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 of Percentage to
Size Sample Universe
A. NGOs: Indigenous 224 25 10%
International 120 6=31* 5%
+
. Funds Providers 3, 173 310 9. 77%
B. Officials of ROA & DPPC ROA = 6
(Looking after the NGOs DPPC = 9
accounts)- Census enquiry 15 100%
C. Chief Accountants of NGOs 31 31 100%
(Census enquiry)
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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