Sunteți pe pagina 1din 217

DBE ACCOUNTING PRACTICE AND ITS

FINANCIAL REPORT PREPARATION


TRAINING
Facilitator Ayele Shirega

September, 2016

Currently, DBE has aggressively expanded its


branches to provide lease financing.
Accordingly, the bank has restructured its
human resources to effectively implement the
lease financing task.
Therefore, all operators and supervisors are
advised not only to familiarize themselves but
also to comply with the reporting requirements
and adhere to the requirements and conditions
set by the Bank.

The purpose of this training is:

To discuss on the elements of Financial Reports and financial


source documents.
To create awareness what major tasks are expected.
To create awareness on DBE accounting practice and tasks
that need due attention by Branches.
To have clear understanding on preparations of basic
financial statements with relevant schedules and supporting
source documents.
At the end of this training, all the participants are expected
to clearly understand all the financial source documents,
contents of basic financial reports, practices and major
expected financial activities and able to prepare basic
financial reports with its schedules accordingly.

Brief explanation of the Branch Code :


1. Newly opened Branch Code

The newly opened branch codes ranges from 001


to 249.
These codes are used as prefix in coding general
ledger and subsidiary ledger accounts as per the
guidelines of the Revised Accounting manual
2004.

1.
2.
3.
4.

Status Code Two digits ranging from 00 to 99


H.O/District Two digits ranging from 01 to 99
Branch
Three digits ranging from 001 to 999
Control Account Three digits ranging from 001
to 999
5. Subsidiary Account Five digits ranging from
00001 to 99999
Therefore, the general ledger account number structure
looks as follow:XX-XX-XXX-XXX-XXXXX

WHERE
The first XX denote status of the account
The next XX denote H.O/District of the account
The next XXX denote Branch of the account
The next XXX denote Control Account of the account
The next XXXXX denote Subsidiary Account of the
account

1.
2.
3.
4.

Status Code
Two digits ranging from 00 to 99
H.O/District
Two digits ranging from 01 to 99
Branch
Three digits ranging from 001 to 999
Control Account
Three digits ranging from
001 to 999
5. Subsidiary Account
Five digits ranging from
00001 to 99999
Therefore, the general ledger account number
structure looks as follow:XX-XX-XXX-XXX-XXXXX

WHERE
The first XX denote status of the account
The next XX denote Head office/District of the account
The next XXX denote Directorate/ Branch of the account
The next XXXXXXXXdenote Control Account of the
account
The next XXXXX denote Subsidiary Account of the
account

00 - Active Loans
01 - Reschedule Loans
02 - Loans under court
03 - Inactive Loans
17 - Substandard Loans
18 - Doubtful loans
19 - Loss Loans

These codes are derived from the names of the


branch by taking three unique alphabets which
represent the branch.
These codes are used while branches give codes to
their fixed assets by combining with fixed account
code numbers

District Office/Branch code Three digits


2. Type of Fixed Assets
Two digits ranging from
01 to 99
3. Specific name of the item Two digits ranging
from 01 to 99
4. Serial No. within the item Five digits ranging
from 00001 to 99999
1.

Accounting Cycle

The accounting process that begins with analyzing


and

journalizing

transactions

and

ends

with

summarizing and reporting these transactions is


called the accounting cycle. The most important
output of this cycle is the financial statements.
For any transaction, there should be a source
document and these source documents help to
produce DBEs financial source documents.

Types of Financial Instrument


1. Collection Receipts
2. Payment Instruments
3. Non Cash Source Documents

Cash Receipt
Loan Repayment Slip
Lease Repayment Slip
Saving Deposit Slip
Current Account Deposit Slip
Withholding Tax Receipt
Stamp Duty Receipt
Value Added Tax Receipt
Telegraphic Transfer

Payment Voucher
Saving Account Withdrawal Voucher
Cheques
Request for Disbursements
Demand Draft
Cashiers payment Order
Telegraphic Transfer Received
Blocking Outward
Claim Ticket

Journal Voucher
Credit Summary
Claim Ticket
Debit Ticket with advice
Credit Ticket with advice

