As indicated in table 3.

6, 6% of the respondent aggress that CBE has proper

practice and procedures concerning cash in a good level, 35% agree in that average good
level and 5% agree an average that bank have procedures and practices concerning cash.
Majority of the respondent agree on that the bank has continues evaluation and
discussion to revige the internal control of cash. On the other hand 80% of the respondent
agree on internal control offices. Check the bills and the amount of cash collected are in a
good or very good level, while 15% average that it is an average level.

3.2 Secondary Data Presentation and Interpretation.

This part of the cheaper focuses on the cash management practices of CBE. In this
analysis the polices and procedures of the bank with regard to its cash management
practice are reviewed.

3.2.1 Idle Cash Investment in CBE

The researcher believe that, the idle cash management is the basic component of
cash management in CBE. Because the bank uses most of investment option those
available in the country. CBE has many investments Investment in Government
securities, Investment in Subsidiary, Investment in association, and other investments.
Table 3.7.1 Investment Alternatives in the Bank
Year
2010/11
2011

Investment in Govt securities

Government band maturing with go days
Government bond,

Amount
273, 659, 463
150, 750, 597

Maturing with go days & with one year

Table 3.7.2 Investment in subsidiary

Year

Investments in

2001

Subsidiary
Investment in commercial Nominees Private 11, 401 000

2011

Limited Company
CBE Southern Sudan Limited
juba Branch

Table 3.7.3 Investment in associates

251, 297, 055

Year
2011

Investment is associates
Specialized financial and

Amount
2, 120, 021

2011

Promotional institution
Universal investors company

755, 037

Table 3.7.4 Investment in the bank

Year
2011

Investment
Amount
African Export Important Bank Gelately and 2, 438, 000

2011

company Swift Company

85, 937
244,114

sources; annual Report of the Bank

3.2.2

Cash Company

In CBE, the following two are major company of cash.

3.2.2.1

Local Cash currency

This is held in the bank in three forms. These are petty cash, vault cash and cash
at ATM machine.
3.2.2.2

Foreign Cash Currency

These are cash currencies which are various foreign currencies and coins. Foreign
currency like USA , Euro, year and other acceptable currencies and keep in vault cash in
the counter value of birr
3.3

Trust Funds

Assets held in trust by the bank and its subsidiary are as follows
Table 4 Trust funds
Year
2001

Group
Cash held an behalf of National Bank of Ethiopia

Amount in birr
1, 002, 159, 337

Trust funds
2011

Source. Annual report of the bank.

31, 003, 445

The bank provides custodial services to the National Bank of Ethiopia (NBE) at
various branches across the country, where by the bank holds cash on the behalf of NBE.
3.4

Cash Collection

In CBE collection of cash can be originated from different types of activities. For
bank, cash collections emanate mainly form but not limited to

Deposits

Borrowings

Repayments of loans and advances

Margins, Commissions, Changes .etc

Funds to be transferred and manage

Transfer form other banks

Sale of acquired property.

Others like income for investments

3.3.1 Deposit with local banks

CBE maintains account with local bank, as required for operation. The main local
bank is NBE.

3.3.2 National Bank of Ethiopia

Pur suant to licensing and suppression of banking business pur clamation No 84/1/94, all
likened banks are kqulred to maintain a reserved balances, computed per directive issued
by NBE for time, in a reserve account with National Bank of Ethiopia.
Clearance or cheyes exchanges between banks is qrected through payment settlement
account. More over, all payments, transferred and receipts between CBE and National
Bank of Ethiopia are cleared through this account.

3.4

Controlling cash Receipt

To being the operations, it is cash what we have to consider first. Cash is the most

liquid asset which is readily convertible in to any other types of asset due to this natural.
The following contents are applications of internal control to cash receipts.

Establishment of responsibility

Segregation of duties

Documentation Procedures

Physical, Mechanical and electronic controls

Independent internal verification and other.

