BACK TO THE BASICS
Presented by
Local Government Services Bureau
State Accounting Division
MT Department of Administration
1
BACK TO THE BASICS
• SCHEDULE:
• Fundamentals of Debits and Credits
• Governmental Accounting
~ Principles
~ Fund Accounting/Basis of Accounting/Measurement Focus
•
Governmental Accounting - cont.
~ Basis of Accounting/Measurement Focus (cont)
•
•
Application to BARS Chart of Accounts
Year end closing procedures ~ (if time permits)
2
BACK TO THE BASICS
ACRONYMS COMMON TO GOVERNMENTAL
ACCOUNTING
CAFR
BFS
Comprehensive Annual Financial Report
Basic Financial Statements
GASB
Governmental Accounting Standards Board
FASB
Financial Accounting Standards Board
GAAFR
Governmental Accounting, Auditing,
GAAP
and Financial Reporting
Generally Accepted Accounting Principles
3
BACK TO THE BASICS
ACRONYMS COMMON TO GOVERNMENTAL
ACCOUNTING
GAAS
GLTDAG
Generally Accepted Auditing Standards
General Long-Term Debt Account Group
GFAAG
General Fixed Assets Account Group
GFOA
Government Finance Officers Association
4
BACK TO THE BASICS
• PRINCIPLES OF GOVERNMENTAL ACCOUNTING
•
Accounting and Reporting Capabilities
•
•
Fund Accounting Systems
•
•
Accounting systems should be maintained in accordance with generally
accepted accounting principles
Accounting systems should be organized and operated on a fund basis
Fund Types
• Fund financial statements should report governmental, proprietary
and fiduciary fund types
5
BACK TO THE BASICS
• PRINCIPLES OF GOVERNMENTAL ACCOUNTING
•
Number of Funds
• Only maintain those funds required by law and sound financial
management
•
Reporting Capital Assets
• A clear distinction should be made between general capital assets and
those of the proprietary and fiduciary funds.
•
Valuation of Capital Assets
• Assets should be reported at historic cost – Donated assets at the
estimated fair market value at the time of acquisition
6
BACK TO THE BASICS
• PRINCIPLES OF GOVERNMENTAL ACCOUNTING
• Depreciation of Capital Assets
• Capital assets should be depreciated over their estimated useful lives
unless inexhaustible or infrastructure assets using the modified
approach
• Reporting Long-term Liabilities
• A clear distinction should be made between long-term liabilities and
general long-term liabilities
• Measurement Focus/Basis of Accounting in the BFS
• The basic financial statements should display the government-wide
financial statements (full accrual) and the fund financial statements
(modified accrual)
7
BACK TO THE BASICS
• PRINCIPLES OF GOVERNMENTAL ACCOUNTING
• Budgeting, Budgetary Control/Reporting
• Budgets should be adopted, controlled through monitoring and
comparison statements included in reporting.
• The budgetary statements should present original budget, final
budget, actual amounts and a comparison with actual to final
• Transfer, Revenue, Expenditure/Expense Classifications
• Revenues should be maintained by fund, major source and other
financing sources
• Expenditures of governmental funds by fund, function/activity and
other financing uses
• Expenses of proprietary funds by activity/object
8
BACK TO THE BASICS
• PRINCIPLES OF GOVERNMENTAL ACCOUNTING
• Common Terminology and Classification
• A common terminology and classification should be used
consistently throughout the budget, accounts and financial report
of each fund
• Annual Financial Reports
• Preparation of interim financial reports for the benefit of
management should be prepared.
• A Comprehensive Annual Financial Report should be prepared and
made available to the public.