Cash Receipt
It is used to collect cash other than loan and S/A or
C/A. Such as refund from unutilized advance, service
charge, advance payment for foreclosure, auction and so
on.
Assume that Ato Kebede has requested to issue demand
draft of Birr 100,000.- on 15/03/16
Dr
Cash
Br 100,120
Cr
Demand Draft(DD) Payable
100,000
Cr
Commission income from DD
100
Cr
Service charge
20

Loan Repayment Slip


It is used to collect loan repayment in cash,
through cheque/demand draft/C.P.O. or from their
account.
Suppose Ato Belete has repaid Birr 400,000 to his
loan No. 00-10104 - 00008 on 25/03/16.
Cash
400,000
Loan Industry Active
400,000

Lease

Repayment Slip
It is used to collect lease repayments in cash, through
cheque/demand draft/C.P.O. or from their account.

Saving

Deposit Slip
It is used to collect cash to their saving deposit.
Assume that Meseret has deposited an amount of Birr
8,500 to her saving account No 112-0662
on 15/03/16.
Cash
8,500.S/A
8,500.-

Current

Account (C/A) Deposit Slip


It is used to collect cash to their saving deposit.
Assume that Dereje has deposited an amount of Birr
500,000 to his current account No 107- 0864
on 15/03/16.
Cash
500,000.C/A
500,000.-

Withholding

Tax Receipt
It is used to collect cash on behalf of ERCA from
service provider

Assume that ABC co. provided transportation service


to DBE an amount of 45,000 .- on 15/03/16
a, If the Co. has a VAT registration no.
b, If the Co. is not registered for VAT
C, if the amount is included VAT
D, if the amount is excluded VAT
Calculate the withholding tax to be collected by the
bank.
Journalize the appropriate accounting entry by DBE

Solution
a, Amount subject to tax = 45,000.Withholding tax rate
= 2% of the amount
subject to tax
= 2%* 45,000.- = 900.b, Amount subject to tax = 45,000.Although, Withholding tax rate is 2%, it is treated
as a business profit tax. Which is 30%
Hence, withholding tax is calculated as =
30%* 45,000.- = 13,500.-

a,

b,

Dr

Dr

Transportation Expense 45,000.Cr Withholding tax Payable


Cr Cash
Transportation Expense 45,000.Cr Withholding tax Payable
Cr Cash

900
44,100
13,500
31,500

Suppose that DBE Dessie branch has rented its building


to the Ethiopian Insurance Corporation. with an
amount of 50,000.- excluding VAT.dd 15/03/16.
a, Calculate the withholding tax to be deducted from
the rent.
Calculate the VAT to be collected by the bank.
Journalize the appropriate accounting entry by
DBE

Assume that Ato Belete has signed a loan contract


agreement of Birr 15 million with the bank on
01/03/16. During signing a contract, The following
entries will be passed
Memoradum/Contingent account entry
Dr Commitment Asset 15,000,000
Cr Commitment liability 15,000,000

Stamp

Duty Receipt
It is used to collect cash on behalf of ERCA from
contract agreements.

Suppose that Ato Belete has signed a loan contract


agreement of Birr 15 million with the bank on
15/03/16.
Calculate stamp duty charge to be collected from
the client.
Journalize the appropriate accounting entry by
DBE

Solution
Amount subject to tax = 15,000,000.Stamp duty tax rate
= 1.25% of the loan amount
or 1% of collateral amount
= 1.25%* 15,000,000.- = 1,875,000.Dr

Cash 1,875,000
Cr Stamp duty charge payable 1,875,000

Value

Added Tax Receipt


It is used to collect cash on behalf of ERCA like from
sale of assets taken over.

Suppose that the bank sold it assets taken over from


defaulter to Mr. Smith with an amount of 6.5million
Birr.
a, If the takeover amount of the asset was 6 million
b, If the takeover amount of the asset was 7.5 million
Calculate VAT to be collected
Journalize the accounting entry

Solution
Amount subject to VAT 6,500,000.VAT rate 15%
VAT amount = 6,500,000.- * 15.%
= 975,000.-

a)
Dr

Cash
7,475,000
Cr VAT payable
Cr Asset Awaiting (AAR)
Cr Gain on sale of AAR

975,000
6,000,000
500,000

b)
Dr
Dr

Cash
7,475,000
Loss on disposal of AAR 1,000,000
Cr VAT payable
975,000
Cr Asset Awaiting (AAR)
7,500,000

