ACCOUNTING OF NON-GOVERNMENTAL ORGANIZATIONS IN ETHIOPIA

THE NEED FOR THE STUDY

Ethiopia is one of the least developing countries of Africa. As in many African countries, the

governmental efforts in the area of socio-economic development are supplemented by the

activities of many non-governmental, voluntary and social organizations. Ethiopia is frequently

affected by sever famine conditions leading to starvation of millions of people, health hazards,

poverty and their concomitant evils. Hence, at the instance of the government, number of

national and international, non-governmental, voluntary organisations have been established

since thirty years. They are meant to fill the gaps that exist in the governmental efforts to remedy

the evils of socio economic imbalances and continuous famines. The non-governmental

organizations [NGOs] are mobilising the resources from various national and international

voluntary agencies. These organisations are to work in a coordinated manner consistent with the

requirements of the society. They are regulated and controlled by the Government agencies like

ROA and DPPC. There is a heavy competition among the NGOs in mobilising financial

resources, resulting in mutual bickering and mistrust. In this process, a few of the NGOs are

found lagging behind in developing required documents to ensure true and fair view of their

financial dealings through the accounting and reporting procedures. Recently, the DPPC has

discarded a few NGOs from the field for lack of complete documentation. Hence, this study

aims at finding the reasons and causes for inadequate accounting and reporting practices

followed by a study of compliances and departures from the guidelines and the generally

accepted accounting principles of financial reporting.

OBJECTIVES OF THE STUDY

The broad objective of the study is to examine the accounting and reporting practices of non-

governmental-organizations i.e., NGOs (which are the integral parts of not-for-profit

organizations) operating in Ethiopia with a view to high light the compliances and deviations

from the statutory stipulations and accounting standards in vogue However, the following are the

specific objectives of the present study:

1. To examine the accounting practices of the non-governmental-organizations (NGOs)

sponsored by local and international initiatives that are operating in Ethiopia.

2. To evaluate financial reporting practices (for internal as well as external uses) and

analyze the formats and contents of annual published financial statements of the NGOs

sponsored by international and national agencies and individuals respectively.

3. To ascertain the perception levels and the opinions of the responsible operatives of the

NGOs with regard to the utility of accounting and reporting practices in Ethiopia.

4. To examine the opinions of the users of accounting information with regard to their

expectations and experiences with the NGOs.

5. To offer suggestions for strengthening and harmonizing the accounting and financial

reporting practices of the NGOs on the basis of the conclusions drawn from the empirical

study.

HYPOTHESES FORMULATION

The entire study of the accounting and reporting practices of the NGOs in Ethiopia is based upon

the following hypotheses borne out by the deep understanding of the statues and the expectations

of the users of accounting information:

(i) There are deviations and departures of the accounting and reporting practices of

NGOs with the guidelines, standards and regulations prescribed by the

government, FASB and regulatory agencies respectively.

(ii) There is difference between the expectations of the users of accounting

information and the contents of accounting and reporting practices of the NGOs

in Ethiopia.

METHODOLOGY

The study is entirely based on the primary and secondary data collected by a well- structured

research design. The primary data are collected from the records of the select NGOs (NFPOs)

and also from the, The Registrar of Associations (ROA) - Ministry of Justice (MoJ) and Disaster

Prevention and Preparedness Commission (DPPC), Federal Governmental of Ethiopia (FGE). To

ascertain the perceptions, and opinions of the funding agencies, officials of the regulatory

agencies like ROA and DPPC, accounting staff of the select NGOs, and the enrolled members of

the select organizations, a field study has been carried out with appropriately designed

questionnaires. These four questionnaires for the four groups (funds-providers, officials of

regulatory bodies, accountants of the select NGOs and the enrolled members) of select

interviewees have been pre-tested by a pilot study. Thus the primary data have been collected

from the original records of the offices concerned and by the field survey. The relevant

secondary data have been collected from various periodical reports of the FGE, World Bank,

CRDA, Statistical Abstracts published by the Central Statistical Authority of the FGE. Before,

actually using the secondary data, the concepts, the methodology and data processing in the

presentation of such information have been verified so as to ensure their propriety.