• It should include all funds and activities of the primary government
including blended component units and an overview of all discretely
presented component units of the reporting entity)
9
BACK TO THE BASICS
ACCOUNTING FORMULA
DR
=
CR
10
BACK TO THE BASICS
ACCOUNTING FORMULA
EXPENSES/
EXPENDITURES
ASSETS +
DR
REVENUES +
=
=
LIABILITIES + EQUITY
CR
11
BACK TO THE BASICS
ACCOUNTING FORMULA
EXPENSES/
ASSETS + EXPENDITURES = REVENUES + LIABILITIES + EQUITY
ASSETS = LIABILITIES + EQUITY
DR
=
CR
12
BACK TO THE BASICS
SELF-BALANCING SET OF ACCOUNTS
ACCOUNTING FORMULA
ASSETS + EXPENSE = REVENUES + LIABILITIES + EQUITY
DR
=
CR
13
14
BACK TO THE BASICS
• QUIZ #1 – Account Type & Normal Balance
Accounts to use:
* Asset
* Liability
* Equity
* Revenue
* Expenditure/Expense
* Contra-asset (use 2 times)
Normal Balances:
* Debit
* Credit
15
BACK TO THE BASICS
QUIZ #1 – Account Type & Normal Balance
TYPE OF
NORMAL
ACCOUNT NAME
ACCOUNT BALANCE
Depreciation
__________
_________
Accounts Payable
__________
_________
Deferred Revenue
__________
_________
Interest Receivable
__________ ________
Assigned Fund Balance
__________
_________
16
BACK TO THE BASICS
QUIZ #1 - CONT.
TYPE OF
NORMAL
ACCOUNT NAME
ACCOUNT BALANCE
Cash
__________
_________
Amount To Be Provided
__________
_________
Interest Earnings
__________
_________
Allowance For Depreciation
__________ ________
City Court Fines (Collected)
__________
_________
17
BACK TO THE BASICS
QUIZ #1 - CONT.
TYPE OF
NORMAL
ACCOUNT NAME
ACCOUNT BALANCE
Real Estate Taxes (Collected)
__________
_________
Capital Outlay
__________
_________
Warrants Payable
__________
_________
Inventories
__________ ________
Net Assets
__________
_________
18
BACK TO THE BASICS
QUIZ #1 - CONT.
TYPE OF
NORMAL
ACCOUNT NAME
ACCOUNT BALANCE
Due To Other Governments
__________
_________
Accounts Receivable
__________
_________
Debt Service Interest
__________
_________
Judgments & Losses
__________ ________
Prepaid Expense
__________
_________
19
BACK TO THE BASICS
QUIZ #1 - CONT.
TYPE OF
NORMAL
ACCOUNT NAME
ACCOUNT BALANCE
Bonds Payable
__________
_________
Taxes Receivable
__________
_________
Gas Tax Apportionment
__________
_________
Deposits Payable
__________ ________
Animal Licenses
__________
_________
20
BACK TO THE BASICS
QUIZ #1 - CONT.
TYPE OF
NORMAL
ACCOUNT NAME
ACCOUNT BALANCE
Supplies purchased
_________
_________
Sale of Capital Assets
__________
_________
Allowance For Uncollectible Accounts
__________
_________
County Option Tax
__________ ________
Federal Disaster Aid
__________
_________
21
BACK TO THE BASICS
QUIZ #1 - CONT.
TYPE OF
NORMAL
ACCOUNT NAME
ACCOUNT BALANCE
Street & Road Maintenance
_________
_________
Due From Other Funds
__________
_________
Machinery & Equipment
__________
_________
Fund Balance
__________ ________
Charge for Copying Services (collected) __________
_________
22
BACK TO THE BASICS
QUIZ #1 - CONT.
TYPE OF
NORMAL
ACCOUNT NAME
ACCOUNT BALANCE
Jury Services
_________
_________
Penalty & Interest on Delinq. Taxes
__________
_________
Restricted for Revenue Bond
__________
_________
Advance to other Funds
__________ ________
23
24
BACK TO THE BASICS
• Quiz #2 – Common entries
– Accounts to use for this quiz:














Cash
Supplies
Gas Tax Apportionment
Taxes Receivable
Accounts Receivable
Accounts Payable
Interest Receivable
Interest Revenue
Prepaid Expense
Expense (Enterprise Funds)/Expenditure (Governmental Funds)
Depreciation
Allowance for Depreciation
Deferred Revenue
Tax Revenue
25
BACK TO THE BASICS
QUIZ #2 – ENTRIES
DEBIT
CREDIT
Record Receipt of Gas Tax Apportionment from State
______________________________
$______
___________________________
$_______
Record Purchase of Supplies
______________________________
___________________________
$______
$_______
26
BACK TO THE BASICS
QUIZ #2 – ENTRIES CONT.