The chief cashier controls is the tellers who responsible for balancing cash with
documents. The casher authorizedto handle cash receipts from HO (Head Office) and
there is limited access to cash safe and bank vaults.
There are different tellers to receive dash. Receiving cash deposit and posting to
the respective accounts is the responsibility of the teller. At the end of the day the teller
transfer the deposited cash to the cashier. The document will be sent to the accounting or
assistant manager or any other authorized person so that, they check whether the teller
posted to right account (customer account) If there is many mistake the teller wiil correct
it.
When the cash is deposited, the customer fills the deposit slip with one copy. The
original will be deliver to customer and the copy is used as a document (remain in the
bank.) The deposit slip should have the bank stamp and tellers intial.
After the accountants authorized the posting made by the teller, he delivered the
documents to the auditor on the Dashes day i.e. Dashes bank is following post auditing.
The auditor will have a daily transaction journal cross check with the documents.
CBE bank is computerized and net worked bank using software called FELCUBE
S.S version. Every branch is interlinked and every customer of one branch can go to other
branch and can deposit cash.
Every one the internal auditor cheek the and vault by making surprise counting i.e
he/she will take the cash balance for the computer and check whether this cash really
physical exists to control misuse of cash.
In CBE bank, Bank Reconciliation is prepared by;

For head office, senior accountants are responsible.

For

branches,

accountants

Reconciliation.

3.5

Controlling Cash Payment

are

responsible

for

preparing

Bank

The key of the vault will with the chief. And the vault has a code which is only
known by a single person, usually by the assistant manager. Every morning the assistant
manager set the code and the casher will open the vault and provider cash to tellers from
the payment. The paying teller required to cheque the amounts in word and figures are
agreed, and he/she will debit the customer account and will pay. For big amount like birr
more than 30,000 tellers ask permit ion to pay from assistant manager or accountant. The
tellers limit only up to br 30,000. The cash remain at the hand of paying teller at the end
of the day and cash paid must agree with the total amount the aping teller received from
the main casher.

3.6

Patty Cash Fund

In CBE bank petty cash fund established for transport cost (for messengers)

entertainment expense and others. This cash is in the hand of the secretary. The petty cash
for every branch is constant amount of br 2.00.
When every messenger requires money for transportation, they will fill a form
which serves as a document and will provide to the authorized person for approval and
they will collect the cash from the secretary, and all other expenses is supported by
document.

3.6.1 Operating the Fund

Disbursements form petty cash are supported by authorized and approved

documents.

Petty cash suspense voucher, is used as a receipt until the final document is
received. This form should indicate the reason for the advance and approved by
an authorized personal.

Petty cash report from should be numbered (numbering should include

department identification example HEL< FMA) and prepared in duplicate, the
original to be submitted to fund management and account department or are
bank accountants, As the replenishment authorization and accounting purposes,
The copy remains the fund hold for recording and balancing proses.

The staffs that ask for advance from petty cash fill out the petty cash suspense
voucher. Get it approved by management member or any delegated staff member
and present it the petty casher.

The petty Cashier checks if the request is in the order and makes the requestor
sign on the voucher, effects payment and voucher in lieu of cash until the final
approving evidence of payment is submitted.

The person who takes advance from petty cash is expected to settle the advance
within 72 hours. Any amendments on the settlement period will be determined
by the top management from time to time.

The staff who took the advance will submit documentary evidence of payment to
the fund holder.

The patty cashier, after receiving and checking the documents will retain them:
receive unexpected cash balance, if any, and returns the petty cash suspense
voucher to the staff who had taken the advance who will destroy it or will cancel
and attach it to the petty cash payment and voucher.

The petty cashier affixes the PAID stamp(or puts his initial, if stamp is not
available) on the document and records the payments column of the petty cash
book.

The petty cashier balances the petty cash book at the end of each day.

When the balance available in the fund, is reduced to established minimum level,
then the fund holder prepares petty cash report and presents in to human
resources and logistics department for approval and transfers it to fund
management and account department or present it for approval to the area bank
manager.

Regardless of the amount of petty cash on hand, replenishment should be

requested and effected before the semi-annual closing of book. This is necessary
that all expenses applicable to the reporting period are included in the interim or
year-end financial statements.

3.6.2 Petty-cash Internal Control

Petty cash Holder

The petty cashier should balance her/his cash book and check cash balance and record as
follows:1. Write down the opening petty cash balance which is the previous days closing
balance on the petty cash book.
2. Add and replenishment received during the day to day opening balance to get the
cash available for the day.
3. Add all petty cash expense payments and amount on petty cash, suspense
vouchers and compare the sum with the total payment entries on the petty cash
book.
4. From the cash available as determined in (2) above, deduct the payments effected
as determined in (3) above. The result gives the petty cash balance that should be
in safe.
5. Count the cash and compare with the balance obtained in (4) above.