RESEARCH DESIGN

The NGOs under study are the non-governmental organizations and voluntary by nature but

regulated and coordinated by the government agencies like ROA and DPPC. In Ethiopia, there

are 344 active NGOs as at the end of financial year 2001 (Ethiopian fiscal year ending July 7,

1993). Out of 344 active and operational NGOs, 224are indigenous and the rest of 120 are

international by their sponsorship. . Hence, a sample of 31 NGOs have been taken on stratified

random sample basis represented by 25 indigenous and 6 international NGOs constituting

11.16% and 5% of the respective total number of NGOs. In aggregate terms, the sample of 31

NGOs constitutes 9% of the total number of 344 NGOs operational in Ethiopia. The purpose of

this sample study is to facilitate an in-depth study of the accounting and reporting practices of the

NGOs in Ethiopia.

The sample NGOs in Ethiopia are found to mobilize funds from foreign agencies, local

philonthropists, and charity institutions as grants, donations, and occasional funds raising

programs. In all there are 3173 funds providers with the 31 NGOs by the end of July 7, 2001.

Since, they are the donors of funds, they are naturally interested in knowing the pattern of

utilization, the benefits derived by utilizing their funds. This is possible, only by the NGOs being

transparent, communicative and by meaningful public relations. Hence, an attempt is made to

know the opinions of the funds-providers as to the purpose of their contributions, their relations

with the NGOs during pre and post donation periods, and the pattern of disclosure through

accounting and reporting methods of NGOs. For this purpose a random sample of 310 funds

providers have been taken which constitutes about 10% of the total number of funds-providers

and they have been served with a questionnaire to elicit their opinion. There are fifteen

controlling officers in the two regulatory bodies viz., ROA (6) and DPPC (9). These controlling

officers are assigned with the duties of ensuring the receipt of financial statements, and periodical

statements from the NGOs working in the country. Hence, an attempt is made to enquire with all

the fifteen controlling officers about the regularity, adequacy, and compliance with the pattern of

reporting prescribed by administering a questionnaire. Hence, this part of the enquiry can be

considered as a census study. Further, it can also be seen from the Sample Design. There are 31

chief accountants/heads of accounting section working in the in the select NGOs (NFPOs). To

ascertain the difficulties, problems and hurdles in complying with the rules, regulations,

guidelines and provisions of the bye-laws/Memorandum of Association with regard accounting

practices and the pattern of reporting by the NGOs, a field survey with all of them had been

carried out for which a suitable questionnaire has been canvassed. Since all the chief

accountants/heads of the accounting sections of the NGOs has been interviewed, it can be stated

that this part of the enquiry is also a census study. There are 3,740 members in the select 31

NGOs as on the last date of the financial year of the FGE. These members are of different types

constituting the core of the foundation, promotion and later management of the NGOs. Hence,

these members are general assembly of the NGOs concerned. They participate in the general

body meetings as and when they are convened. To gauge their opinion about the accounting and

reporting practices of the 31 NGOs, a random sample of 449 members is taken and held personal

interviews with them with a suitably structure questionnaire. The summary of it is as under:

Particulars of Elements Universe

Size

Size of

Sample

Percentage to

Universe

A. NGOs: Indigenous

International

224

120

25

6=31*

10%

5%

. Funds Providers 3, 173+ 310 9. 77%

B. Officials of ROA & DPPC

(Looking after the NGOs

accounts)- Census enquiry

ROA = 6

DPPC = 9

15

100%

C. Chief Accountants of NGOs

(Census enquiry)

31 31 100%

D. Enrolled Members 3, 740 449 12%

Note: *. Names of the select NGOs are given in Annexure Table 3. B. + It is total of all the funds providers excluding the Members. Further it is accumulated

number available on the records.

DATA PROCESSING

The primary data collected through the questionnaires and from various files of the relevant

bureaus, have been processed, tabulated and analyzed by applying various statistical techniques

like averages, ratios, and test of significance. Secondary data collected from various published

sources like Annual Statistical Abstract, Central Statistical Authority, FGE; and the occasional

papers of World Bank, IMF and African Union Organization. All the secondary data have been

verified with regard to their comparability in terms of definitions, concepts and methods of

compilation.

SCOPE OF THE STUDY

The primary focus of the study is on the accounting and reporting practices of NGOs operating in

Ethiopia.(non-governmental not-for-profit organizations in Ethiopia).The scope of the present

study is, therefore, confined to the examination of the process of recording financial transactions

and the procedure, pattern and methods of reporting of the financial activities of the NGOs in

NFPOs sector operating in Ethiopia. As such the present study is focused on the compliance,

and deviations of the accounting and reporting practices of the NGOs with the prescribed

guidelines, and the accounting standards. Thus it excludes the analyses of annual published

financial statements. Therefore, it is to be noted that the entire study is confined to the

accounting and reporting practices of NGOs (NFPOs) in Ethiopia with particular emphasize on

the compliance with, and the departures from the relevant guidelines and the generally accepted

accounting principles relevant.