Telegraphic

Transfer
It is used to collect cash from the customer/staff when
the customer/staff need to transfer money to other
branch/H.O./

Assume that Ato Tigabu Kebede is the staff of Dessie


branch has transferred to Dangila branch for Ato
Tesfaye Kebede an amount of Birr 6,000 excluding
charges on 15/03/16.
a) Journalize appropriate accounting entry at Dessie
branch.
b) Journalize appropriate accounting entry at Dangila
branch
c) Journalize appropriate accounting entry at Head
Office

Solution
Transfer amount/cash received =6,000
Commission income =0.1% of Transfer amount
Commission income =0.1% * 6,000=Birr 6
Telephone income =Birr 9.50
a)

Dr cash
6,015.50
Cr Head office account
6,000
Cr Commission income
6
Cr Telephone income
9.50
Dessie branch will send T.T ticket with credit summary
to Head office.

b) Upon receiving telephone message, Dangila branch


passes the following entries
Dr T.T Received/U.E/ 6,000.Cr TT payable to Tesfaye Kebede 6,000
When payment effected to the beneficiary
Dr TT payable to Tesfaye Kebede 6,000
Cr Cash
6,000
Upon receiving credit summary from head office,
Dr Head Office a/c
6,000
Cr T.T. Received/U.E/
6,000

c) Upon receiving credit summary from Dessie branch,


Head Office will pass the following entries
Dr
Dessie branch account
6,000
Cr
Dangila branch account 6,000

Demand

Draft
It is used to collect cash to issue demand draft upon
request.

Suppose that w/ro Biruktawit Amare is the borrowers


of Dangila Branch and she has requested the
branch to issue Demand Draft of Birr 100,000 on
15/03/16 and the branch prepared the demand
draft.
Required record the appropriate journal entry.

Upon receiving the request from client


Dr

Cash
100,100.
Cr Demand Draft Payable
100,000
Cr Commission income
100
a) If the Demand draft is to be paid on same branch
Dr
Demand draft payable
100,000
Cr Cash
100,000
b) If the demand draft is presented on some other branch
or Head office,
Dr Demand draft payable
100,000
Cr Head Office
100,000

The paying branch of demand draft will pass the


following entries,
Dr

Dangila Branch a/c


Cr
Cash

100,000
100,000

Cashiers

Order Payment /C.P.O/


It is used to collect cash to issue /C.P.O/ upon
request.

Assume

that Ato Solomon has requested the


branch to issue an amount of Birr 850,000
C.P.O to be paid to XYZ Co. on 15/03/16.

Solution:
Dr
Cash
850,020.Cr C.P.O payable
Cr Commission Income

850,000.20.-

Payment

Voucher
It is used to make payment on cash other than loan
and S/A or C/A. Such as advances, utilities, payment
from payable account, refund of receipt above the
advance, refund of advance payment for foreclosure,
auction and so on.

Saving

Account Withdrawal Voucher


It is used to make payment from Saving Account
Assume that Meseret has withdrawn an amount of Birr
3,500 from her saving account No 112-0662 on
15/03/16.
Dr
Cr

S/A

3,500.Cash

3,500.-

Cheques
It is used to make payment from Current Account
Assume that Dereje has withdrawn an amount of Birr
100,000 from his current account No 107- 0864
on 15/03/16.
C/A
100,000.Cash
100,000.-

Request

for Disbursements
It is used effect payment based on loan/lease contract
agreement
Assume that a loan has disbursed to Ato Belete Birr
5,000,000 for loan No. 00-10104 - 00008 on 15/03/16.
Dr Industry loan
5,000,000
Cr C/A No.107-0978
5,000,000
Off-balance sheet
Dr Commitment- Liability 5,000,000
Cr Commitment- Asset
5,000,000

Blocking

Outward
It is used to handle other branches customer/staff to
withdraw from his/her account
Suppose that W/o Abeba - staff of D/Birhan branch
wants to withdraw Birr 3,000. from her S/A from Head
Office.
a) Journalize appropriate accounting entry at Head
Office.
b) Journalize appropriate accounting entry at D/Birhan
branch.

