For the purpose of this paper, Charities and Societies in Ethiopia mean humanitarianrnprivate organization, using its own resources, not profit making and participating to fulfillrngovernment efforts with a view to eliminate poverty. There are 1630 registered Charitiesrnand Societies in Ethiopia as of May 31, 2010. The major intervention areas of CSs inrnEthiopia are; general health, education, agriculture, water and sanitation, childrndevelopment, HIV/AIDS, and others focused on child and women rights.rnEvidence compiled by NBE shows that the global resources mobilized by the voluntaryrnsector are immense and this has benefited the countryâ€™s economy significantly. Betweenrn2004 and first-half of 2008 the total of NGO transfers amounted to US$1.78 billion. Thernannual break-down of this is greater than earnings from the export of coffee (NBE 2007;rn2008).rnFinancial statements prepared by CSs serve as a means to communicate with fundingrnagents, government and other stakeholders. In preparing basic financial statements, CSsrnin Ethiopia use both generally accepted accounting principles (GAAP) and internationalrnfinancial reporting system (IFRS)/IAS. US GAAP is highly applicable and there is arntendency to use IFRS/IAS in the future. Most CSs in Ethiopia keep records of non-rnexchange transactions, prepare the three basic financial statements prescribed by FASB,rnand the statements are continuously validated by independent body.rnPerformance evaluation is undertaken based on major areas; financial management,rnincome independence, board governance, program cost, output and outcome measure,rnand effective use of volunteer service. For most organizations, a higher percentage ofrnresources spent on program services than on management and fundraising is considered arnpositive performance indicator. According to the research result most CSs in Ethiopiarndemonstrate above average performance