LIMITATIONS OF THE STUDY

Though the study presents a comprehensive theme over the succeeding Chapters, it is not free

from limitations. The following are a few limitations to which the inquiry is subjected:

1. Since every NGO (NFPO) is engrossed with multiple programs, it is not possible to

establish the relationship between the nature of programs and accounting and reporting

practices.

2. Due to the lack of systematic records at various government offices, the time series

constructed are not uniform for different types of analysis.

3. Since the study is only pertaining to the enquiry into the accounting and reporting

practices of NGOs, accounting information (financial facts and figures) are not analyzed

in-depth.

TECHNO-FORMAT

The dissertation is presented the traditional format consisting of six chapters and each one is

devoted to explain and attain the objectives set out in the preceding pages. The necessary notes

and relevant references are placed at the end of the Chapter concerned. Depending upon the need

and the nature of the subject matter, each chapter (except the First Chapter) is divided into two or

three modules dealing with independent subject matter in their sequence. The survey of literature

is presented in chronological order. Wherever necessary, for improving the reader’s

comprehension, diagrams, charts and graphs have been presented. Depending upon the relevance,

appropriateness and propriety Tables and Charts are placed at relevant text or in the Annexure

with composite number. The first figure in the composite number indicates the Chapter and the

next explain the serial number expressed either in numeric or alphabetic number. Classified and

relevant Bibliography has been placed at the end of the dissertation. The copies of the

questionnaires served among the interviewees have been given in the Appendix for ready

reference.

The following are the significant conclusions and the suggestions born out of the study:

1. The accounting environment of the NGOs in Ethiopia is composed of financial, legal,

social and economic factors obtained in the country. These factors are again controlled

by the expectations, aspirations and public awareness about the operations of the NGOs

in the country.

2. As an obligation to the agreement, the NGOs have to maintain financial accounting

records of assets, liabilities, income and expenditure in accordance with the standard

accounting practices. The DPPC has the authority to verify and review the financial

management aspects of the NGOs.

3. The NGOs, as per the guidelines and agreements (entered with DPPC and ROA), have to

submit (i) Annual Activities Report and (ii) Audit Reports to both the agencies. The

reports should contain the purposes, activities undertaken, the target groups, clients, and

others whom it serves. Further, the report should also contain information about the

sources of its funds and the pattern of utilization of the resources. It is clear that there

are many rules, regulations, and guidelines in the form of agreements, statements and

conditions to govern the activities of the NGOs. To ensure transparency, and

accountability, the NGOs are to disclose their activities to government, public, donors

and to the beneficiaries. In addition to these mandatory stipulations, the NGOs have

accepted the self-regulation by a voluntary code of conduct. All these are no doubt good

for the survival of the organizations. But the methods, and procedures in the form of

specific accounting and reporting practices are not clearly delineated by any agency.

4. The 344 operational NGOs are extending their activities through 846 NGO offices in

various regions. Program wise commitment of the NGOs reveal that 228 (27% of the

total number of NGO offices) are engaged in social welfare activities, next to which

stand Health care and education and training programs. As a matter of fact, the NGOs

directly engaged in eradication of HIV/AIDS are only 68 (8%) and in water and

sanitation programs 144 (17%).

5. There is no uniformity in accounting policies adopted by the NGOs. Due to the

variations in accounting policies, a few of the NGO show huge deficits and others show

a hefty surplus. An analysis of the Income and Expenditure of the 31 select NGOs

indicate that 13 have deficit ranging between Birr.0.02 million and Birr.6.0 million in

2000-01 The deficit incurred is on account of treatment of fixed assets as expense in the

year of their acquisition. The surplus among the 18 NGOs varied between Birr 5000 and

Birr.6.00 million. Absence of the policy of not considering depreciation against the

continuing assets might be one of the reasons of showing high surpluses. Of course, the

surplus or deficit in NGOs has no significance. However, persistent deficit over the

years may lead to either slowing down or abandonment of the projects. Making surpluses

by the NGOs is also not considered as healthy sign because; it might be the result of the

failure to implement programs. As such, the NGOs, in either case must explain in their

Annual Reports the reasons for deficit/surplus in its own interest of involving the people

in their pursuits.