DEBIT
CREDIT
Record the Receipt of Taxes
______________________________
$______
___________________________
$_______
Record the Accrual of Expenditures
______________________________
___________________________
$______
$_______
27
BACK TO THE BASICS
QUIZ #2 – ENTRIES CONT.
DEBIT
CREDIT
Record the Payment of the Expenditure Accrual
______________________________
$______
___________________________
$_______
Record the Accrual of Interest Revenue
______________________________
___________________________
$______
$_______
28
BACK TO THE BASICS
QUIZ #2 – ENTRIES CONT.
DEBIT
CREDIT
Record the Receipt of the Interest Revenue
______________________________
$______
___________________________
$_______
Record Annual Depreciation Expense
______________________________
___________________________
$______
$_______
29
BACK TO THE BASICS
QUIZ #2 – ENTRIES CONT.
DEBIT
CREDIT
Record the Payment for a Prepaid Expense
______________________________
$______
___________________________
$_______
Record the Use of a Prepaid Expense
__________________________
___________________________
$______
$_______
30
BACK TO THE BASICS
FUND ACCOUNTING
GOVERNMENTAL FUNDS
• General
•Special Revenue
•Debt Service
•Capital Projects
•Permanent
31
BACK TO THE BASICS
FUND ACCOUNTING – CONT.
PROPRIETARY FUNDS
• Enterprise
• Internal Service
32
BACK TO THE BASICS
FUND ACCOUNTING - CONT.
FIDUCIARY FUNDS
• Pension Trust
• Private Purpose Trust
• Investment Trust
• Agency
33
BACK TO THE BASICS
FUND ACCOUNTING - CONT.
ACCOUNT GROUPS ~ no longer required
to be reported. I recommend updating for
your records.
• General Fixed Assets (GFAAG)
• General Long-Term Debt (GLTDAG)
34
BACK TO THE BASICS
BASIS OF ACCOUNTING
Deals with the timing and recognition of
transactions and events
Full Accrual Basis
Modified Accrual Basis
Cash Basis
35
BACK TO THE BASICS
MEASUREMENT FOCUS
Deals with the types of events or transactions
reported in the Operating Statement
Economic Resources
Changes in Net Assets
Current Financial Resources
Changes in Resources
Available for spending
36
BACK
BACK TO
TO THE
THE BASICS
BASICS
A FUND’S MEASUREMENT FOCUS AND
BASIS OF ACCOUNTING CANNOT BE
SEPARATED
Funds that Focus on Economic Resources
Use Full Accrual Accounting
(Enterprise)
Funds that Focus on Current Financial
Resources use Modified Accrual
Accounting (Governmental)
37
BACK
BACK TO
TO THE
THE BASICS
BASICS
Full Accrual Basis of Accounting
• Recognizes increases and decreases in economic
resources (Net Assets) as soon as the
underlying event or transaction occurs
•Revenues are recognized as soon as they are
earned
•Expenses are recognized as soon as the liability
is incurred
• Regardless of the time of related cash inflow
and outflows
38
BACK TO THE BASICS
Modified Accrual Basis of Accounting
•Recognizes increases and decreases in financial
spendable resources only to the extent that
they reflect near-term inflows and outflows of
cash
• Amounts are recognized as revenues when earned,
only so long as they are collectible within the
period or soon enough thereafter to be used to
pay liabilities of the current period.
• In other words, when they are available to pay
expenditures of the current period.
39
BACK TO THE BASICS
The Cash Basis of Accounting
• Is the simplest to achieve and provides the least
disclosure
• Only revenues received and expenses or expenditures
disbursed are recognized
• The Balance Sheet of the Governmental Unit
displays only a balance in cash and the fund
balance accounts.
• The Operating Statement presents results of only the
cash transactions for the reporting fund.