Solution
a) At Head Office
Dr Blocking outward 3,000.Cr Cash
3,000.H.O will send blocking ticket with stamped
withdrawal form to D/Birhan branch to serve as claim.
b) At D/Birhan Branch
Dr
S/A of W/ro Abeba
3,000.Cr Blocking inward
3,000.-

Upon receiving the blocking ticket along with


withdrawal voucher from Head Office,
Dr
Blocking inwards 3,000.Cr Head office a/c
3,000.D/birhan branch will send the credit summary to Head
Office
Upon receiving the credit summary, Head Office pass
the following entries.
Dr D/Birhan branch a/c
3,000.Cr Blocking outward
3,000.

Journal Voucher
It is used to handle non cash transactions like monthly
interest accruals, payroll transactions, adjustments, year
end closing transactions, advance clearance, monthly
interest collection.
Claim Ticket
It is used to request other branch/H.O to confirm the
payment effected on behalf of them.
Credit Summary
It is used for to respond claims from other branches
/H.O and pass inter-branch account/Head Office account.
Debit Ticket with advice
It is used to debit his account and notify to the customer
Credit Ticket with advice
It is used to credit his account and notify to the
customer

Example:- Suppose that Ato Zenebe - a manager of


Dangila Branch presented approved clearance for
travel advance with attached receipts.
- Perdiem for 4.5 days, 400/day
- Fuel 2,500.- Motor Vehicle tyre repair 40.- Car wash 30.- Wage 50.- Advance has been taken by him
a, Birr 3,000.b, Birr 5,000.-

Date

Particular Debit
s

Credit

17/05/16

Entry of
the day

18/05/16

Daily
100,000
transactio
n

10,000

94,420

19/05/16

Daily
60000
transactio
n

20,000

134,420

4,420

Balance

4,420.-

Auditors
initial

Date

Particular Debit
s

31/05/20
16

Calculate 70,000
d interest

Credit

Balance

70,000

Auditors
initial

Date

Particular Debit
s

17/05/16

Entry of
the day

4,420

Credit

Balance

4,420.-

Auditors
initial

Date

Particular Debit
s

17/05/16

Entry of
the day

4,420

Credit

Balance

4,420.-

Auditors
initial

Date

Particular Debit
s

17/05/16

Paid to
Zenebe

1,800.-

Credit

Balance

1,800.-

Auditors
initial

Date
17/05/16

Particular
Debit
s
Entry of
the day

2,500

Credit

Balance
2,500.-

Auditors
initial

Date
17/05/16

Particular
Debit
s
Plate No.
AA 365766

Credit
70.-

Balance
70.-

Auditors
initial

Date
17/05/16

Particular
Debit
s
For
loading of
fixed
asset

Credit
50.-

Balance
50.-

Auditors
initial

Date
12/05/16
17/05/16

Particular
s

Debit

Credit

5,000.-

Balance
5,000.-

4,420.-

580.-

Auditors
initial

Date

Particular Debit
s

Credit

Balance

Auditors
initial

Valu
e
date

Day
No.

D
ay

Posti
ng
type

Vouc
her

Amou
nt

Breakd
own of
postin
g

princip
al

Int.
cal
cul
ati
on
Intere
st

Mem
o int

Pric
ipal
out
stan
din
g

Arre
ars

Princ
ipal

Com
mit
men
t
Bal.
Inter
est

Components of Gross Salary


Basic salary
Fuel allowance
Telephone allowance
Representation allowance
Hardship allowance ( As per the Banks Collective
agreement)
Overtime
Shift premium
Indemnity allowance
Top-up payment

Deductions from Gross Salary


Income Tax
Pension - 7%
Graduate tax
Staff loan
Housing loan
Automobile loan
Staff Receivable
Other deductions
Credit Association loan

Credit association membership fee


Labor union membership fee
Labor union loan
Bond deduction
Edir contribution

Assume that Ato Mesfin is Jimma Branch staff. Other


information of the staff are as follows: Basic salary
= 14,000
Fuel allowance
= 150 Lt (1lt = 20)
Telephone allowance
=150
Representation allowance = 200
Hardship allowance
= 15%
Overtime
= Shift premium
= Indemnity allowance
= Top-up payment
= 1,500

Income Tax
Pension - 7%
Graduate tax = 380
Staff loan
= 1500
Housing loan = 1200
Automobile loan = Staff Receivable = 500
Other deductions = Credit Association loan = 300

Credit association membership fee = % of basic salary


Labour union membership fee = Labour union loan
= Bond deduction
= 600
Edir contribution
= 20
Required: Calculate net payment of the staff for the month of
June 2015.
Prepare appropriate journal entries

Assume that Ato Mesfin is also entitled for two


months salary on August 2015.

