HARAMAYA UNIVERSITY

COLLEGE OF DISTANCE AND CONTINUOUS EDUCATION

A PROPOSAL ON ASSESSMENT OF ACCOUNTING PRACTICE AND

By Hamza Dawid
ID NO. Hu/Ac/021/14

A DVISOR: Mr. Nesru Kasim

May, 2021
HARAMAYA, ETHIOPIA
 Contents
ACRONOMY............................................................................................................................4

CHAPTER ONE........................................................................................................................5

1. INTRODUCTION..................................................................................................................5

1.1. Background of The Organization........................................................................................5

1.2. Statement of The Problem...................................................................................................6

1.3. Basic Reach Question.........................................................................................................6

1.3 Objectives of The Stud.........................................................................................................7

1.3.1 General Objective.................................................................................................................7

1.3.2 Specific Objectives...............................................................................................................7

1.4 Significance of the study......................................................................................................7

1.5. Scope of the Study..............................................................................................................7

CHAPTER TWO........................................................................................................................8

2. REVIEW OF RELATED LITERATURE..............................................................................8

2.1. The Concept Of Accounting..............................................................................................8

2. 2. Definition and Characteristics of Non-Governmental Organization..................................8

2.3. Not For-Profit Organization................................................................................................9

2.4. Funds and Fund Accounting................................................................................................9

2.5. Fund Accounting by Non-Profit Organization....................................................................9

2.5.1. Unrestricted Fund...............................................................................................................10

2.5.2. Restricted Fund..................................................................................................................10

2.5.3. Endowment Fund...............................................................................................................10

2.5.4. Agency Fund......................................................................................................................10

2.5.5. Annuity Fund......................................................................................................................11

2.5.6. Life Income Fund...............................................................................................................11

2.5.7. Loan Funds.........................................................................................................................11

2.5.8. Plant Fund..........................................................................................................................11

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 2.6. Accounting for Not-For Profit Organizations...................................................................11

2.7. Valuation of Fixed Assets..................................................................................................12

2.8. Basics of Financial Statements..........................................................................................12

2.8.1. Balance sheet......................................................................................................................12

2.8.1.1. Limitations of Balance Sheet......................................................................................13

2.8.2. Income Statement...............................................................................................................13

2.8.2.1. Limitations of Income Statement:...............................................................................14

2.8.3. Cash Flow Statement:.....................................................................................................14

2.8.4. Statement of shareholders' equity’s................................................................................14

2.9. Accounting for Revenues, Gains, and Support.................................................................14

2.2. Review of previous empirical study..................................................................................15

CHAPTER THREE..................................................................................................................16

3. RESEARCH METHODOLOGY AND DESIGN................................................................16

3.1. Research Design................................................................................................................16

3.2. Study Area.........................................................................................................................16

3.3. Source of Data...................................................................................................................16

3.4. Population, Sample and Sampling Techniques.................................................................16

3.5. Instrument of Data collection............................................................................................17

3.5.1. Questionnaires....................................................................................................................17

3.6. Procedures of Data Collection..........................................................................................17

3.7. Data Analysis Techniques and Presentation......................................................................17

4. Work Plan.............................................................................................................................18

5. Logistic.................................................................................................................................18

5.1 Cost of Stationary Materials and Others............................................................................18

REFERENCE...........................................................................................................................19

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ACRONOMY
NGO: Non- Governmental organizations
ERCS: Ethiopian Red Cross Societies
NFPO: Non For-Profit Organization
ERCSHRB: Ethiopian Red Cross society Harari Regional Branch
NS: National Society