6. The financial transactions in any entity are either recorded on cash basis or on modified

cash basis or on accrual basis. A close study of accounting records of the 31 NGOs

reveals that 23 NGOs are on cash basis. 6 are on modified cash basis of accounting and

the rest of two are following accrual system. Out of these two NGOs on accrual basis,

one is indigenous and the other is international organization. Since, the custodian

function can be carried out efficiently under accrual system, the NGOs are to follow it in

their own interest of convincing the fund providers.

7. The field survey of the 31 NGOs revealed that all of them maintain cashbook, ledger,

employees’ attendance registers, and pay roll registers. Similarly 96% of the NGOs are

found maintaining receipt books (acknowledging the receipt of cash). Hardly, 26% of

the NGOs maintain Journal as they have the modified cash system of recording the

transactions.

8. Out of the 31 sample NGOs, only 28 are recording their cash/cheque receipt transaction

by computerization. However, the received cheques are sorted out and deposited in the

bank next day. At the end of every day, a Cash Collection report is prepared and

postings are made to the respective accounts.

9. Out of the 31 select NGOs, 18 are maintaining petty cash book system on imprest

system, for recording payments varying between Birr.100 and Birr 500 These

organizations have approved chart of expenses that are met out of petty cash kept with

the petty cashier. This chart includes payments towards conveyance, postage, cartage,

freight, hospitality and other miscellaneous expenses. The petty cash payment voucher is

printed and pre numbered.

10. Almost all the 31 sample NGOs have their HO/CO in Addis Ababa but their programs

are carried out at various locations. As such, there is a need to direct, monitor, inspect

and coordinate their activities from the HO/CO, for which there is a system of

management reporting. These reports are meant to provide specific information about

the programs, their progress, expenses and the benefits derived from the implementation

of projects. In all the NGOs, there are no prescribed proforma to report the above details.

A narrative reports with some details of expenses, are submitted by the field officers.

11. Regarding the regularity in submission of reports to the DPPC, it is found that almost all

NGOs are not at all complying the time schedule and therefore, they are irregular.

12. The NGOs are to prepare annual financial statements for three purposes. Firstly, as

means of discharging legal obligation; secondly, to help in the evaluation of operational

efficiency and effectiveness of the utilization of the resources endowed to them and

lastly, for the purpose of communication of the operational and financial information to

the persons interested.

13. In terms of formatting of the financial statements, all the 31 NGOs follow report form

(vertical formats of balance sheet and Income and Expenditure Statements). An analysis

of the formats and contents of the Income and Expenditure reveals that (i) there is

similarity with regard to the formats of the income and expenditure statements among the

NGOs under study; (ii) out of 31 NGOs, only 11 have shown the details of the donations,

and other incomes in ‘notes’; (iii) only 7 NGOs have given program-wise expenditure

though all of them have number of on-going programs; and (iv) out of the 31 sample

units only 2 have used the terms like ‘surplus or deficit’ and the rest described them as

excess of income over expenditure and vice versa. Thus there is a need to improve the

disclosure pattern of income and expenditure depending upon the nature of activities.

14. The content analysis of the Income and Expenditure reveals that certain items like

donations, transfers from head office, and other incomes are found in all the 31 NGOs

but the details like annual subscriptions, fund-raising income, and classification of the

donations into restricted and unrestricted are not found. The expenses like administrative

and office costs, contingencies and other expenses are the common heads that appear in

all the 31 NGOs but the break-up of the administrative and office expenses is hardly

given and the expenses incurred for various programs and projects are not shown clearly.

Out of the 31 NGOs, only 8 have given program wise expenses.

15. Out of the 31 NGOs, only 13 are found preparing balance sheets. Out of these 13 NGOs

only 8 have shown fixed assets and the other have shown only current assets. Regarding

the liabilities, none have any liabilities other than current liabilities and capital fund.

However, the details of these assets and liabilities are shown in ‘Notes” by 8 NGOs only.

Thus, in terms of contents of the Income and Expenditure and Balance Sheet, there is no

uniformity and they are inadequate in terms of disclosure.

16. A study of the co-relation between the full disclosure of the program wise expenditure

and the size of donations has been attempted. It indicated that the NGOs receiving

higher donations are obliged to disclose details of expenditure program wise. Similarly

the co-relation between the volume of donations and the habit of preparing balance

sheets is also examined. The relevant data indicate that there is no relationship since, the

3 NGOs receiving more than Birr 3 million donations have not cared to prepare the

balance sheet. Again the relationship between the size of capital fund and the

preparation of balance sheet is also studied. The data relating to the capital fund and the

number of NGOs preparing balance sheet reveals that there is no relationship between

them.