Required: Calculate the net pay


Prepare appropriate entries

Assume that Ato Mesfin is also entitled for two step


salary increment on August 2015.
(one step salary increment is Birr 650).

Required: Calculate the net pay


Prepare appropriate entries

Assume that Ato Mesfin has been transferred to


Hawassa Branch on September, 2015. If
a) His transfer is with lateral position
b) His transfer is with promotion

Required: Calculate the net pay


Prepare appropriate entries

Monthly Return
Cash holding position
Cash count & imprest fund
Bank Account Position
Breakdown of Receivables
Breakdown of Uncleared Effects
Breakdown of Payables
H.O. Account/Inter-branch Account Statements
H.O. Account/Inter-branch Account Reconciliation

Expense Summary
Income Summary
Income expense summary
Schedule of Accumulated Depreciation
Schedule of Provision
Schedule of Fixed Assets
Schedule of Assets Awaiting for resale
Breakdown of loans
Breakdown of memorandum accounts
General Ledger Position

Monthly Reports
Lease financing position report
- Product wise
Loan position report
- by Category
Tax, pension and related reports
Ageing of Receivables and Payables
Quarterly Reports
Saving by range and regional state
Demand deposits by range and regional state

DBE FINANCIAL REPORT


PREPARATION AND PRESENTATION

March, 2016

Every year, the external auditor has


conducting audit activity on the bank
Financial report and we have taken a
lesson on various issues raised.
Therefore, it is necessary to familiarize
on preparing and presenting, schedules of
the components of basic financial reports
to get unqualified financial reports in a
continuous manner.

The purpose of this training is: To

discuss on issues raised by external auditors on


the schedule of Financial Reports.
To create awareness on basic required schedules
Discuss on the way of analyzing the accounts.
To have clear understanding on preparations of
schedules with supporting source documents.
At the end of this training, all of the trainees are
expected to clearly understand, analyze and able to
prepare schedules of financial reports to be
presented to external auditors.

Cash and cash equivalent


All branch and head office Cash counting
report should be presented in advance.
In the head office report there are Gold and
Silver balance in which brought forward from
year to year without any transaction
movement
,
the
external
auditors
recommend that it is better to transfer to
cash.

While reviewing the Till balance, some branches do


not close the till balance at the end of day. This
shows that the bank has not properly monitor the
cash balance daily.
Prepaid Insurance related to cash, fidelity
insurance should be reviewed continuously for all
branch and head office
Insurance expense related to cash and fidelity
insurance has to be reviewed and recorded into the
proper category of expense.

Bank balance
Bank balance confirmations have to be presented at
bank level in advance .
Comparison of some bank balance confirmation
report shows that there was variance between the
bank balance report of the bank with the bank
statement.
Some international bank reconciliation
balance
shows that there are many
long outstanding
balance in foreign currency amount.

Loan and advance

Comparison of Schedules of interest receivable in the


detailed loan position balance with GL balance of interest
receivable should show same balance.
Schedules of
suspended interest in the detailed loan
position balance has discrepancies with GL balance of
suspended interest balance.
some loan of suspended interest balance has exceed with
the interest receivable balance.

Interest adjustment balance could not able to identify their


reference.
One sector of some loans have been incorporated under
the other sector of loan.
Some pass and special mention status of loan has
suspended interest.
Some loan has abnormal interest receivable.
Some loans has only suspended interest.
To find the loan balance there are two alternative account
in the T-24 system in a loan but the generated balance is
not the same.

Some loan balances shown in the General ledger whereas


could not able to get in the T-24 loan position reports.
Some loans are settled but there is minor balance.
Thus the Interest income on loan affected by the
above factors.
In some loans, it is unable to find the newly
injected loan.
All the collateral value of the loans has to be
captured in the system.

There should be a mechanism of collecting


confirmation letter from the borrowers.
List of rescheduled loans in the current year has to
be presented to the external auditors and reviewing
& checking of the implication of income statement.
List of under implementation loans in the current
year has to be presented to the external auditors
and reviewing & checking of the implication of
income statement.