40
BACK TO THE BASICS
Application of the Basis of Accounting and
Measurement Focus by Fund Type
Modified Accrual Basis/Flow of Current Financial
Resources Measurement Focus
Governmental funds:
• General fund
•
Special revenue funds
•
Debt service funds
•
Capital projects funds
•
Permanent funds
41
BACK TO THE BASICS
Application of the Basis of Accounting and
Measurement Focus by Fund Type
Modified Accrual Basis/Flow of Current Financial
Resources Measurement Focus
Trust and Agency funds:
• Agency funds (only the basis of accounting applies;
measurement focus is not
applicable)
42
BACK TO THE BASICS
Application of the Basis of Accounting and
Measurement Focus by Fund Type
Accrual Basis/Flow of Economic Resources Measurement Focus
Proprietary funds:
Enterprise funds
Internal service funds
43
BACK TO THE BASICS
Application of the Basis of Accounting and
Measurement Focus by Fund Type
Accrual Basis/Flow of Economic Resources Measurement
Focus
Trust funds:
Investment trust funds
Pension trust funds
Private purpose trust funds
44
BACK TO THE BASICS
PRACTICAL DIFFERENCES:
• Receipt of long-term debt proceeds
• Repayment of the principal of long-term
debt
• Capital acquisition
• Exhaustion of capital assets
• Deferrals and amortizations
45
BACK TO THE BASICS
ILLUSTRATIVE ENTRIES
RECEIPT OF LONG-TERM DEBT PROCEEDS:
PROPRIETARY FUNDS:
Cash
DR
CR
$20,000
Bonds Payable
$20,000
GOVERNMENTAL FUNDS:
Cash
Other Financing Sources
$20,000
$20,000
46
BACK TO THE BASICS
ILLUSTRATIVE ENTRIES
REPAYMENT OF THE PRINCIPAL OF LONG-TERM DEBT:
PROPRIETARY FUNDS:
Bonds Payable
Interest Expense
DR
CR
$5,000
300
Cash
$5,300
GOVERNMENTAL FUNDS:
Expenditure- Bond Principal
Expenditure-bond Interest
Cash
$5,000
300
$5,300
47
BACK TO THE BASICS
ILLUSTRATIVE ENTRIES
CAPITAL ACQUISITION:
DR
CR
PROPRIETARY FUNDS:
Equipment
$20,000
Cash
$20,000
GOVERNMENTAL FUNDS:
Expenditure-capital Outlay
Cash
$20,000
$20,000
48
BACK TO THE BASICS
ILLUSTRATIVE ENTRIES
PROPRIETARY FUNDS:
Depreciation Expense
DR
CR
$2,000
Accumulated Depreciation
$2,000
GOVERNMENTAL FUNDS:
Depreciation is Recorded in the GFAAG –
Not in the Governmental Fund Itself
49
50
BACK TO THE BASICS
• Chart of Accounts is the framework of an
accounting system
• Is a uniform system for Local Governments
• Provides the information needed for
administration & reporting purposes
• Allows for comparisons
• Funds have 4 numbers
• Accounts have 6 numbers
• Objects have 3 numbers
51
BACK TO THE BASICS
FUND CLASSIFICATION
1000
-
General Fund
2000
-
Special Revenue Funds
3000
-
Debt Service Funds
4000
-
Capital Projects Funds
52
BACK TO THE BASICS
FUND CLASSIFICATION
5000
-
Enterprise Funds
6000
-
Internal Service Funds
7000
-
Trust and Agency Funds
8000
-
Permanent Funds
9000
-
GFAAG/GLTDG
53
BACK TO THE BASICS
BALANCE SHEET ACCOUNTS
100000
-
Assets and Other Debits
200000
-
Liabilities, Equity and
Other Credits
54
BACK TO THE BASICS
REVENUE ACCOUNTS
310000
320000
330000
340000
350000
360000
370000
380000
390000
-
Taxes
Licenses and Permits
Intergovernmental Revenues
Charges for Services
Fines and Forfeitures
Miscellaneous Revenues
Investment Earnings
Other Financing Sources
Internal Services
55
BACK TO THE BASICS
EXPENDITURE ACCOUNTS
410000
420000
430000
440000
450000
460000
470000
480000
490000
-
General Government
Public Safety
Public Works
Public Health
Social/Economic Services
Culture and Recreation
Housing and Community Dev.
