The material presented here is intended only to overview more detailed accounting procedures specifically presented in other portions of the Manual. ASSETS ► Treasury Cash - Incoming: All monies collected by accounting entities included in the Treasury Fund Structure are to be deposited either in the State Treasury or directly in a commercial bank to the credit of the State Treasury . Collection Reports, document- ing amounts deposited, are to be sent to the Department of Administration, Treasury Division, with a copy provided for the Department of Administration, Accounting Division. ► Treasury Cash - Outgoing: Disbursements may be made from an accounting entity's cash in treasury control account in several ways: No Warrant Transfer; Transfer-Warrant Claim (Auditor's Warrant): Agency Warrant; Treasurer's Check; or Agency Treasurer's Check As far as most accounting entities are concerned, disbursements will be made by initi- ating a Transfer-Warrant Claim which results in an Auditor's Warrant being produced. ► Cash - Other: Cash change and cash purchase funds may be established as required to conduct business effectively. In both cases, amounts withdrawn must closely parallel demonstrated needs. ► Receivables - Generally: Many accounting entities are involved with accounts receivable. The System provides the capability to record accounts receivable details and subsequent col- lection activities. ► Deferred Receivables: As stated in MOM Chapter 2-0200, "...revenues are to be recorded when cash is received...". Accordingly, receivables relative to anticipated revenue or income collections must be fully reserved (in most applications). ► Non-Deferred Receivables: Receivables applicable to anticipated revenue or income collections for an enterprise-type accounting entity are to be offset directly in the appropriate revenue or income nominal account. This departure from the general principle is necessary to permit the financial records to accurately match revenues and expenditures on a period-by-period basis. ► Receivables - Expenditure Abatements: The anticipated collection of monies to be credited to an expenditure or withdrawal control account are to be directly offset in an appropriate expenditure or withdrawal control account. ► investments: Short-term investments (those anticipated to be held for twelve calendar months or less) are to be recorded at cost . Long-term investments (those anticipated to be held for more than twelve calendar months) are to be recorded at par
When investments are recorded at par, premiums paid or discounts received are to be amortized or accumulated over the remaining term of the investments. In either case, interest purchased is to be offset against the first applicable interest collection. The detailed records and a portfolio to support the balance of applicable general ledger control accounts are maintained by the Department of Administration, Investments Division, in a SBAS sub-system called PMS (Portfolio Management System). ► Fixed Assets: The recording of a fixed asset is dependent upon the nature of the purchasing accounting entity. Generally speaking, fixed assets purchased by an enterprise-type or trust accounting entity are to be recorded in the records of the purchasing entity. Other- wise, all fixed assets are to be recorded in the General Fixed Asset Fund. Fixed assets recorded in the General Fixed Asset Fund will be identified by the nature of the fixed asset (land, buildings, equipment, etc.) and the accounting entity credited with the purchase. Only specified expenditures are to be capitalized. The criteria for expenditure capitalization depends upon: •The asset's anticipated life, •The asset's cost, and •The asset's productive qualities. The subs>system to SBAS (a detailed subsidiary ledger) to identify fixed assets for which an agency is responsibile and to itemize the balance in applicable general ledger control accounts is called the Property Accountability Management System (PAMS). ► Depreciation: Fixed assets recorded in enterprise-type accounting entities are to be depreciated over the asset's useful life. Depreciation schedules used must result in charging expenditure accounts with amounts closely approximating the asset's consumption. In no case shall an asset be depreciated beyond the asset's cost even though the asset may still be in productive service after having been fully depreciated. Fixed assets recorded in the General Fixed Asset Fund must not be depreciated. Fixed assets recorded in trust accounts are not to be depreciated unless approval to do so is obtained from the Department of Administration. ► Miscellaneous Assets: Assets not otherwise classified are identified in the miscellaneous asset group. The Encumbrance Account is included in this group. Rather than an asset, per se, the encumbrance account represents an offset to the liability account Reserve for Encumbrance. Encumbrances are recorded to acknowledge the extent to which an appropriation is obligated for expenditure. This is an important budgetary control aspect of a governmental accounting system, wherein, it is vitally important that amounts appropriated are not over-expended or over-obligated. An encumbrance Subsidiary Detail Ledger is maintained within the System detailing the amount of unliquidated encumbrances. The amount encumbered against an appropriation or allocation is also transacted in the Appropriation Control Ledger.
Prepayments: Disbursements anticipated to be converted to expenditure categories at a later date are to be recorded as prepayments. LIABILITIES ► Accounts Payable: Ordinarily, only enterprise-type accounting entities need to accrue expenditures monthly. In most cases, the encumbrance subsystem adequately provides for recording obligations against amounts appropriated for disbursements. When used, the System produces a detailed subsidiary ledger to support the balance in the general ledger control account (based on information input into the System). Care must be taken to assure that a disbursement liquidating an account payable is accurately analyzed. Otherwise, expenditures and liabilities will be overstated - at least on a temporary basis. ► Expenditure Accruals: At year-end, all valid obligations (as defined at year-end) against an appropriation are to be accrued. Disbursements in subsequent years which are applicable to amounts accrued are to be debited to the appropriate expenditure accrual account. In no case may an expenditure accrual account carry a debit balance (which would represent an "overdraft"). Expenditure accrual accounts may be increased only with the approval of the Department of Administration. At the expiration of an appropriation's availability, the balance remaining in expenditure accrual accounts is to be closed to a prior year expenditure or withdrawal adjustment account. Amounts accounted in a prior year expenditure or withdrawal adjustment account are to be analyzed to determine the impact on financial operations of applicable prior fiscal years. Significant adjustments will be made to the expenditure categories shown in the Executive Budget as required.