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 CHAPTER ONE
1. INTRODUCTION
1.1. Background of The Organization
The Ethiopian Red Cross Society was established by government decree on 8 July 1935
and became 48th member of the International Federation of Red Cross and Red Crescent
Societies on September 25 of the same year. The NS is an independent organization
established and recognized by law through a National Charter adopted in 31 October
1947.The Charter has undergone various parliamentary revisions, the last being that of
1999.ERCS has a structure consisting of 11 regional offices, 33 zonal branches, 88 district
(woreda) branches, and more than 4,500 committees (Kebele Red Cross Committees) at
grass root-level.7 The NS is governed by elected board members at national and branch
levels. The boards set the general direction of the National Society. A national assembly
is convened every two years and elections of governing board members are held every four
years. The ERCS began its humanitarian operations to the wounded soldiers sick combatants
and civilian victims of the Italian war of aggression in 1935. Since its establishment it has
been rendering various services to communities vulnerable to and affected by natural and
manmade disasters through provision of ambulance service, community based first aid
service, emergency responses, restoring family links, essential drug program, water and
sanitation, HIV/AIDS and related services. It also runs disaster risk reduction programs like
food security, climate change adaptation, livelihood diversification and institutional capacity
building interventions with the aim of creating resilience households and communities.
The Ethiopian Red Cross Society Harari regional Branch is the first branch established in
1975 EC, during Ethio-Somali conflict. Harari Regional branch provides humanitarian
assistance in Harar town and 3 woreda cross committees. The branch has 22 volunteer and
3996 members. The Ethiopian Red Cross society Harari regional Branch based on the charter
of the national society to carry out disaster response and regular humanitarian services. With
the current socio economic situation of the region the red cross branch humanitarian free
services (ambulance, first aid, HIV/AIDS prevention, care and support program, tracing and
essential drag distribution) and its other health and health related development programs are
viewed with a high degree of appreciation by the beneficiaries and the public at large. Like
Ethiopian Red Cross Society operating in the country, Ethiopian Red Cross Society Harari
branch also engages in a number of projects in the country mainly humanitarian services

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including disaster relief, first aid, training, basic health care, blood donation services, health
and hygiene promotion, HIV and AIDS support, and water and sanitation (ERCS, 2015).
Basically, there are also other critical issues to be dealt with in this project implementation.
Financial constraints are among the basic factor to be assessed for the success of such project.
This study is concerned with the accounting practices and its problems the case of ERCS in
Harari Regional branch. They are distinctive from other organization by (i) hybrid structure
in terms of status features, (ii) service being the main objective, (iii) absence of profit motive,
(iv) public support, (v) accountability to the resource providers by stewardship function
through appropriate accounting control system such as fund accounting and budgeting and
(vi) democratic management. In the context of present study, the following major accounting
features of ERCS are worth noting: basis of accounting, financial statement, budgeting
system ERCS, source of fund, accounting system
1.2. Statement of The Problem
An accounting practice is intended to enforce affirms accounting guidelines and policies, it
exists as the daily recording of financial data that is important to the evaluation and
monitoring of the organization. Therefore, organizations have their own accounting practice
based on the characteristics of their service. In order to provides the users with necessary
information. All accounting system is the means by which a company records and stores the
financial and managerial information from its transaction so that it can retrieve and report the
information in an accounting statement (Bazley, 2010)
According to PHIL (2014), stated that, the problems of most NGOs is face in applying the
theories and practices of appropriate accounting system to be changes that happen through
time, growth that occurred since the establishment of the organization, and increase in
business transaction based on accounting cycle, generally accepted accounting
principle(GAAP), computerized accounting system and internal control system. But, other
unstudied problems most NGOs faces some problems in implementing and applying the
theories and practices of appropriate fund accounting some of them are:- variation between
budgeted and actual and their consequences in the accounting practice, not preparing
financial reports covering all funds, if promised donation is not obtained to finalize the
project, financial statements does not include disclosure of promise to give and financial
transactions during the period.
Based on those problems the study will be focused on an appropriate implementing and
applying the theories and practices of appropriate accounting system. Thus, the study will be