Conversation of Natural Resources
Debt Service
56
BACK TO THE BASICS
EXPENDITURE ACCOUNTS – CONT.
500000
510000
520000
-
Internal Services
Miscellaneous
Other Financing Uses
57
BACK TO THE BASICS
OBJECT EXPENDITURE CLASSIFICATIONS
100
200
300
400
500
600
700
800
900
-
Personal Services
Supplies
Purchased Services
Building Materials
Fixed Charges
Debt Service
Grants, Contributions, Indemnities
Other Objects
Capital Outlay
58
BACK TO THE BASICS
BUDGETARY, ACCOUNTING AND REPORTING SYSTEM (BARS) FOR
MONTANA, CITIES, TOWNS AND COUNTIES
BARS ACCOUNT STRUCTURE
Asset & Liability Accounts - (Illustration 1)
1st Digit 1 = Assets & Other Debits
1st Digit 2 = Liabilities& Other Credits
Fund
Account
Number
Number
XXXX
XXXXXX
59
BACK TO THE BASICS
BARS ACCOUNT STRUCTURE - CONT.
Revenue Accounts - (Illustration 2)
1st Digit 3 = Revenue
Organization
Fund
Program
X
Job
XXX
Optional
Code
Major
Code (Department) Source
XXXX
XXX
XX
Sub-Source
Detail
X
XX X
Optional
60
BACK TO THE BASICS
BARS ACCOUNT STRUCTURE - CONT.
Expenditure Accounts - (Illustration 3)
1st Digit 4 & 5 - Expenditures
Organization
Fund
Code
Program Job Code (Department)
X
XXX XXXX XXX
Optional
Optional
Sub
Major
Function Activity Activity Object
XX
XX
XX
X
SubObject Detail
X
X
Optional
61
BACK TO THE BASICS
BARS ACCOUNT STRUCTURE
Asset & Liability Accounts - (Illustration 1)
1st Digit 1 = Assets & Other Debits
1st Digit 2 = Liabilities& Other Credits
Fund
Account
Number
Number
1000
GENERAL
101000
CASH
62
BACK TO THE BASICS
BARS ACCOUNT STRUCTURE - CONT.
Revenue Accounts - (Illustration 2)
1st Digit 3= Revenue
Organization
Fund
Program
X
Job
XXX
Optional
Code
Major
Code (Department) Source
1000
GENERAL
XXX
Optional
Sub-Source
Detail
31
1
010
TAXES
GENERAL
PROPERTY
TAXES
REAL
ESTATE
TAXES
63
BACK TO THE BASICS
BARS ACCOUNT STRUCTURE - CONT.
Expenditure Accounts - (Illustration 3)
1st Digit 4 & 5 - Expenditures
Organization
Fund
Code
Program Job
Code
(Department)
X
1000
Optional
XXX
GENERAL
XXX
Optional
Sub
Major
Function Activity Activity Object
42
01
40
PUBLIC
SAFETY
LAW
ENFORCEMENT
SERVICES
2
SUPPLIES
CRIME
CONTROL &
INVESTIGATION
SubObject
2
Detail
1
Optional
UNIFORMS
OPERATING
SUPPLIES
64
65
BACK TO THE BASICS
66
BACK TO THE BASICS
67
BACK TO THE BASICS
REVENUE QUIZ
Identify the appropriate revenue code number for the following revenue items:
Fund #
Account #
1. Accruing monthly fees for garbage collections services _____________________________
2. The receipt of real estate taxes in the general fund
_____________________________
3. The receipt of payments for weed spraying services
_____________________________
4. The receipt of a bequest from the estate of a deceased member _______________________
of the community for use in the general fund
_____________________________
5. The receipt of interest on an investment in the road fund ____________________________
6. The receipt of money from the state as an allocation from taxes
on fuel
_____________________________
7. The receipt of personal property taxes in the road fund _____________________________
8. The receipt of money for the preparation of a burial plot at the cemetery _______________
9. The receipt of proceeds from fair activity
______________________________
10. The receipt of fees collected by the clerk and recorder ______________________________
68
BACK TO THE BASICS
Expenditure Quiz
Identify the appropriate expenditure code number for the following expenditure
items:
Fund Account Object
1. Payment for personal services for the clerk and recorder _____________________
2. The purchase of tires for a dump truck in the road department _______________
3. The purchase of machinery for use in garbage collection _____________________
4. The purchase of envelopes for the justice of the peace ______________________
5. Payment for electricity for the building at the cemetery _____________________
6. Payments for the rental of a backhoe paid for with
gas tax monies
___________________
7. The purchase of a riding lawn mower for the park
__________________
8. Recording the depreciation of garbage equipment
__________________
9. Payment of the employer's contribution to sheriff's retirement ________________
10. Payment for the cost of the audit of the county
__________________
69
YEAR END CLOSING
72
CHECKLIST FOR YEAR-END CLOSING ENTRIES
GENERAL
1. Review year-end budget to actual expenditure
report for budget overdrafts
Cover budget overdrafts by a resolution of the
governing body authorizing the transfer of
appropriations per Section 7-6-4031, MCA.
