
.
@- #
No.
>?
&M @- #
Stores No:________________________.
"#"
@- #
Shelf No.H_______________________________
M_ CK '#'#
received the following
5
day 20
a
<D
"
Category
of asset
'#'#
Description of Asset
ci2 i
from
Q
/
@- #
Quantity
serial
No
5
\ I&
Unit Price
#
Birr
8 HH
j
C.
I& *2 #
Total price
#
j
Birr
C
.
*2 #
Total
M& %
Prepared by:
Deliverer (Donor)
7DistributionH
$ %
( %
Deliverer (Recipient)
Original to Deliverer
nd
2 Finance
!"#
3rd Copy to FAMU
&'
4th Store
th
) * +, - .' 5 Pad
___________________________________________________________________________
MoFED DECEMBER 2007
156
Annex VI Receipt for Fixed Assets Requested & Issued (FAIRR)
E M >
g,
= h#
D G
k " ?
&M @- #
"#"
@- #
Shelf No: __________________________
>=B
c2 5- L '#'#
lm
n?R K
E 1 L U- o
4 ]# p
&16 8 HH
I ___________________________________here by certify that I have counted correctly and received the fixed assets
enumerated below for the use of ----------------------@
'#'#
/
Q
\ I&
I&
*2 #
No.
@- # Serial Unit of
Quantity
Unit Price
Total price
No
Measure
D 5%
P5"%
#
j
#
j
Requested
Approved
Birr
C Birr
C
*2 #
Total
D G% ]#
Requested by:
M& % <%
Prepared by
12 3 4
a fF] ]#
store keepers signature
7DistributionH
5Nq ]#
Recipients signature
nd
!"#
2 Copy to FAMU
#
%0
3rd Copy Gate Pass
&'
4th Store
th
) * +, - .' 5 Pad
/
$ %
( %
___________________________________________________________________________
MoFED DECEMBER 2007
157
Annex VII Property Identity Number (PIN) Register

(PIN) @- #
'E
9;
PROPERTY IDENTIFICATION NUMBER (PIN) REGISTRATION FORM
2:
PUBLIC BODY _________________________________________
a
<D%
"
fj
"
Category of Asset:____________________________
Account Code: ________________________________
a r
"
Sub
category of
asset
a
Eb
sC
Location
I
Department
@- #
PIN
a r
"
Sub
category of
asset
a
Eb
sC
Location
I
Department
a
<D%
@- #
Item No
a r
"
Sub
category of
asset
a
Eb
sC
Location
I
Department
___________________________________________________________________________
MoFED DECEMBER 2007
Item No
a
<D%
@- #
158
Annex VIII Fixed Assets Transfer Form (FATF)

2:
PUBLIC BODY :______________________________________
F ] 9;
FIXED ASSETS TRANSFER FORM (FATF)
a
F P% D? H
Asset transferred from:
a
F P
D?
Asset transferred to:
2
Name: __________________________________
9;# 1
Premises: _______________________________
I
Department:______________________________
_ l @- #
Building No:_______________________________
V @- #
Room No: _________________
D?
@- #
User No:_______________________
@- #
No
>?% '#'#
Description
2
Name: __________________________________
9;# 1
Premises: _______________________________
I
Department:______________________________
_ l @- #
Building No:_______________________________
V @- #
Room No: _________________
D?
@- #
User No:_______________________
@- #
PIN
/
@- #
Serial No
%0 <=*
FAIR
@- #
5
Number
Date
Unit
of measure
I&
Cost
___________________________________________________________________________
MoFED DECEMBER 2007
Remark
159
F P
2
7Reason for transfer of the asset____________________________________________________
_____________________________________________________________________________________________
FF]% ]#
of transferor
Signature
5Nq ]#
of recipient
Signature
CQ Observer
_ 9; :
gW M&STH
%
!"#
H
%
5N > ! 82
%
st
nd
rd
This form is prepared in three copies: the 1 copy to FAMU, 2 copy to the recipient and 3 copy to transferor
fF]
Head of FAMU
FF]%
F P
of Transfer
<6 HH
___________________________________________________________________________
MoFED DECEMBER 2007
5 Date
160
Annex IX Receipt for Articles or Property Returned (RAPR)
E M >
g,
= h#
n?
2
E " <b
RECEIPT FOR ARTICLES OF PROPERTY RETURNED
No________________
Building No
_ l @- #_______________________
Room No
.
Department: ______________________________
D?
@- #
User No ________________
5
Date ______________________________
M_ CK '#'#
TK
I have returned the assets indicated hereunder.
.
'#'#
@
@- #
Detailed Description
PIN
No.
Date_______________
1
Premises__________________________________
2
Name: _______________________________
________________
" &'
/
@- #
Serial No
*#EB 8HH
Q
Quantity
EQ
cost
#
Birr
I&
j
C
D.5
>#S 9 Z
Accumulated
Depreciation
#
j
Birr
C.
'E I&
Book Value
#
Birr
a
<
j
C.
2
Remark for
return of asset
___________________________________________________________________________
MoFED DECEMBER 2007
161
*2 #
Total
Deliverer
Recipient
/Distribution:
$ %
!"#
Original to FAMU
12 3 4 2nd copy to Store
3rd Copy to Deliverer
) * +, - .' &# 5 6 - 4th Copy Pad
___________________________________________________________________________
MoFED DECEMBER 2007
162
Annex X Used Assets Reissue Receipt (UARR)
E M >
g,
= h#
E E
%0 " ?
&M @- #
"#"
@- #
Shelf No: __________________________
>=B
5
c2 5- L '#'#
lm
E E
n?R K
E 1 L U- o
4 ]# p
&16 8 HH
I ___________________________________here by certify that I have counted correctly and received the used fixed
assets enumerated below for the use of ----------------------'#'#
^t
/ @- #
. @
Q
\ I&
I& *2 #
No.
Model
Serial No
Total price
Quantity
Unit Price
#
Birr
j
C
#
Birr
*2 #
Total
12 3 4
a ]#
store keepers signature
5Nq ]#
Recipients signature
j<
H E E
: k
" E
EM 4
^ F% I&
a
@Z < +
= %
'E I& =%HH
Note: The Book Value of an asset at the time it was returned to store is used when a used asset is reissued.
7DistributionH
nd
!"#
2 Copy to FAMU
#
%0
3rd Copy Gate Pass
&'
4th Store
th
) * +, - .' 5 Pad
/
$ %
( %
___________________________________________________________________________
MoFED DECEMBER 2007
j
C
163
Annex XI Gate Pass for Fixed Assets (GP)