Asset awaiting for resale


List of Addition of Asset awaiting for resale
Check properly deducted the take over balance of
the asset awaiting on loan balance with the value
date of the take over assets.
If the take over asset is greater than loan amount
and other charges it should be refunded to the
borrowers.
Revaluation activity has to be conducted.
Expected to prepare age analysis report and reason
for staying unsold.

List of disposal of Asset awaiting for resale


Summary schedule has to be prepared.
The report should incorporate
take over amount
take over date
amount sold
gain on disposal of asset awaiting for resale
And the balance should be reconciled with profit loss
balance of gain on disposal of asset awaiting.
The seller has to be collect VAT on the sold balance.

Borrowing and treasury Bills


The schedule of the borrowing balance should be
reconciled with GL and contract agreement.
Thus it is expect to analyze the data held on the
system against with;
- Contract balance
-contract interest rate
-Basis of interest
- Properly calculating on interest
-Check the balance is correctly reflected in
the General Ledger and profit loss statement.

The content of preparing such type of interest


schedules manually should be included the
following components of reports;
-value date ,reference ,Number of days, amount
of borrowing , basis of interest, interest rate,
previous year accrued interest balance, previous
year due interest balance, current year interest
payment and should be reconciled with current
date accrued interest balance plus current date
due interest balance.

Check balance of the schedules of interest expense


incurred on borrowing with PL reported balance.
There should be in advance collecting of confirmation
letter from the lenders. If any variance should be
reconciled.
Current year borrowing balance should be reported.
Details of debt settlement report has to be presented
in advance for auditors.

Ethiopian Government saving bond


Last year/month bond balance plus Current year
Bond sales report balance less current year bond
redemption should be equal to GL bond principal
balance by each terms of GL line.
Under due principal balance of bond report there
are many interest due balance are incorporated ,
thus it has to be segregated to principal and
interest.

Employee contribution of government saving bond


balance is held under other liability section and it
should reported to EGSB.
Employee contribution of government saving bond
account should have schedule.

Treasury Bills
The content of preparing such type of interest income
earned from treasury bills schedules manually should be
included at least the following components of reports;
-value date ,reference ,Number of days, amount of
purchased , basis of interest, discount rate , previous
year discount interest balance, and should be reconciled
with current date accrued interest balance plus current
date due interest balance.
Before returned back the certificate it should be held a
copy of the certificate.

Inter- branch Account


Branch account and head office account should be
reconciled.
Branch account Reconciliation balance has to be
equal with the GL and branch account statement
balance.
At the time of holding branch closing payable and
branch closing receivable it has to be considered the
following things
-posting the transaction in detailed form.
-no long outstanding item presented.

branch closing payable and branch closing receivable


balance should be subsequently cleared.
Net of branch closing payable and branch closing
receivable balance should be reported in the balance
sheet
No need of posting the transaction in sum amount
instead of posting the transaction individually.
Holding of the branch closing payable and receivable
balance should be posted to as per individual
transaction.

Fixed asset
Fixed asset register balance should be reconciled
with General ledger balance.
Reconciliation of cost of fixed asset has to be done
in the under mentioned way;
-previous year original cost balance
plus
addition of fixed asset( either purchase
capitalized
portion),
transfer
in,
increase
adjustment if any,

Less
Disposal, transfer out, decrease adjustment if any.
Reconciliation of accumulated depreciation is equal to
Previous year register balance plus current year
depreciation expense ,increased adjustment if any,
transfer in.
Less transfer out, decreased adjustment, disposal.

Summary of schedule of previous year original cost/


Fixed Asset balance of head office and branches plus
Addition, increase adjustment, transfer in, less
transfer out, disposal, decrease adjustment have to
be equal with the GL balance and the consolidated
summary schedule.
The sum of transfer in and transfer out should be
zero.

reviewing and checking under progress


account has to be conducted like the cost of
fixed asset and reported in the same manner.
Repair and maintenance related to fixed
asset cost should be reviewing.
Insurance expense related to fixed asset also
has to be reviewed.

Disposal of Fixed Asset


Summary of schedule of Disposal of Fixed Asset has
to be prepared.
The report should incorporate
Original cost, accumulated depreciation, proceeds,
book value, gain on disposal of fixed asset.
And the balance should be reconciled with profit loss
balance of gain on disposal of fixed asset
Plate number, code number of fixed asset items

Any increase and decrease adjustment should


be clearly justified and the attaching
document should be sufficient.