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focused on the above unstudied issues and forward possible conclusion and recommendation
at the end.
1.3. Basic Reach Question
1) To what extent the accounting practice of Ethiopian Red Cross society in Harar
branch?
2) To what extent the financial statements of the organization includes disclosure of
promise to give?
3) How to examine the consequence of accounting practice if there is variation between
budgeted and actual activity Ethiopian Red Cross society in Harari regional branch?
4) What are the problem in accounting practice of the ERCS in Harari regional branch?
1.3 Objectives of The Stud
1.3.1 General Objective
The general objective of this study is to assess the accounting practice and its problem in case
of Ethiopian Red Cross society in Harari regional branch.
1.3.2 Specific Objectives
The study will have the following specific objectives: -
1) To assess the accounting practice of Ethiopian Red Cross society in Harari regional
branch.
2) To assess the problem in accounting practice of the ERCS.
3) To assess the financial statements of the organization includes disclosure of promise
to give.
4) To examine the consequence of accounting practice if there is variation between
budgeted and actual activity.
1.4 Significance of the study
The study will be beneficiary to the management of Ethiopia Red Cross Society, other local
nongovernmental organizations and for any other researcher in identifying the proper usage
of accounting system in accordance with accounting principles and standard of FASB, the
student researcher has got practical application before joining to the practical world. Besides
this study will be help the decision maker to decide on the financial statement of the
organization by making comparisons of the theoretic aspect with the actual practice of the
organization. At the end this research can serve as secondary source for further study.
1.5. Scope of the Study
The study will be focused on the assessment of accounting practice and its problems in
Ethiopia Red cross society of Harari Regional Branch far from 526 km from the head. Among
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the different accounting practice this research paper will be focused on basis of accounting,
financial statement, budgeting system ERCS, source of fund, accounting system in ERCA
by making a case study of the ERCS Harari regional branch.
CHAPTER TWO
2. REVIEW OF RELATED LITERATURE
2.1. The Concept Of Accounting
Accounting is the process of identifying, measuring and communicating economic
information to permit informed judgments and decision by users of the information (Bob
Schneider, 2010). Accounting is a service activity to provide quantitative information about
economic entities. The information is primarily financial in nature and is intended to be
useful in making economic decisions. Accounting reports are used in describing the activity
and financial status or many different kinds of economic entities (Kermit & Larsson, 1990).
The major purpose of accounting system is to provide us full information to both external
users and to the company’s managers for making operating decisions. Many transactions
result in important financial managerial information. All accounting system is the means by
which a company records and stores the financial and managerial information from its
transaction so that it can retrieve and report the information in an accounting statement. All
companies have accounting system ranging from the very simple such as check book to the
complex involving the use of networked computers (Bazley, 2010). The basic accounting
model provides a frame work for accounting system and is the basis for recording transaction.
This model for the corporation called the residual equity theory modes is usually expressed in
an equation (Bazley, 2010). The way in which management is given the information for the
use conducting the affairs of business and in reporting to owners, creditors and other
interested parties is called the accounting system. In general sense an accounting system
include the entire network of communications used by a business organization to provide
needed information (Fees Warren, 1998). Basics of financial accounting system that a
company can use it either a manual or a computer accounting process regarding to be
primarily interns of manual system the components of an accounting system include the
frame work for operation of the system. The input source document the records used to store
accounting information of the output report (Bazley, 2010)
2. 2. Definition and Characteristics of Non-Governmental Organization
A Non-Governmental Organization (NGO) is an organization that is neither a part of a
government nor a conventional for-profit business. It usually set up by ordinary citizens;
NGOs may be funded by governments, foundations or businesses. Some avoid formal
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funding altogether and are run primarily by volunteers. NGOs are highly diverse group of
organizations engaged with a wide range of activities, and take different forms in different
parts of the world. Some may have charitable status, while others may be registered for tax
exemption based on recognition of social purposes. Others may be fronts for political,
religious or other interest groups (Regina E, H., & Densie N, 1994, P-1). Not for profit
originations (NPO are characterized) by the absence of owners and dependence on
contributions, dues, charges for services, and investment income for revenue rather than taxes
Characteristics
 Contributions of significant amounts of resources from resource providers
 Operating purposes other than to provide goods or services at a profit
 Absence of ownership interest like those of business enterprises (Kattelus, Recr &
Wilson, 2005, P 555)
Non-profit organization includes any organization that is exempted from payment of taxes
and whose primary purpose is to be benefit society. Nonprofit organizations are unlike
businesses because they don’t exist to earn a profit (Regina E, H., & Densie N, 1994, p 1-2)
2.3. Not For-Profit Organization
Not for-profit organizations are a legal and accounting entity that is operated for the benefit
of Sthe societies whole rather than for benefit of an individual (Larson, 2005). Not for profit
accounting specializes in recording, reporting and planning the operations of various
governmental units and other non-for profit organizations such as churches and educational
institutions. An essential element is an accounting system that will insure strict adherence on
the part of management to restrictions and other requirements imposed by law, by other
institutions or by individual donors (Fees &Warren, 1998)
2.4. Funds and Fund Accounting
A fund is a fiscal and accounting entity with a self-balancing set of accounts recording cash
and other financial resources together with all related liabilities and residual equities or
balances and changes their in. which are segregated for the purpose in accordance with
special regulations, restrictions or limitations. A fund in the not-for profit sense is a self-
contained accounting entity with its own asset, liability, revenue, expenditure or expenses and
fund balance or other equity account and with its own ledger. (Lynn &Free Man, 2004)
2.5. Fund Accounting by Non-Profit Organization
The internal accounting until for many non-profit organizations is the fund, which is an
accounting entity, with a self-balancing set of accounts recording cash and other financial