E M >
g,
= h#
#
%0 P?*
Gate Pass for Fixed Assets

2:
Public Body: _________________________________
No
'#'#
No______
PIN
>?% > ! 6
Issue of Fixed Asset
@- #
>?%
6
2
Reason for issuance of the asset
-E
For repaid
D 5%
Requested by;
. E!
For duty
P5"% 9#
?
Approving supervisor
1
Personal property
u"5%
fF]
Authorized by Head of FAMU
7Distribution:
8
:
%
Borrowed
%
# %0 71st Copy Gate Pass
% 93
72nd copy FAMU
% 93 5 73rd Copy - Pad
___________________________________________________________________________
MoFED DECEMBER 2007
Date____
2# .
Remark
164
Annex XII Journal Voucher
/ 2)
ME/HE
No
Date
FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

!" #$
" %&'( MINISTRY OF
FINANCE & ECONOMIC DEVELOPMENT
)* + , - $ .
JOURNAL VOUCHER
/ 01
/ 234 &+
Name of Public Body:_______________________________________________
+
Purpose
35 + 6
Budget Category
)*
/7
Account Code
95: 1 + ; $
Prepared by Name and Signature
: = )*
>#? @A 'B: C
A: &
Original - to Accounts; Second Copy in Pad
3
Debit
8
Credit
<7 : 1 + ; $
Approved by Name and Signature
D / E#
___________________________________________________________________________
MoFED DECEMBER 2007
165
Annex XIII Trial Balance (Modified)

7f
ME/HE
27
fj
QM
Trial Balance
1
74
a 2
Name of Public Body______________________________
v V1.
2
Name of Program ________________________________
w .
2
Name of Sub Agency _____________________________
r v V1.
2
Name of Sub Program____________________________
vV a 2
Name of Project_________________________________
2 d
Source of Finance ______________________________
N
fj @- #
Bank Account Number___________________________
fj
"
Account
code
fj
1 0
Account Description
#
Month ____________
Code _____________
Code ______________
Code ______________
Code ______________
Code ______________
Code ______________
t
Debit
o!
Credit
E# % - E H n#!CH *# fj
[#
Revenue/Assistance/Loan From
Revenue/Assistance/Loan Report)
k RK
Expenditures
"
k 7 "
k
[ #TK *2 #7
Recurrent expenditures (Total of Recurrent
expenditures Reports)
/WC
k 7 /WC
k
[ #TK *2 #7
Capital expenditures (Total of Capital Expenditures
Report)
6.
I& x
TK [ #
* *2 #e
Net Book Value of Fixed assets (Total of fixed
assets report Part one)
1 NC F
x 1 NC F
[#
:
*2 #e
Fixed assets under construction (Total of fixed assets
report Part three)
___________________________________________________________________________
MoFED DECEMBER 2007
166
'% VK x E M '%%# fj
[ #TK *2 #e
Transfers: (from Transfer Report)
< j fjsK7 < j fjsK [ #TK *2 #7
Receivables: (from Receivables Report)
fjsK7
fjsK [ #TK *2 #7
Payables: (from payables Report)
4# y
o! TK7 fj
"
D?F
'E 7
Letter of Credit:(by account code-from General
Ledger)
5601
4101
4102
4103
6 . f 7 D?F
4 #7
Net Assets/Equity (from General Ledger)
6.
P * x
TK [ #
* *2 #e
Fixed assets fund (Total of fixed assets report Part
two)
1 NC F
P * x 1 NC F
[#
:
*2 #e
Fixed assets under construction fund (Total of fixed
assets report Part three)
-o E M >
-o E M >
I& FY%7 fj
"
D?F
4 #7
Cash & Cash Equivalents (by account code-from
General Ledger)
jE M
Cash on hand
N
%d 2 Q E M
Cash at bank in foreign currency
N
E M
Cash at bank
*2 #
Total
___________________________________________________________________________
MoFED DECEMBER 2007
167
Annex XIV Fixed Assets Report Part One