However, total budget appropriations should
remain the same within each fund as amended
by resolution.
73
CHECKLIST FOR YEAR-END CLOSING ENTRIES
- cont.
2. Verify that Transfers In (383XXX) equal Transfers
Out (521XXX) within all funds.
3. Verify that interfund loans receivable (131XXX –
short-term 133XXX – long-term) equal interfund
loans payable (211XXX – short-term or 233XXX –
long-term).
4. Verify that the trial balance for each fund is in
balance.
74
CHECKLIST FOR YEAR-END CLOSING ENTRIES
- cont.
5. Verify that the expenditure detail is equal to
the expenditure control (242000), and that the
revenue detail is equal to the revenue control
(172000) in those systems where control
accounts are used.
75
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
6. Taxes/Assessments Receivable
A. Reconcile all taxes/assessment receivable
accounts (11XXX) with the County Treasurer’s
receivables, including protested taxes.
B. Adjust deferred revenue accounts (223XXX) to
the corresponding receivable accounts for real,
personal, protested and special assessments,
and offset to the appropriate revenue accounts.
(Do not defer taxes for proprietary funds.)
76
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
6. Taxes/Assessments Receivable
C. Reconcile the deferred assessment receivable
account (119000) for each special improvement
district (S.I.D.) with the future year’s principal
assessments.
Verify that all prepaid assessments have been
deducted from the deferred assessment
receivable account.
77
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
GOVERNMENTAL FUNDS AND ACCOUNT
GROUPS
1. Review payroll and claims expenditures for possible
accruals, if deemed material. This would include
any goods or services received prior to the end of
the fiscal year. Also, review debt service funds for
accruing any bond interest payable at year-end or
for bond principal payable within the next fiscal
year. (Reclassify principal from general long-term
debt account group to short-term payable of debt
service fund.)
78
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
GOVERNMENTAL FUNDS AND ACCOUNT
GROUPS
2. Review revenue accounts for possible accruals, if
deemed material, But, keep in mind that these
revenues must meet the revenue recognition criteria
of measurable and available. Revenue for federal
and/or state grants that are reimbursed upon
expenditure, should be recognized when the
expenditure is made. (Some revenue susceptible to
accrual may be interest on investments, state
shared revenue, P & I on delinquent taxes, etc.)
79
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
GOVERNMENTAL FUNDS AND ACCOUNT
GROUPS
3. If inventory of supplies is deemed material, establish or adjust
inventory account (15XXXX) and offset non-spendable fund
balance for inventory of supplies (250100).
4. Capital assets purchased by governmental funds should be
added to the general fixed asset account group (GFAAG). Any
assets traded-in or disposed of should be deleted. The balance in
this account group should be reconciled with the capital asset
inventory. Depreciation is required to meet the requirements of
GASB Statement #34. (Note: The GFAAG is not longer required
to be reported under GASB #34 but can be maintained to
generate information for the government-wide statements)
80
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
GOVERNMENTAL FUNDS AND ACCOUNT
GROUPS
5. Prepare worksheet on unused vacation, sick leave,
compensatory time and employer’s related payroll
obligation. Adjust compensated absences payable
account within the general long-term debt account
group (GLTDAG). (Note: The GLTDAG is not
longer required to be reported under GASB #34 but
can be maintained to generate information for the
government-wide statements)
81
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
GOVERNMENTAL FUNDS AND ACCOUNT
GROUPS
6. Adjust the appropriate long-term liability
account (GLTDAG) for principal paid from
governmental funds on contracts, loans,
lease-purchase
agreements,
general
obligation
bonds
and/or
special
improvement district (S.I.D.) bonds.