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resources, together with all related liabilities and residual balances, and changes there in,
which are segregated for the purpose of carrying on specific activities or attaining certain
objectives in accordance with special regulations, restrictions, or limitations Separate funds
may be necessary to distinguish between assets that may be used as authorized by the board
of directors and assets whose use is restricted by donors. Funds commonly used by some of
the NFP.
 Unrestricted fund (sometimes called unrestricted current fund, general fund)
 Restricted fund (sometimes called restricted current fund or current restricted fund)
 Endowment fund
 Agency fund (sometimes called custodian fund)
 Annuity fund and life income fund (sometimes called living trust fund)
 Loan fund
 Plant fund (sometimes called land, building and equipment fund). The above
important and basic funds are presented below (Larson, 2005)
2.5.1. Unrestricted Fund
It includes all the assets of the non-profit organization that are available for use as authorized
by the board of director and are not restricted for specific purposes. Thus, similar to the
general fund of governmental entity, an unrestricted fund is residual in nature.
2.5.2. Restricted Fund
Nonprofit organizations establish restricted funds to account for assets available for current
use but expendable only as authorized by the donor of the asset. Thus, a restricted fund of
NFP organization resembles the special revenue funds may be expended only for specific
purposes.
2.5.3. Endowment Fund
An endowment fund of a non-profit organization is similar to a non-expendable trust fund of
a governmental entity. A permanent endowment fund is one for which the principal must be
maintained in definitely in revenue producing investments. Term endowment fund may be
expended after the passage of a period of time or the occurrence of an event specified by the
donor of the endowment principal. A quasi endowment fund is established by the board of
directors of a non-profit organization, rather than by an outside donor.
2.5.4. Agency Fund
An agency fund of a non-profit organization is used to account for assets held by a non-profit
organization as a custodian. The assets are disbursed only as instructed by the owner. For

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example, a non-profit university may act as a custodian of cash of a student organization. The
university disburses the cash as directed by the appropriate officers of the student
organization. The undistributed cash of the student organization is reported as a liability of
the university’s agency fund, rather than as a fund balance, because the university has no
equity in the fund.
2.5.5. Annuity Fund
Assets may be contributed to a non-profit organization with the stipulation that the
organization pay specified fixed amounts periodically to designated recipients, for a specified
time period. An annuity fund is established by; the non-profit organization to account for this
arrangement. At the end of the specified time period for the periodic payments, the
unexpended assets of the annuity fund are transferred to the unrestricted fund or to a
restricted fund or endowment fund specified by the donor.
2.5.6. Life Income Fund
A life income fund is used to account for stipulated payments to a named beneficiary during
the beneficiary’s time. In a life income fund, only the income is paid to the beneficiary. Thus,
payments to a life income fund’s beneficiary vary from one accounting period to the next, but
payments from an annuity fund are fixed in amount.
2.5.7. Loan Funds
A loan fund may be established by any non-profit organization, but loan funds most
frequently are included in the accounting record of colleges and universities. Student loan
funds generally are revolving; that is a sold loan are repaid, new loans are made from the
receipts. Loans receivable are carried in the loan fund at estimated realizable value;
provisions for doubtful loans are debited directly to the fund balance ledger account, not to an
expense account. Interest on loans is credited to the fund balance account, ordinarily on the
cash basis of accounting.
2.5.8. Plant Fund
The components of plant funds vary among non-profit organizations. In addition to plant
assets, plant funds may include cash and investment earmarked for additions to plant assets
and mortgage notes payable and other liabilities collateralized by plant assets. Sinking fund
assets set aside for retirement of debt incurred to acquire plant asset also may in plant funds.
2.6. Accounting for Not-For Profit Organizations
Accounting is the process of measuring economic events. It is the language in which all
financial management is conducted. Accounting supports the management of non-profit
organizations in several ways. For one, the accounting system and the financial statements it
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produces provide a historic record of the financial activities and status of an organization.
These can be used to assess the organization’s steward ship of the resources entrusted to it.
(Steward Ship is the responsibility for using resources in the ways intended by their donor.)
Accounting also provides the basis for the diagnostic tests and measurements known
collectively as financial Even though part or all of the revenue is to be waived or reduced.
Suppose for example that the nonprofit community hospitals are patient service records for
June1999 include the following journal entries are appropriate for the community hospitals in
addition to cash contribution NFP organization often receives contribution of material,
services and facilities. For instance, a hospital receives free drugs or a university may receive
free operating services. The contribution material is recorded in the inventories ledger
account at its current fair value with a credit to a revenue account in unrestricted fund.
(Larson, 2005)
2.7. Valuation of Fixed Assets
The fixed asset accounts should be maintained on the basis of original cost or estimated on
the basis of original cost or the estimated cost if the original cost is not available or in the
case of gifts the appraised value at the time of received. Nongovernmental organizations
frequently acquire properties by gift rather than through purchase where assets are acquired
in this manner. On the other hand, the question arises as to whether the net appraised value
should be initially recorded as net figure or whether the donors original cost and a cumulative
allowance for depreciation should be set up on the NGOs units books. Since a recording of
donor’s original cost provides a better basis for subsequent depreciation. However, the
committee recommends this method of recording the asset in the accounts of NGOs units.
(Larson, 2005).
2.8. Basics of Financial Statements
Financial reporting system of a company utilizes its specially determined accounting
statements and rules of their application. Regulation and use of financial reports is
coordinated by national or international accounting standards. There are four main financial
statements.
 A balance sheet
 An income statement
 Cash flow statement and
 Statement of shareholder’s equity.