7f
ME/HE
TK [ #
*
Fixed Assets Report Part one
1
74
a 2
Name of Public Body___________________________________
v V1.
2
Name of Program ______________________________________
w .
2
Name of Sub Agency ___________________________________
r v V1.
2
Name of Sub Program___________________________________
vV a 2
Name of Project________________________________________
2 d
Source of Finance ______________________________________
N
fj @- #
Bank Account Number___________________________________
fj
"
Account code
4521
4522
4523
4524
4525
4526
4527
4528
4529
4530
fj
1 0
Account Description
z #/ R K >
4 LK z #/
{{| R K
%Vv F H NH M
v F H Z= >
j
Plant and machinery
C".}
j RK
Military equipment
~ lR K
,
~ lR K
,
+=
<
Infrastructure
C".} E 1 L
% ~ lR K
4
V >?R K
4 % - E6 6 R K
@2
>
. [#
% > j
#
Month ___________
Code ______________
Code ______________
Code ______________
Code ______________
Code ______________
Code ______________
t
Debit
o!
Credit
___________________________________________________________________________
MoFED DECEMBER 2007
168
4531
4521-1
4522-1
4523-1
4524-1
4525-1
4526-1
4527-1
4528-1
4529-1
4530-1
4531-1
V
E E >?R K
Office equipments
>#S 9 Z
z #/ R K >
4 LK
z #/
{{| R K
Accumulated depreciation - Vehicle and other
vehicular transport
>#S 9 Z %Vv F H NH M
Accumulated depreciation - Aircraft, boats, etc.
>#S 9 Z v F H Z= >
j
Accumulated depreciation - Plant and machinery
>#S 9 Z
C".}
j RK
Accumulated depreciation - Military equipment
>#S 9 Z ~ lR K
,
Accumulated depreciation - Buildings residential
>#S 9 Z ~ lR K
,
+=
Accumulated depreciation - Buildings non
residential
>#S 9 Z
<
Accumulated depreciation - Infrastructure
>#S
9 Z
C".}
E 1 L
%
~ lR K
Accumulated depreciation - Military purpose
buildings
>#S
9 Z
V
E E
>?R K 4
V
>?R K
4 % - E6 6 R K
Accumulated depreciation - Furnishings and fixtures
>#S 9 Z
V
E E >?R K @2
>
. [#
% > j
Accumulated depreciation - Livestock and transport
animals
>#S 9 Z
V
E E >?R K
Accumulated depreciation - Office equipments
g = *2 #
Column total
" fj
QM
______-
_____-
______-
_____-
______-
___________________________________________________________________________
MoFED DECEMBER 2007
169
Annex XV Fixed Assets Report Part Two