3.7

Cash in Transit

Every branch at CBE have its own cash which is limited to maintain on the vault, if we
take as an example Arada CBE CAN MAINTAIN UP TO 2.5 Mil. Birr vault. Having this,
the cash policy of the bank doesnt want each branch to maintain cash, beyond their cash
limit in the vault as a result; branch send cash which are above the limit to HO(head
office) and there is cash shipment from HO(head office) area bank. If branch have cash
shortage then this cash is called; CASH IN TRANSIT. Documents, when cash transferred
to HO, will be initiated by the branch in four copies and signed by authorized person. The
first will go to HO and the two remain with branch for recording the translation.

3.8

Cash from casher to teller and vice versa

In the cash house there are two vaults, one petty cash vault and main vault. The assistant
manager unlocks the code of the vault and the main cashier deliver some amount of
money only to the paying teller, the paying teller take the money by signing on the
surrender book. When the cashier deliver money to the paying teller, the vault cash will
be detected (credited). On the other hand the receiving teller collects cash from the
depositor and delivers to the cashier. At the end of the day the main cahier will make
balance to the vault cash using the following formula.

Cash on hand =cash collection-cash payment

3.9

Electronic Payment Card System

CBE ,Being a member of VISA, It has started issuing visa branded, CBE electron debit
cards, ATMs have been procured and placed in ideal to withdraw cash. Merchant sites
also being provided with the pointed sale terminals to accent payments using cards.
Cash is being filled in ATM by card center. When cash is needed by card center, claim for
cash transfer will be made from FMAD (fund management and account department).
Card center up on receiving cash will keep the fund in the vault kept under the custody of
card. Card center after securing cash in this vault will transfer to ATM by filling different
denomination of birr notes in appropriate class or level of hopers.
3.x Related party transaction
Related parties are considered to be other entities that exercise significant influence over
the banks financial and operating decisions or entities over which the bank is able to
exercise significant influence in their financial and operating decisions. However, as per
the provisions of 1as24 related parties do not include the government, government
departs or agencies.
I.

Included in loans and advances in birr 328,964,086 advances to

employees are non interest bearing.

II.

Interest paid during the year 0n deposit balances from related

companies through share holding is Birr 159,932 all transactions with
related parties are at arms length.

CHAPTER FOUR
Summary conclusion And Recommendation
4.1 summary

CBE is Share Company use cash for operating, investing and financing activity.

The company cash management to maintain adequate control of over cash

position to keep the firm sufficiently liquid.

The company maximizes cash hold, welfare of employee, customer, and

shareholding wealth and return equity.

Cash that are expected to idle for short period of time in invested in short time
investment. That includes deposit at interest and government treasury bills.

CBE Bank manages cash flow, cash collection and disbursement by process the
invoice reducing the gap between the timing of customers bill.

The company considering internal control by the management in the conduct of

the business as well as to ensure smooth economic function.

Cash components are the major currency is held to petty cash, vault cash and cash
at ATM machine.

Cash budget indicates cash shortage and cash excess, in regards to this action may
be taken on time to invest any excess cash or to borrow funds whenever there is
any shortage.

Cash planning is a technique to plan and control the use of cash.

Cash for casting is an estimation of the flow in a doubt of the firms cash account

over a particular period of time.

Adjusted net income approaches are vital for the company to project companys

need for cash at further dated to generate the refereed funds.

The major use of long term cash forecast to the company is for working capital

requirement and to evaluate proposed capital project.

Financial statement are prepared primarily for the purpose of use outside an
organization, Managers could also find their organization financial statement

useful in making decision.

Over the past four years, CBE Shares company get birr 7,724,635.00 dividend

incomes from long term development for the past five year.
In 2009/2010 accounting period, the company cash on hand is 487,671,113.00.