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 2.8.1. Balance sheet
Shows what a company owns and what it owes at the certain moment of time. It provides
details about company’s assets, liabilities and share holder equity. This provides the value of
firm’s assets (what a firm own), liabilities (what the firm owes to outsiders) and equity (what
the inside shareholders or owners own) on a particular date. The value of assets will equal to
the value of liabilities plus owners’ equity (A=L+E). Items in the balance sheet are listed
based on conservative principle; e. if estimating or in doubt of the actual value. The value of
assets is not being overstated and the value of liabilities is not being understated. Assets are
things that a company owns that have value. Assets include physical property and things that
non material but nevertheless exist and have value, such as trademarks and tents. In addition,
cash itself is assets in a balance sheet. Assets are generally listed based on how quickly they
can be converted (current and noncurrent assets) in to cash. Current assets include cash,
marketable securities, account receivable, inventory, prepaid expenses that are more liquid
than the long term (fixed assets) which include equipment, land, asset that are intangible and
valuable example, good will patents, deferred charges. Liabilities could include current
liabilities (example, bank advance, income tax payable, and accounts payable, accrued
expenses), deferred income tax (difference between the tax reported on the income statement
and tax reported on tax return), minority in subsidiary companies (representing outside
ownership in subsidiary companies) and long term debt (example, bonds, and capital leases).
Shareholder equity includes share capital (par or stated value of share received at the time of
original issues), paid in capital (when shares are sold for more than the par or stated value),
retained earnings/deficit (undistributed earnings). Equity is also expressed as “residual
interest” (E=A-L). E is negative the firms is technically bankrupt.
Net worth or book value refers to what is available to common shareholders and is given by:
Total asset- Total liabilities-preferred stock=Net worth. Net worth divided by numbers of
common shares outstanding will give us the book value per share. The market value is equal
to the price per share times the number of the number of share outstanding (also referred to as
the market capitalization of a company) we can estimate the intrinsic value of stock by using
discounted cash flow models.
2.8.1.1. Limitations of Balance Sheet
The balance sheet records the values of assets and liabilities in terms of their original cost.
This is especially misleading for fixed assets (that could have significantly changed in value).
It is also difficult to value intangible assets. Current assets are less troublesome; partly

