Overview of Governmental Accounting, Budgeting, Contracts/Purchasing, Accounts Payable and Treasury
Finance Academy
Course Instructors •
Al Friedrich, Office of the Auditor-Controller
•
Paul Lewis, CAO – Budget and Analysis
•
Mike Derr, CAO – Contracts/Purchasing
•
Ma Mon, Office of the Auditor-Controller
•
Eamonn Mahar, Office of the Treasurer-Tax Collector
Overview Annual Budget
Contracts/ Purchasing
General Accounting
Treasury
Accounts Payable
Payroll
Governmental Accounting
Accounting Standards • Generally Accepted Accounting Principles (GAAP) • Financial Accounting Standards Board (FASB) - Business & Not-for-Profit Organizations
• Government Accounting Standards Board (GASB) - State and Local Governments
Governmental Accounting – Funds • Governmental resources are allocated and accounted for in separate entities, called Funds • The Funds are based on the purposes for which monies are to be spent and controlled
Types of Funds • Governmental Funds • Tax supported Activities • Legally Adopted Budgets • Includes: • General Fund • Special Revenue Funds • Capital Project Funds • Debt Service Funds
Types of Funds (cont’d) • Proprietary Funds • Self-sustaining, Fee Supported Activities • •
Enterprise Funds Internal Service Funds
• Fiduciary Funds • Trustee Activities on behalf of Outside Parties
Accounting Methods
Cash Accounting • Recognize Revenue when Cash is Received • Recognize Expense when Cash is Paid
Full Accrual Accounting – Proprietary Funds • Balance Sheet - Assets • Cash • Receivables • Capital Assets
• Balance Sheet – Liabilities • Payables • Debt
Full Accrual Accounting – Proprietary Funds • Balance Sheet – Net Assets • Revenues – Recognized when Earned regardless of Cash timing • Expenses – Recognized when Incurred regardless of Cash timing
Balance Sheet
Liabilities
Full Accrual
Assets Net Assets
Full Accrual
Cash Assets Cash Investments Receivables AssetsAssets Total Liability
Cash Investments A/R Total Assets Payables
Deferred Liability Rev. Payables Total Liabilities Prepaid Total Liabilities
Net Assets Net Assets Total Liab. & Net Assets Total
$ 10,000 100,000 Full -Cash Accrual 110,000 $ 10,000 100,000 -110,000
----
$ 10,000 100,000 50,000 160,000 --
--- 5,000 20,000 25,000
110,000 110,000 135,000 110,000 110,000
160,000
$ 10,000 100,000 50,000 160,000
5,000 20,000 25,000 135,000 160,000
Modified Accrual Accounting – Governmental Funds • Balance Sheet - Assets • Cash • Receivables
• Balance Sheet – Liabilities • Payables
Modified Accrual Accounting – Governmental Funds • Balance Sheet – Fund Balance • Revenues recognized in period available and measurable – 60 Days after June 30th • Expenditures recognized in the time period incurred
Balance Sheet Current Liabilities Current Assets
Modified Accrual
Fund Balance
Noncurrent Assets
Noncurrent Liabilities Other Net Assets
Not considered in Modified Accrual
Capital Assets • Capital Assets +
Assets that benefit more than one Fiscal Period and worth more than Capital Asset thresholds. Capital Assets are differentiated from Maintenance
• Capital Asset Policy Monterey County Website Office of the Auditor-Controller Under Policies & Procedures
Long-Term Liabilities • • • • •
Bonds & Notes Payable Certificates of Participation Other Post Employment Benefits Compensated Absences Landfill Closure Costs
Budgetary Accounting
County Budget Act State Government Code §29009. In the recommended, adopted, and final budgets the funding sources shall equal the financing uses. §29120. Except as otherwise provided by law, the board and every other county or dependent special district official and person shall be limited in the incurring or paying of obligations to the amounts of the appropriations allowed for each budget unit as originally adopted or as thereafter revised by addition, cancellation or transfer.
Budgetary and Operating Equations & Relationship BUDGET Appropriations = Estimated Revenue + Fund Balance
ACTUAL – June 30th Revenues minus Expenditures
ASSETS = LIABILITIES + FUND BALANCE
Encumbrance Accounting •
An encumbrance is an estimated amount recorded for purchase orders, contracts, or other expected expenditures chargeable to an appropriation
•
The encumbrance is a placeholder until the expenditure is made.
Ledger for Budgetary Control Available Appropriations Expenditures Encumbrances Balance Date Explanation CR (DR) DR (CR) DR (CR) CR (DR) 7-1-14 Budget authority 1,500 1,500 7-2-14 Purchase order 500 1,000 8-15-14 Voucher payable 500 (500) 1,000
Financial Reporting
Audit Opinion from Independent Auditor In our opinion, based on our audit the financial statements present fairly, in all material respects, the respective financial position of the County of Monterey, as of June 30, 2013 in accordance with accounting principles generally accepted in the United States of America.
Financial Statements • Proprietary Funds (Full Accrual) • Governmental Funds (Modified Accrual) GASB #34 requires reconciliation of Governmental Funds (Modified Accrual) to Government-Wide (Full Accrual)
Reconciliation of Government Funds to Government-Wide Governmental Funds – Fund Balance Capital, Long-term & ISF Assets minus Long-term Liabilities Government-Wide – Net Position
$220,057,489 $691,242,120 minus $232,748,828 $678,550,781
Who Reviews Financial Reports? • • • • •
Bond Holders & Trustees Rating Agencies Prospective Creditors Grantors Federal and State Government
What do They Look For? Financial Stability Status of Reserves Risks for Existing Debt Continuing Disclosure – Alerts to New Risks • Financial Statements fairly present the County’s financial position • • • •
Single Audit – Federal Programs • Report on whether the County complied with the types of compliance requirements for major Federal Programs • Report on internal controls concerning compliance • Report on the schedule of expenditures of Federal Awards as required by OMB Circular A-133.