4.2 Conclusion
As we already know cash and cash management or the basic components in any
business for profit or nonprofit/NFP/ organizations. Therefore every business had to well
structured, developed and systematic cash management.
One of the basic issues in managing cash and internal contract system is idle cash
management is, idle cash is cash remain at hand without any purpose. There are different

area in which companies invest idle cash live treasury business, commercial papers and
other,
Our cash is also managed effectively by cash receipt and cash payments by proper handle
companys use a petty cash fund for immediate and miscellanies payments and we found
it very important to have a petty cash fund.
The companies have various motives for holing cash like transaction, precautionary,
speculative and other motives.
During a given period of time having cash flow statement is very vital in proper handling
and controlling of cash management.
Their emphasizes and explains how companies obtained and used cash for given period
of time. The cash flow statement classifies cash receipt/inflows/ and payments/out flows
in there categories. That is operating, investing and financing activities.
They have a good internal control over cash there are some other measures to be taken
like depositing daily cash receipt at bank, having petty cash fund,
Preparation of bank reconciliation, comparison of cash receipt and deposits cash
budgeting.
Cash planning is a technique to plan and control the use of cash.
It may be done on daily, weekly and monthly basis.
Cash budget is the most significant devices to plan and control day to day cash balances.
It is a summary of statements of firms expected cash flow and out flow over a given time
period
CBE has its own cash management CBE cash flow capital contribution deposition,
repayment for loan and advantage and loan local cash currency and foreign cash
currency. CBE maintains different account with local and foreign bank.
In the bank activity controlling cash receipt

and cash payment from customer to

customers given great emphasis. Chief casher teller and assistant managers usually
involves in those activities. At the end of the day the receivable teller transfer the cash
he/she counted from customer to the main casher and casher offer he/she checked the
amount he/she transfer to the vault.

Every morning assistant manager set the code of the vault and the main casher open the
vault and provides some money to the paying teller. And the paying teller serves
customers.
The two major investment CBE has invested at Tana building and investment at Nyala
insurance by using its idle cash and other.
In CBE petty cash fund established for transportation cost, entertainment expense and
others, idle cash is in the hand of secretary. The petty cash in every branch capital amount
of birr 200 but in HO petty cash increase from birr 200-500.
CBE has cash buying and cash selling activity. Cash buying means when one branch of
CBE has shortage of cash in the vault. Cash selling means when one branch has over cash
above the limit, it has to transfer to the HO vault. And there type of cash is called cash in
transit. Now a days technological advantage became one of crucial element in todays
competitive environment. CBE bank also has electronic cash payment system. Some
amount of cash in different denominates are placed in the automatic tailor machine
(ATM) and when customer require money they use their machine to withdraw the money.
It is the duty main cashier place cash in the ATM and check the balance.

4.3 Recommendation
To become successful in day activity all business must have up to date and translate their
service by developing their good experience and drop their Mal administration open
windingly. Its the reality of our world that one person or organization, government and
other entity have their own strength and weakness. Here the researcher lists the activities
that should be encouraged and the activity that should be improved at CBE.

The Bank has opportunity for its customer to withdraw cash for 24 hours of time
and at any branch of the Bank to whom its convenient for him.

CBE Bank has strong finance department especially at head office to control cash.

The Bank use strong van when huge amount of cash transferred from head office
to branches and vice versa.

Ideal cash investment is good, but it should be able to diversified and improved.

The internal auditor performs his/her activity after one day at actual transaction
that is he/she checks before any cash payment or cash deposit must done.

A single casher or teller is required to accept huge amount of cash from customer,
it would be better if some one be with him to sasses.

Inspector comes from head office to check general branches activities, including
petty cash once in a year, but it would be better if the time is shorter than a year.

Every month the internal auditor makes surplus check cash in the vault to keep the
cash from misuse.
CBE required creating more awareness about electronic payment system. About the
ATM, should be located in the safe place and must address the remote areas of the
country because of fair and equal allocation of electronic payment system.
The researcher belief honestly that CBE grows dramatically when they accept
position criticism in their day to day activities.

8. Does the bank have different methods to controlling excess cash or cash shortage?
Very Good

Good

Average

Poor

Very poor

Poor

Very poor

9. Is there any restriction over petty cash disbursement?

Very Good

Good

Average

10. Dose the bank has continued evaluation and discussion to revise the internal control
cash?
Very Good

Good

Average

Poor

Very poor

11. How do you implement the banks cash pooling system?

Very Good

Good

Average

Poor

Very poor

12. Does the company have checking practice of cash positionality at a time of financial
strength and liquidity?
Very Good

Good

Average

Poor

Very poor

13. What is the degree for internal control officer in role on the process of checking the
bills and the amount of cash collected?
Very Good

Good

Average

Poor

Very poor