13
 because of their short-term nature (inventories and marketable securities are listed at lower of
their cost or market values) liabilities are also not biased (since they are generally contractual
and market values will be equal to their book values; for example, if the company has taken a
loan, the birr amount of loan obligation does not change with time). Also, an analyst should
pay close attention to “off-balance Sheet Items”.
2.8.2. Income Statement
The income statement of provides information on the various revenue and expense items
during a certain period. Thus, this statement shows the total income generated in a certain
period. An income statement also shows the costs and expenses associated with earning of
that revenue. The end line of the statement usually shows the company’s net earnings or
losses. Items in the income statement are based on accrual principle i.e. transactions (such as
sales) are recognized when they occur and not when actual cash is received. Furthermore, the
expenses are matched to when the revenue is recognized and not when the actual payment is
made. The above principle makes it obvious that there could be wide discrepancy between a
firm’s revenue and actual cash flow.
2.8.2.1. Limitations of Income Statement:
In finance, the focus is on valuation that requires knowledge of expected cash flows rather
than historical earnings. Note net income does not equal cash flow. This is because the
income statement reports revenue/expenses when they are earned or accrued and not when
actual cash is received. Further, several items are subjectively determined (depreciation).
Also depreciation is based on historical cost of the asset. Thus, during periods of inflation,
depreciation expense will be understated as it is based on historical cost while the revenues
reflect the current market price. Such non-synchronization leads to inflated earnings.
Furthermore, a traditional income statement only records transaction and not opportunities.
2.8.3. Cash Flow Statement:
Reports a company’s inflows and outflows of cash. This statement shows whether the
company generated cash or not. Generally, cash flow statements are divided in to three main
parts. Each part reviews the cash flow from one of three types of activities: 1) operating
activities; 2) investing activities; and 3) financing activities. It shows how the company
obtained cash and for what purpose they were used.
2.8.4. Statement of shareholders' equity’s
Shows changes in the interests of the company’s shareholders over time. It is the value that would
be left if a company sold all of its assets and paid off all of its liabilities. In other words, it is a net

14
worth of accompany. It belongs to the shareholders, or to the owners of the company (Homewood,
1987)
2.9. Accounting for Revenues, Gains, and Support
Not-for-profit organizations have traditionally distinguished revenues, gains and support.
Revenue represent increases in unrestricted net assets arising from bilateral exchange
transactions in which the other party to the transaction is presumed to receive direct tangible
benefit commensurate with the resource provided. Examples are membership dues, program
service fees, sales of supplies and services and investment income. Gains such as realized
gains on investment transactions and gains on sale or disposal of equipment are increases in
net assets relates to peripheral or incidental transactions of the entity and often beyond the
control of management. Support is an increase in net assets arising from contributions of
resources or non-exchange transactions and includes only amounts for which the donor
derives no tangible benefits from recipient agency. (Kattelus, Recr, Wilson, 2005 P-564)
2.2. Review of previous empirical study
Abdul-Rahman, A and Goddard, A. (1998) initiated a study on” An interpretive inquiry of
accounting practices in religious organizations. The study of accounting practices was rooted
in two religious organizations in Malaysia; the research was an attempt to study accounting
practice in a cultural setting. The study also makes a contribution towards the need for
accounting research to become more explanatory of accounting as social practice and is
developed by observation. This is achieved by developing grounded theory from the data and
is in accordance with resent calls for case studies in accounting research to be more
concerned with producing social theories of accounting practice.
Andrew, G., & Mussa, J., A. (2006) study on” accounting and navigating legitimacy in
Tanzania NGOs” observed the phenomenon of accounting in non-governmental
organizations(NGOs). The study seeks to complete accounting processes and reporting
practices in NGOs and the conditions that sustain those processes and practices. The study
reviewed that NGOs have become important institutions in world affairs but accounting
research has not developed significant interest in their operations. The research recognized
the importance of accounting in the process of navigating organizational authenticity.

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 CHAPTER THREE
3. RESEARCH METHODOLOGY AND DESIGN
3.1. Research Design
The intention of the study will be on the assessment of accounting practice and its problems
in ERCS Harari Regional branch. In order to achieve the objectives of this study and get
relevant and sufficient information on research problem, descriptive survey design will be
employed. A descriptive survey design, objectives are predetermined allowing data
collection to be relevant and sufficient to the study problem (Abalang.J.A., 2016).
For this study the researcher will be used both quantitative and qualitative data. The closed
ended questionnaires will be designed and prepared by the researcher and distributed to
ERCS Harari Branch experts. In addition, the study will be employed qualitative data by an
open ended questionnaire with the organization accounting practice professionals. In line
with this, quantitative research is a formal, systematic process that describes and tests
relationships and
examines causes among variables. On the other hand, the data obtained from the open ended
will be analyzed qualitatively.
3.2. Study Area
The area chosen for this study is ERCS Harari Regional branch, which the first branch
established in 1975 EC, during Ethio-Somali conflict. The office of this branch found in
Harar city far from 526 kilo meter from the head office which found in Addis Ababa.
3.3. Source of Data
The study will be conducted by collecting data from both primary and secondary sources.
Primary data will be collected from the staffs of the ERCS Harari Regional Branch based on
a
structurally designed questionnaire. It will be included both closed ended and open-ended
questions, which gives the respondents an opportunity for adequate expression of their
view on the questions. In addition, secondary data will be collected from different documents,