17. According to the government guidelines, the auditor concerned should give an audit

report composed of a clear statement with regard to the methods, procedures, principles,

and conventions followed in the preparation, finalization of the annual financial

statements. These aspects are known as the accounting policies. A close study of the 31

NGOs’ financial statements for the year 2000-01 reveals that all of them have the

accounting policies stated by the auditors. It is found, that only five aspects relating to

accounts have been touched. They are: (i) basis of accounting; (ii) valuation methods of

inventory; (iii) valuation of fixed assets; (iv) treatment of fixed assets and (v) the

methods of depreciation. The scrutiny of the Auditors Notes appended to the financial

statements reveals that there is no uniformity in the statement of accounting policies.

18. The disclosure principle requires that financial statements; be complete in the sense of

including all information necessary to the users of the statements. By scanning the

financial statements including Auditors’ Notes of the 31 NGOs, it is revealed that the

details of accounting period, basis of accounting and the details of administrative

expenses are shown clearly. The tax collected from the employees on their salaries at

source by the NGOs is shown only by one entity out of the 31. Similarly, the

organization chart with staff details are given by only 4 NGOs. Thus, the principle of

full disclosure is not adhered to by most of the NGOs in Ethiopia.

19. Out of 310 sample funds-providers about 40% did not prescribe any modality of

utilization of donations. Thus, the funds are for general purposes programs. They are to

be used by the NGOs as per their expediency. About 41% of the funds providers

prescribed that their donations should be used for prevention and eradication of

HIV/AIDS and the next preference is relief and rehabilitation of the handicapped. From

the point of view of accounting 40% of donations come under General Fund and the rest

come under the category of Restricted Funds. As such the NGOs are to design their

accounting and reporting system in a way that full disclosure is facilitated with regard to

the restricted funds.

20. Post-funding relations between the donors and NGOS are weak in the sense that 17% of

contributors were never cared in terms of communication of their programs and progress.

It is again interested to note that 63% of the donors were approached by the NGOs for

further funding only.

21. The financial statements like Income and Expenditure Statement and Balance Sheets of

the NGOs are rarely supplied to the funds-providers. Thus the NGOs are found

maintaining confidentiality about their financial position. It is against the cardinal

values of the NGOs to which they are committed in the Statement and Conditions of

Authorization.

22. About 75% of the funds-providers are not satisfied as they are kept in darkness as to the

performance, accountability, publicity and reporting. This is a clear evidence of

inadequate transparency and lack of proper reporting system.

23. The ROA and the DPPC are not very particular about the quality of reports submitted to

them. Certification and attestation of the annual financial reports by the external

independent auditor is sufficient to them. Even if the package of the financial statements

(Balance Sheet, and Income and Expenditure) is incomplete, they are not raising any

objection. Further, the review and scrutiny of the submitted periodical statements

including the financial statements are seldom attempted. by the ROA and DPPC. The

reason stated for such condition is that they do not find time for the review and scrutiny

of the submitted reports.

24. As per the guidelines of the DPPC to the auditors, they have to verify whether the NGOs

in question comply with the provisions of various laws, proclamations, conditions and

statements. A scrutiny of auditor’s reports of 31 NGOs for 2000-01 reveals that no

certification in clear terms as to the compliance or otherwise of the provisions is given.

In spite of these lapses in the Auditors’ Certificate, the regulatory agencies accept them.

25. Out of the 31 interviewed accountants 28 revealed that they are trying to computerize the

accounting transactions but the process is not completed. At present, pay rolls, cash

transactions, including petty cash payments are fully computerized by all but fixed assets

and inventories are electronically recorded by 3 and 18 NGOs respectively. As a matter

of fact, all the NGOs have computers but they use them as a substitute to typewriters.

26. Regarding the soft ware applications, they have different packages like MS.Excel (18

NGOs); Peach Tree (3 NGOs); Sum System (2); Power Base (2 NGOs) and others (3

NGOs). The umbrella organization is helping the NGOs to share the soft ware packages

among themselves.

27. As the members form the general assembly of the NGOs, they have the right to access to

operational and financial information. General Assembly is the forum where the

members could seek any type of information. Out of 449 respondents, only 36 (8%)

reveal that they receive information about the meeting of general assembly. About 18

(4%) admitted that they are communicated the date, agenda of the General Assembly

meeting and advance copy of the financial statements. Thus the opportunity of

discussing, enquiring, and knowing about the financial and operational aspect is limited

for the members.

