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STATE ACCOUNTING

State Accounting

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Application of Principles - Section AM-003

Effective Date 9/19/08

 

The State Accounting System uses the modified accrual method of accounting. 

The General Ledger has fund types similar to the fund types recommended in GAAP.  The fund types used in State Accounting System are:

1.   10000 - General Fund - accounts for all financial resources not required to be accounted for in another fund.  Revenue generally comes from state taxes.

2.   20000 - Cash Funds - accounts for revenues generated by specific activities from sources outside of state government and the expenditures directly related to the generation of the revenues.

3.   30000 - Construction Funds - accounts for the revenues and expenditures associated with the acquisition or construction of capital facilities.  The General Ledger uses two main funds within the construction fund area to account for revenues from specific sources.  The State Building Fund (33000) receives its revenue from sales and income taxes (Section 72-1005, R.R.S., 1943).  The State Capital Construction Fund (38000) receives its revenue from the cigarette tax.  (Section 77-2602, R.R.S., 1943).

4.   40000 - Federal Funds - accounts for all federal grants and contracts received by the State.

5.   50000 - Revolving Funds - accounts for the operation of state agencies which provides goods and services to other departments or agencies within state government.

6.   60000 - Trust Funds - accounts for assets held by the state in a trustee capacity.  Expenditures are made in accordance with the terms of the trust.

7.   70000 - Distributive Funds - accounts for assets held by the state as an agent for individuals, private organizations, other governments and/or other funds.

The State Accounting System is a double entry accounting system; however, entries on input documents are not required to balance debits and credits.  This is because for every debit amount entered on an input document, regardless of account, the system posts a corresponding credit amount to an automatic entry.  For every credit amount entered on an input document, the system posts a corresponding debit amount to an automatic entry.  Each system that interfaces with the General Accounting system has automatic accounting instructions (AAIs). For example, AAIs can direct the Post to General Ledger program to post a debit to a certain expense account and an automatic credit to a certain accounts payable account. The automatic entries are controlled by the transaction types and by the ledgers involved.  A report demonstrating these events would be the R09801 General Ledger Post Report. 

Illustration

An agency pays a bill to Lincoln Office Equipment for office supplies.  The agency prepares a voucher and enters the following transaction coding:

Business Unit . Object Code                                                 Amount                  

       99021000.531100                                                       100.00   Debit

 

The accounting system posts to the General Fund the following entries high-lighted by "T" accounts:

Accounts Payable

(211900)

Office Supplies

(531100)

DR

CR

DR

CR

100.00

100.00

(posted by AcctgSytem)

(entered on document)

The accounting system completes the transaction, balancing debits and credits by posting a corresponding credit amount to the appropriate automatic entry account for the fund entered in the transaction coding.

Self-Balancing - Because the State Accounting System posts a corresponding debit or credit entry to the offset account for every corresponding credit or debit entered on an input document, the accounting equation (assets = liabilities + fund balance) is always maintained for each fund.

Balance Sheet Accounts - The inclusion of asset, liability, and equity accounts allows users more flexibility in properly accounting for certain transactions.  Transactions which in the past have been handled with revenue and expenditure accounts are more properly accounted for with asset, liability and equity accounts.  Examples would include interfund loans, investment transactions, establishing petty cash funds and prior period adjustments.

Year-end closings - The State Accounting System will automatically close out, by fund, the net effect of all expenditure and revenue accounts to the unreserved fund balance equity account each year.

Fund Reporting - Fund Accounting is the essence of governmental accounting and the State Accounting System meets this need by providing both a Fund Summary and Fund Detail Report (reference Reports chapter in this manual.)

1.   In addition, the State Accounting System provides for multiple use funds, those funds that can be used by more than one agency.  Both the control agency for the fund and the user agency will receive accounting information relevant to their needs.

Edits - The State Accounting System provides comprehensive edits in the following areas:

1.   Update Processing - All updates are checked against the account master, the business unit master and at posting against the budget master.

2.   Daily Processing - All accounting transactions must go through batching and detail edits before they attempt to post.  All transactions failing these edits are suspended until corrected.

3.   All accounting transactions attempting to post in State Accounting System are subjected to appropriation, allotment, and cash edits.  No transaction may post unless sufficient authority (appropriation and allotment) and ability (cash) are present to post the transaction.  In addition, payroll transactions must have sufficient personal service appropriation to post.

Internal Controls - The State Accounting System meets this requirement by utilizing batch balancing for both daily accounting transactions and update (maintenance) processing.  In addition, the system control file maintains needed information to properly balance the dollar amount of information entered into the system to the dollar amount of information processed by the system.

Reporting - Improved reporting includes

1.   Posted transactions Batch Report which lists, by division within agency, all accounting transactions processed.  The system includes many inquiries and reports that can be run by the individual at the agency level.

2.   The State Accounting System also provides grant/project accounting which allows expenditure and revenue reporting to cross fiscal year for both federal grants and State projects.

3.   The State Accounting System provides for subsidiary accounts payable and accounts receivable ledgers which can be carried from one fiscal year to the next.

4.   The use of division-level reporting has been used wherever possible to allow agencies to accumulate and report accounting information at organizational levels lower than agency.

Consolidation of vendor payments - The State Accounting System provides for consolidated payments to vendors on a daily basis.