Receivable and payable


The schedule of receivable should incorporate the
following reporting components;
Value date, booking date, reference, purpose of the
receivable/ description , name of the account,
account number, amount, number of days/Age of the
account and reason of un settled balance. And the
balance have to be reconciled with the GL.

Under each account any cleared or addition balances have


to be incorporated the under mentioned reporting
component;
Previous month/year balance, cleared or addition date,
reference, amount, reason of cleared or addition.
If unable to collect the receivable balance, it should
propose to the respective organ of the bank to make
written of by justifying the way how we are tried to do so
and ensure adequate provision are held.

The schedule of payable should incorporate


the following reporting components;
Value date, booking date, reference,
description , name of the account, account
number, amount, number of days/Age of the
account and reason of un paid balance. And
the balance have to be reconciled with the
GL.

Under each account any settled or addition balances


have to be incorporated the under mentioned
reporting component;
Previous month/year balance, settled or addition
date, reference, amount, reason of settled or
addition.
If unable to get the beneficiary, it should propose
to the respective organ of the bank to make write
back by justifying the way how we are tried to do
so.

It is required to prepared the schedules of all debtors


and debt balance under the GL of head office and
branches other than loan and advance, fixed asset
balance, cash and cash equivalent, bank account balance.

It is required to prepared the schedules of all creditors


balance under the GL of head office and branches other
than Borrowing, time deposit, saving and current
account.
There should not be reported abnormal balance in the
schedule and the GL

Rent income
The tax purpose report of rent income and other related
expense should be explanatory and it should describe the
following.
the way calculated the balance in explicit way
The schedule of rent income report should contain;
Monthly rent, rent contract agreement, amount collected
during the monthly/quarterly, tenant name, uncollected
amount, uncollected month, deducted withholding
receivable.

VAT should be paid by the tenant and the bank have to be


collected and paid to the tax authority at the time of
effect the monthly payment of tax.
Tax and pension contribution
Check
properly calculating of tax and pension
contribution before effect the payment.
Documentation of payment income tax ,VAT, Business
profit tax it is better to segregate the file.
It has to have a separate account to record Business profit
tax.

Provision
Check properly holding of provision for receivable, asset
awaiting and loan account
Check properly recording of provision on the T-24 system
for on line branches and manually for off line branches.
Reviewing and checking of the net impact of provision on
income statement of all branch and head office.
It should reflected in the income statement in the
following way;

If the last year provision balance is grater than current


year provision balance, it is recognized as provision
income.
In the contrary provision expense.
Other balance sheet and Profit loss account.
Before and After preparing balance sheet or Profit loss
account it has to be verified the proper account/PL
category.
GL and PL mapping
It is better to segregate current asset with long term asset
and current liability with long term liability.

All foreign non cash processed transaction they do not


have proper source document, attached only system
generated slip.
Saving and current account
There are many minor abnormal balances.
Expense and income
Some account has abnormal balances, hence it requires to
check the healthiness of all account.

Overlooked Accrual accounts


Reviewing of the Gain or loss on foreign currency
fluctuation account.
There must be installing mechanism to transfer
Retention account A and B to Birr account in the
core banking system.

Thank You!!

=e uv
Su= 2008 .U

1.
2.
3.
4.
5.
6.
7.
8.
9.

(Employment Income tax)


(Graduate tax)
(Value Added Tax)
(Witholding Tax)
(Stamp Duty)
(Sales Tax)
(Tax on Saving DepositLocal)
(Tax On Foreign Dep. & Placement)
(Business Profit Tax)

(Pension
Contribution)

T<U sT> ^ W^} }k[u (}Suu


) k e u\ T>K< S L
714/2003

G. 1 2003 / 30
2004 / 5%
. 1 2004 / 30
2005 / 6%
. 1 2005 / 7%

sT> ^

. 1 2003 / 30 2004 /
7%
. 1 2004 / 30 2005 /
8%
. 1 2005 / 30 2006 .
9%
. 1 2006 /
11%

286/94 12 (1)



2

1.1

78/94 3()
1.2 (Transportation/Fuel Allowance)
/ 78/94 3()



