Current Fund Flashcards
Step One -Closing Ledger Steps
Close prior year appropriation reserves to budget operations or accounts payable for contracts
Step Two - Closing Ledger Steps
Transfer Current Year Appropriations to Appropriation Reserves
- Grants transferred to Grant Fund
- Debt Service Unexpended Balances Canceled
- RUT Charged Off
- Deferred Charges Charged Off
- Appropriation Cancellations Recorded
- Overexpenditures setup as deferred charge
Step Three - