1.

0 ACCOUNTING FOR GOVERNMENT REVENUE

1.1 INTRODUCTION

 Large proportion of recurrent revenue is collected by the Ministry of

Finance (Treasury) through its collecting agents.

 Hence the treasury places greater responsibility of collecting and

accounting for government revenue on the Receivers of revenue.

 Development Revenue which comprises of Loans and Grants is

only collected and accounted for by the Treasury.

 Regulations further require that all government revenue must be

banked intact and transferred to the exchequer account before an
approval of expenditure is granted.

1.2 THE PROCEDURES FOR ACCOUNTING FOR CASH AND CHEQUE

RECEIPTS

 Revenue in form of cash or cheque is collected by receiver of

revenue, collector of revenue or sub-collector of revenue.

 When revenue is tendered an Exchequer Receipt Voucher (ERV) is

raised in four copies.

Distribution is made as follows:

First copy - to the person tendering the money

Second copy - attached with the Revenue Collectors

Cash Book (RCCB)

Third copy - filed in case the second copy is

misplaced

Fourth copy - remains in the Receipt Book.

 If there is over collection (cash overages) or under collection (cash

shortages), there are some accounting treatments to be taken into
account:

Overages - Issue and ERV and credit

Miscellaneous Revenue account

Cash shortages - Replaced or Loss Report is prepared

and submitted to the Receiver of
Revenue.

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NB: for insignificant amounts,
replaced from the own pocket of the
Revenue collector. For significant
amounts – Loss Report must be
prepared and submitted to the
Receiver of Revenue.
 Banking

- Daily collections should be banked intact and on the

same day at the nearest NMB Bank, NBC or B.O.T
whichever is applicable.

- Banking is done by the cashier by filling five copies of

Bank pay In Slips (BPIS)

- All these copies of Bank Pay in Slips must be rubber

stamped and the first three copies are retained by the
bank.

At the Revenue Collector’s office, fourth copy of Bank

Pay In Slip and original sheet of the Revenue Collectors
Cash Book and the second copy of Exchequer Receipt
Voucher are submitted to the receiver of revenue.
Therefore, the second copy of Revenue Collectors Cash
Book and fifth copy of BPIS remains with the collector of
revenue as his permanent document of evidence.

 At the Receiver of Revenue’s Office

The batches of Revenue Collectors Cash Book, Exchequer Receipt

Voucher and Bank Pay In Slips will be posted by debiting the
Revenue Receipt Cash Book and Credited the appropriate revenue
account.

1.3 ACCEPTANCE OF CHEQUES BY THE GOVERNMENT

Government offices are allowed to accept cheque of legal payment as

legal tender provided the following conditions are observed:

(a) A cheque should be “crossed” – Accounts Payee Only.

(b) Third party cheques should not be accepted i.e cheques drawn
in favour of the payee who subsequently endorses in favour of
the government.

(c) Post-dated cheques should not be accepted.

(d) In case a cheque is suspected to be dishonoured the Collector

of Revenue should demand cash instead.

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1.4 DISHNOURED CHEQUES

A cheque is said to be dishonoured if the drawer bank has returned it

to the drawee after learning out that the cheque cannot be cleared by
the drawer’s bank due to either technical problems on the cheque or
lack of sufficient funds to accommodate the cheque.

A cheque can be dishonoured by one or more of the following factors:

i) Signature on the cheque differs with specimen signature

in the bank.

ii) Amount in figures differs with amount in words.

iii) If the cheque is stale. Usually six months after the date
was prepared.

iv) If the cheque contains unauthorized alterations.

v) Lack of sufficient funds in the drawers account

vi) If the cheque is mutilated/defaced.

1.5 SECURITY AND CONTROL OF OFFICIAL RECEIPTS AND FORMS

 Various receipt books or forms are issued to collectors of revenues

to be used for acknowledgement of receipt of public monies. If they
are not controlled and accounted for properly, there is a possibility
of being mis-used.

 It is therefore important for the officer entrusted to exercise some

maximum control measures over marketable documents. The
following procedures may help to minimize or eradicate the
malpractices over public monies:

i) A thorough check of all stocks received in order to ensure

that:

a) They are free from printing errors

b) Items and quantities received correspond with orders.

ii) Stocks received must be stored in safe custody – preferably

in strong rooms.

iii) Proper and accurate records should be maintained i.e A

register to be kept to record stocks received, issued and
balance held at any point in time.

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iv) Accurate and prompt submission of all used and unused
receipts (from collectors of revenue to receivers of revenue).

v) Avoiding overstocking of the official receipts and forms.

vi) Ensure proper internal control in the system (i.e separation of

functions).

vii) Prompt/surprise checks by receiver of revenue on all unused

receipts against issues and receipts records.

1.6 LOSSES OF PUBLIC MONIES

 Losses of public monies could be due to:

a) Robbery of cash.

b) Defalcations through falsifications of accountable

documents/receipts by tempering or robbering e.g.
Carbon slipping.

 Courses of actions to be taken by an account officer immediately

after receiving a loss report.

1. Undertake a critical examination of the loss to ascertain its

completeness

2. Open a separate file for each loss and all follow-up actions
affected through it

3. Loss due to defects in the rules or regulations – get the rules

amended

4. Loss due to negligence of the officer – put to task the officer

concerned for recovery

5. For cases with police, a copy of report of inquiries should also

be made available to the accounting officer.

6. For cases in the court, court judgment should also be obtained

for taking actions e.g. claiming for compensation etc.

7. Maintain a Losses Register giving details of Losses, Recovery

and Write - off

 At the end of financial year, this is in corporate as a footnote to the

appropriation account.

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1.7 ACCOUNTING TREATMENT FOR LOSSES CASH RECEIPTS

a) Losses of cash by Revenue collector before issue of a receipt.

- Prepare a payment voucher in the name of the Accounting Officer
charging the expenditure account code 2202 – Losses of public money.
The cheque drawn will then be submitted to the revenue section and
the collector will acknowledge receipts by issuing the necessary
Exchequer Receipt Voucher in favour of the person who tendered the
money.

b) Losses of Cash after issue of receipt:

- A payment voucher will be prepared charging the losses expenditure
account code 2202 and the cheque will be dispatched to the revenue
collector concerned to enable him to balance the receipt and bank the
cheque to the respective Paymaster General Recurrent Revenue a/c.

c) Losses through frauds:

Assuming the correct payment was supposed to be shs. 150,000/=, the

actual payment made fraudulently was shs., 300,000/= thereby causing
a loss of shs. 150,000/=.

Procedure:
Prepare a journal voucher (JV) debiting the loss (amount of shs.
150,000) to the Losses Expenditure a/c code 2202 and crediting the
same to the expenditure a/c to which the amount was originally
charged, so as to adjust the expenditure to its correct position.

d) Losses of fixed fee receipts

- If the receipts have already been used to acknowledge cash – treat
this as a loss of cash

- Unused Receipts – Loss report should be prepared and submitted to

the Receiver of Revenue:; principal secretary – Treasury and the
Controller and Auditor General.

1.8 PERIODIC REVENUE/FINANCIAL STATEMENTS REQUIRED.

There are a number of revenue statement s required to be submitted

from one point to another until they reach the Controller and Auditor
General.

A) SUB – COLLECTORS TO COLLECTORS OF REVENUE

i) Monthly revenue collection progress report.

ii) Monthly unused receipts/returns.

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iii) Monthly revenue verification report.

iv) Arrears of Revenue outstanding as at 30th June and 31st

December of each year.

B) COLLECTORS OF REVENUE TO RECEIVERS OF REVENUE

i) Monthly flash report.

ii) Monthly revenue verification report.

iii) Arrears of revenue outstanding as at 30th June and 31st

December every year.

C) RECEIVERS OF REVENUE TO CONTROLLER AND AUDITOR

GENERAL OR TREASURY

i) Monthly Flash report on Revenue collection.

ii) Bank reconciliation statements (Monthly).

iii) Monthly unused receipts/returns.

iv) Quarterly statements of Revenue .

v) Annually Statements of Revenue

1.9 STATEMENT OF REVENUE

 At the end of the financial year, the Receiver of Revenue is required to

prepare and submit to the CAG and Treasury a Statement of Revenue
Received during the year. This should be within a period of four
months after the expiry of the financial year in question.

FORMAT OF THE STATEMENT OF REVENUE

MINISTRY ‘X’/REGION ‘X’

STATEMENT OF REVENUE RECEIVED DURING THE YEAR
ENDED 30TH JUNE 20XX

REVENUE DETAILS APPROVED ACTUAL OVER UNDER

ITEM “CODE (NOMENCLA ESTIMATES RECEIPTS COLLECTION COLLECTION
NO” TURE)

 Statement of revenue received is usually accompanied by footnotes

depending on circumstances:

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i) Reasons for material differences between approved estimates
and actual receipts

a) If the difference is less than one million and the difference

is at least 25% of the approved estimates, then such
difference should be explained by the Receiver of
Revenue.

(b) For amounts equal or more than one million shillings,

variation of 2.5% or more should be explained.

ii) Statements of Arrears of Revenue as at 30th April, 19 x 9 and

uncollected as at 30th June.

- This should be in respect of the current year collection,

uncollected as at 30th June of the preceding financial
year.

iii) Statement of Arrears of Revenue abandoned during the year i.e

amounts written – off.

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ILLUSTRATIVE QUESTION:

 The following information pertains to Arusha Region, Vote No. 80

for the year ended 30th June, 2010.

CODE DETAILS APPROVED ACTUAL

ESTIMATES REVENUE
1902 Forest Royalties 10,000,000 12,000,000
1903 Farm Produce 12,000,000 8,000,000
1904 Honey Bee Licence 4,000,000 6,000,000
1905 Forest Industrial Unit 3,200,000 3,280,000
2140 Recovery of Public movies 100t 160,000

 The following revenue which are in arrears as at 30th June, 2010,

fell due since 2008/09 financial year and April, 2010 respectively.

CODE ITEM 2008/09 OR 2009/10 UP TO

EARLIER 30TH APRIL
1902 Forest Royalties 2,402,000 7,436,000
1903 Farm Produce 402,000 812,000
1904 Honey Bee Licence 80,000 400,000

 The following revenue amounts were abandoned during the

financial year ended 30th June, 2010.

ITEM AMOUNTS ABANDONED

1902 Forest Royalties 800,000

1904 Honey Bees Licence 60,000

REQUIRED:

Prepare a Statement of Revenue Received during the year ended 30 th June,

2010.