7f
ME/HE
TK [ #
8
Fixed Assets Report Part Two
1
74
a 2
Name of Public Body___________________________
v V1.
2
Name of Program __________________________
w .
2
Name of Sub Agency ___________________________
r v V1.
2
Name of Sub Program___________________________
vV a 2
Name of Project________________________________
2 d
Source of Finance ____________________________
N
fj @- #
Bank Account Number________________________
fj
"
Account code
5721
5722
5723
5724
5725
5726
5727
5728
5729
5730
#
Month ___________
Code __________
Code __________
Code _________
Code _________
Code _________
Code ________
fj
1 0
Account Description
z #/ R K >
4 LK z #/
{{| R KP *
%Vv F H NH M P *
v F H Z= >
j
P *
C".}
j RK P *
~ lR K
,
P *
~ lR K
,
+= P *
?R K
4 % - E6 6 R K P *
@2
>
. [#
% > j P *
t
Debit
___________________________________________________________________________
MoFED DECEMBER 2007
o!
Credit
170
5731
5721-1
5722-1
5723-1
5724-1
5725-1
5726-1
5727-1
5728-1
5729-1
5730-1
5731-1
V
E E >?R K P *
Office equipments fund
z #/ R K >
4 LK
z #/
{{| R K
P * 9 Z
Vehicle and other vehicular transport fund contra
%Vv F H NH M P * 9 Z
Aircraft, boats, etc. fund contra
v F H Z= >
j
P * 9 Z
Plant and machinery fund contra
C".}
j RK P * 9 Z
Military equipment fund contra
~ lR K
,
P * 9 Z
Buildings residential fund contra
~ lR K
,
+= P * 9 Z
Buildings non residential fund contra
?R K
4 % E6 6 R K P *
9 Z
Furnishings and fixtures fund contra
@2
>
. [#
%
> j P *
9 Z
Livestock and transport animals fund contra
V
E E >?R K P * 9 Z
Office equipments fund contra
g = *2 #
Column total
" fj
QM
______-
___________________________________________________________________________
MoFED DECEMBER 2007
___________
-
171
Annex XVI Fixed Assets Report Part Three
7f
ME/HE
1 NC F
TK [ #
Fixed Assets Report Part Three
1
74
a 2
Name of Public Body______________________________
v V1.
2
Name of Program ________________________________
w .
2
Name of Sub Agency _____________________________
r v V1.
2
Name of Sub Program____________________________
vV a 2
Name of Project_________________________________
2 d
Source of Finance ________________________________
N
fj @- #
Bank Account Number_____________________________
fj
"
Account code
4501
4502
4503
4504
5801
5802
5803
5804
:
#
Month ___
Code _________
Code _________
Code _________
Code _________
Code _________
Code _________
fj
1 0
t
o!
Account Description
Debit
Credit
~ l 1 NC
,
~ l 1 NC
,
+=
<
1 NC
C".} E 1 L 1 NCR K
~ l 1 NC
,
~ l 1 NC
,
+=
<
1 NC
C".} E 1 L 1 NCR K
g = *2 #
Column total
___________"fj
"fj
QM
QM
To Trial
To Trial
Balance
Balance
___________________________________________________________________________
MoFED DECEMBER 2007

Government Owned Fixed Asset Management Manual

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1

Ministry of Finance & Economic Development (MoFED)

MoFED DECEMBER 2007

1. THE DEFINITION OF FIXED ASSETS

2. STRUCTURE FOR THE MANAGEMENT OF GOVERNMENT

3. THE ICC AND REGISTER MAINTENANCE PROCESS .

4. ASSIGNING PIN AND MARKING OF FIXED ASSETS IN

5. VALUATION OF ASSETS WITH OUT COST ..

6. CHANGES IN THE REGISTER ..

7. ACCOUNTING TREATMENT OF COST OF ASSETS

2.1. The Government Fixed Assets Management Cycle ..

4.1. Property identification Number (PIN) .

5.1. Fixed assets in use ..

7.1. Fixed Assets ..

8. INCORPORATING THE INITIAL VALUE OF EXISTING

MoFED DECEMBER 2007

DISPOSAL OF FIXED ASSETS ..

Why government owned fixed assets should be disposed? .

13. OTHER ISSUES ..

Annex I Fixed Assets Count Sheet (FACS)

MoFED DECEMBER 2007

Annual Summary Schedule

Central Accounts Department

Fixed Assets Count Sheet

Fixed Assets Management Unit of PBs

Fixed Assets Registration Card

Fixed Assets Under Construction Summary Table

Fixed Assets Transferring Form

Federal Government of Ethiopia

Government Owned Fixed Assets Management Manual

Government Property Administration Department

Initial Comprehensive count

Ministry of Finance & Economic Development

Property Identification Number

Receipt for Articles or Property Returned

Fixed Assets With Users Control Card/ User Card

MoFED DECEMBER 2007

roclamation No 57/1996, Federal Government of Ethiopia Financial

allocated budget. This manual is developed to provide uniform and advanced

MoFED DECEMBER 2007

MoFED DECEMBER 2007

MoFED DECEMBER 2007

THE DEFINITION OF FIXED ASSETS

he Council of Ministers Financial Regulations No 17/1997 provides two

MoFED DECEMBER 2007

MoFED DECEMBER 2007

Property & Equipment (Account Code 4520-4599)

Motor vehicles, motorcycles, bicycles, and trailers

Aircraft, boats, etc.

Aircraft and boats for non-military purposes.

Plant and machinery

Equipment for office and workshops including

generators, heavy construction equipment, survey

Military aircraft and boats; small arms, artillery, tanks,

Purchase or construction of houses in the country or

Buildings non residential

Purchase or construction in the country or abroad of

MoFED DECEMBER 2007

All public structures that are not buildings including

Military purpose buildings

Residential buildings, non-residential buildings and

Furnishings and fixtures

Exterior and interior lighting fixtures of buildings,

transport animals for government purpose.