21/2007

(1/4)
2,200.00 ( )

1.3 <KA uM(Per diem)

uw l` 78/94 k 3(S) SW[ W^}< Su


< Y^ x< < Y^< KT
c=kXke T>K< S <KA uM
w` }`M:: JU u= <U\ vKYM
I uM S Sc YM }c< uSJ<'
uSS] l` 21/2001 k 4(4) SW[ W^}
Su Y^ x < 25 =KA T@` `k uL
KT>`< penc? T>K< k
<KA uM e w` 150 ( S HUX w`) T>`e
J uT<U G<@ S< ^ uS (4%)
K=uM MU uTK M::

1.4 <M (Representation Expense)

<M u l` 286/94 k 21/1/u SW[


W^} `~ KA u}K x uS~ U K=I
penc?< [< T>`<
T>SK <:: uSJ<U <M
10% w` MuU::

1.5 VvM uM (Mobile Allowance)


K=Mu
vU ::

1.6 S] u? uM(Housing Allowance)

KW^} u_ w T>c< S] u? uM
u= SJ< S e T>Mu uSJ<
W^}< S ` uSS` e T>Mu
JM:: JU W]< S] u? uT KW^}
T>k`w J I pU #u T>c pU$ <
wKA SUU LM::

1.7 <`h(bonus)
<`h U xe uTu[ SM T>c J w` T>Mu
u= <:: SJ< S
W^} uS <e KK< U <e uTev T>c
uSJ< v KW^}< xe c=K< xc< K12 ^
(uu S~ <e LKK<u >?) uTM uS L
uSS` e K=[ vM::

1.8 w <K Svum (Cash Indemnity)

uv <e uw }kv uTMM L


T>< W^} Y^< vI] w SM
SkuM ` } SJ< S up Mx Y^<
uT><<u c w K=Mv< T>M
uSJ< KT>Mv< w <K Svum
w (Cash Indemnity) u\ LM:: W^}
w >? =G< }kT
w uT< K<K~ TTD JU
W^} v< u=Kl U K?L Y^ Sw
c=Su< ueT< }^kS< w =L<
[M:: JU Svum< T>< u\ uSJ<
<K Svum u< KW^}< c=M
uW^}< `H S L }Ua e K=Mu
vM ::

M 2
v T>SK~ K?KA w`
2.1
> MKA uSe T> u= u}SK} u
l` 286/94 k 32(1) SW[ u= ] KJ< c
= < K}c > MKA }S e`
uS(10%) e MuM::> MKA TK
T<U vKS< U` U KA= MKA
<::
uSJ<U v T>< f` ` u} uT>K<
SkU (Licence fee) ' S< MKA
(Professional fee) S S<
(Annual maintaniance /support fee)
> MKA SJ< S u< G`
}c J T>cucu< u l` 286/94 k
32(1) SW[ e` uS (10%) SJ Ku eUU L }
`dDM::

2.2 Uw` k[ (Stamp Duty)


Uw` k[ uc L T>M w` k[<
T>K< c / SW[ uT[ <::v Y^
` uw Uw` k[ T>Mv< c
w` ' S ' =^ p` <KA <:: v
w` uT>c<u p T>eK< Uw` k[ G<K
SJ T>v< uM SMM:: <U uw`
<K< L ul` 5 w` c=J uS c L S c
uS <::

uW^} p` <M L T>K< Uw` k[

uSJ<U usT>U J u>?


W^} KSp` uT>[ <M L Uw` k[ SM Ku::

2.3 } N=Xx L Withholding 2% w` }ki


eKT[
u l`

286/94 k 53(1) SW[ uQ c< Sw


}c< `& Se & K`
M}ssS< M ` Se MJ< `
T>>ea U` u? w (78/94) w` }
kf k] =[u }c T<U L 2%
kc< Tek[ Kv<:: JU w\ T>keu c<
w` SK l` Lk[u J w\ kf
T>ek[< c< } H>Xw L 30% uSk SM
Scwcw Ku::

uu< SW[ n p`x <M&

10,000 w` uL KJ n p`x
J 500
2% }ki
u=I `

2.4 }T] c? e (VAT)

285/94 8(2)()




T>:-

206

351/95
154/2000

207

208

209

- 1996 .



/ /

210

//


1%




211

212