RECOMMENDATIONS:

On the basis of the findings and the conclusions drawn from the study, a maiden attempt is made

to make a few suggestions as under:

1) Non-government organizations as a part of NFPOs are the associations of people

voluntarily enrolled. Therefore, they are corporate bodies in their truest sense. They are

playing a significant role in terms of social service, economic activities, employment

generation and capacity building in Ethiopia. The regulations that govern the operations

of the NGOs in Ethiopia have been framed in piece-meal manner and as and when they

were necessary. Hence, a comprehensive piece of legislation (Proclamation or Code or a

Statute) with codified and consolidated covenants is an immediate necessity.

2) At present the Guidelines, 1996; prescribe that the NGOs are to maintain necessary

books of accounts as are required by government agencies. This prescription is vague

and there is a leeway for the NGOs to escape from the responsibility of maintaining

systematic record of accounts. Hence, the above proposed legislation should mention: (a)

the statutory books to be maintained; (ii) auxiliary records that assist in the protection

and continuation of the properties of the entity; (iii) the registers, minute books and other

records necessary for evidencing the systematic and democratic functioning of the NGO.

3) The FGE may also develop appropriate formats of Financial Statements like Balance

sheet, Income and Expenditure Statements Cash Flow Statements, Statement of

Accounts followed by an Annual Report of the Board of Directors. The essential events

and aspects, which are to be compulsorily incorporated, should also be indicated. The

NGOs operating in Ethiopia, irrespective of their origin, have to comply the above

formats with minimum modifications as far as necessary

4) A statement showing the Permanent programs, On-going Programs and Proposed

Programs with the estimated cost of the inputs should, also follow the financial

statements.

5) It is observed during the field survey, that the emoluments as a percentage to the total

expenses are heavy. Hence, there should be a tab on the emoluments that the executive

officers to draw every year.

6) The responsibilities of the Auditors, their mode of appointment, terms of appointment,

the above should also prescribe their emoluments proposed comprehensive law.

7) The responsibility of the executives of the NGOs with regard to the maintenance of

books and the penalties in the event of their failure to discharge their assigned

responsibilities should also be defined.

8) The report of the auditor in the form of certification and attestation should be clear in

mentioning about the nature of the audit report like; qualified, unqualified, disclaimer or

adverse report.

9) It is observed by the researcher that more than 50% of the NGOs in Ethiopia are

recording their financial transactions on cash basis accounting. This system of

accounting fails to record the assets, depreciation, year-end adjustments of expenses,

revenues and other items of assets and liabilities. Consequently, the financial statements

fail to reflect the true financial position for emphasizing the efficient and effective

utilization of the resources that contributed by public. Hence, it is suggested that all the

NGOs irrespective of their size are to follow the accrual system of accounting.

10) Earlier it is recommend to follow accrual basis of accounting for the NGOs. Conforming

to this empirical concept, it is suggested to the NGOs to provide depreciation on all the

tangible fixed assets at the rates prescribed by the regulatory agencies. This is essential to

estimate the net asset-base, which is a major component in the Capital Fund.

11) For the purpose of full disclosure, it is necessary for the NGOs to give an inventory of

on-going projects and also their value at cost. This will also be useful to ascertain the

asset base of the accounting entity. Further, it is convenient to the NGOs and also to the

funding agencies to estimate the cost of unfinished work for future financing purposes.

12) In the annual report of the NGOs, it is also useful to include the results of the programs

obtained during the year so as to estimate the ratio between cost and benefits. Since, the

NGOs are more of service delivery entities, it is not possible to estimate the results in

financial terms precisely. Hence, a narration of the results, and achievements in physical

terms will give the idea about the effectiveness of the projects.

13) In line with the triangular reconciliation of the NGOs financial statements as proposed

earlier, (with in the ambit of FASB statements, the guide lines and also in view of the

special characteristics of the NGOs in Ethiopia), the present research suggests

customized formats of the reporting pattern of the NGOs in Ethiopia. To follow the

suggested reporting formats, the accountants of the NGOs will have to redesign their

accounting methods. Thus it is hoped to bring about a change from the grass-root levels

of accounting system of the NGOs in Ethiopia.

POSSIBLE AREAS OF FURTHER RESEARCH:

1. Status of training of voluntary workers in the NFPO sector

2. Organization Development for the NGOs in NFPO sector where diverse

activities are carried at various locations.

3. Evaluation of financial performance of the NFPOs.

4. A study of impact of Aid and No-aid on the performance of the NGOs in NFPO

sector.

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