16
records, regulatory organ reports, from web site, books, annual reports and magazines,
articles and journals.
3.4. Population, Sample and Sampling Techniques
In research methods, population is the entire aggregation of items from which samples
can be drawn (Kothari, 2012). The total population of the organization is 31 respondents. All
of them will be selected through census sampling techniques. Because population or the
universe size is small it is no use to resort in to a sample survey. According to Kothari (2012)
Sampling refers to the process of obtaining information about an entire population by
examining only a part of it.
3.5. Instrument of Data collection
3.5.1. Questionnaires
The main method of data collection for this study will be the questionnaire. According to Yin
(2003), structured questioners are important method for collecting primary data and that it
further allows the researcher to be well focused on the specific research topic. Questions
present in the form of affirmative statements, relating to the concepts on major accounting
features of ERCS are worth noting: basis of accounting ,financial statement, budgeting
system ERCS, source of fund, accounting system and the problem in accounting practice of
the ERCS in Harari branch. The respondents will be asked to indicate their level of agreement
on a five point likert scale with the following ratings. Strongly agree (SA; or 5), agree (A;
or 4), neutral (N; or 3), disagree (DA; or 2), and strongly disagree (SD; or 1). The
questionnaire
is close ended questionnaire to elicit guided responses and for easy analysis and to
obtain additional information, the respondents will be requested to provide open-ended
responses if they have opinions which they feel the researcher will be found useful.
3.6. Procedures of Data Collection
In order to achieve the objective of the study, the researcher goes through series of data
gathering procedures. The relevant data will be gathered by using questionnaires. To
accomplish this task formal latter of clearance and recommendation will be granted from
Haramaya University for getting permission. the researcher has contacted the head of ERCS
Harari Regional branch for consent. After making agreement with the concern participants;
the researcher will be introduced his objective and purposes. Then the questionnaires will be
administered to sample respondents. The participants allow giving their own answers to each
item independently as need by the researcher. They will be closely assisted and supervised by

17
the researcher himself. Finally, the questionnaires will be collected back at the right
appointment.
3.7. Data Analysis Techniques and Presentation
In order to meet the stated research objectives, the collected data will be analyzed based on
the nature of the objective. Accordingly, the data collect via closed ended questionnaires will
be analyzed with descriptive statistics using statistical package for social scientists (SPSS)
V. 20.0. Furthermore, Wolcott (1994) cited in Creswell (2003; pp. 184), suggested that
qualitative research is fundamentally interpretative i.e. the researcher makes an
interpretation of the data. Thus, the data that collect from the open ended questionnaires will
be interpreted qualitatively. To sum, the analysis of quantitative data and interpretation of
qualitative data combines to seek convergence among the results (Creswell, 2003)
4. Work Plan
This study is assumed to be accomplished from December 2021
No. Research activities April May June July August
1 Literature review X
2 Finalizing of proposal X X
3 Preparation of data collection instrument X
4 Distributing of questioner and collecting data X
5 Data entry and editing X
6 Data analysis and interpreting writing X
7 Writing essay, editing and submitting X

5. Logistic
5.1 Cost of Stationary Materials and Others
No Items Unit Quantit Unit price Total price
y
1 printing paper Ream 1 90.00 90
2 Pen Pieces 5 10 50.00
3 Pencils Pieces 4 1.00 4.00
5 Note book Pieces 1 6.00 6.00
6 Toner Pieces 1 1300.00 1300.00
7 Flash disk Pieces 1(8GB) 180.0 180.0
8 Eraser Pieces 1 2.00 2.00

18
 9 Transportation 180
10 Mobile card 200
Total 2008.00

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