82
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
GOVERNMENTAL FUNDS AND ACCOUNT
GROUPS
7. Adjust the appropriate amount available
account (173XXX) in GLTDAG to the
corresponding fund balance in the debt
service fund types (3XXX) for general
obligation bonds and special improvement
district (S.I.D.) bonds.
83
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
GOVERNMENTAL FUNDS AND ACCOUNT
GROUPS
8. Adjust appropriate amount to be provided
account (174XXX) for all long-term liability
accounts within GLTDAG. This includes
contracts, notes, capital lease purchases,
compensated absences, G.O. bonds and
S.I.D. bonds payable.
9. Close out revenue and expenditure accounts
to fund balance (271000). (Data systems will
do this automatically)
84
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
PROPRIETARY FUNDS
1. If interim revenue accounts are used for
bond/loan proceeds, close these accounts to
the appropriate general ledger account.
2. If interim expense accounts are used for
capital asset acquisition or principal
payments, close these accounts to the
appropriate
general
ledger
account.
(18XXX for capital asset purchases and
23XXX for principal payments.)
85
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
PROPRIETARY FUNDS - cont.
3. Prepare journal vouchers for accrual of
revenue and/or expenses, if deemed material.
a. Utility charges
b. Interest receivable on investments
c. Other revenue accruals
d. Claims payable
86
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
PROPRIETARY FUNDS - cont.
3. Prepare journal vouchers for accrual of
revenue and/or expenses, if deemed material.
e. Payroll payable
f. Interest payable
g. Reclassify long-term payable to short-term
h. Prepaid expenses
87
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
PROPRIETARY FUNDS - cont.
4. Reconcile accounts receivable and deposits payable
with detail of customer records.
5. If inventory of supplies is deemed material, adjust
inventory and offset to supply expense account(s).
6. Reconcile appropriate capital asset accounts with
with capital asset schedules. Adjust for assets
traded in, sold or disposed of.
88
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
PROPRIETARY FUNDS - cont.
7. Prepare a depreciation schedule for the fiscal
year. Prepare a journal voucher for
depreciation expense for each proprietary
fund.
8. Adjust reserved retained earnings accounts
(25XXXX) to agree with appropriate
restricted cash accounts (102XXX).
89
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
PROPRIETARY FUNDS - cont.
9. Determine the changes in closure and postclosure
costs and liability for the solid waste fund and adjust
the necessary accounts appropriately. (430800580
Expense/236000 Liability) (Determined from a new
engineer’s estimate). (GASB #18)
10. If interest expense is to be capitalized for assets
constructed with tax exempt borrowings, close
appropriate interest earnings/interest expense on
borrowings to the appropriate asset account. (Limited
to construction period only.)
90
CHECKLIST FOR YEAR-END CLOSING
ENTRIES - cont.
PROPRIETARY FUNDS - cont.
11. Adjust compensated absences payable
schedule and offset to payroll expense.
per
12. Close revenue and expense accounts to retained
earnings (272000).
91
92
Local Government Services Bureau
Website: http://doa.mt.gov/lgsb
Address: 301 S Park Ave ~ Room 340
PO Box 200547 ~ Helena, MT 59620-0547
Phone: 841-2909
Staff members:
Kay Gray, Bureau Chief
Darla Erickson, Accounting Program Manager ~ 841-2911
Accounting Fiscal Officers:
Magda Nelson, Kalispell region ~ 257-5245
Jamie Cain, Helena region ~ 841-2902
Jason Sunderland, Billings region ~ 252-5564
Dorianne Minkoff-Brown, Miles City region ~ 234-5057
Audit Review Staff:
Kim Smith, Helena office
Larry Donovan, Helena office
93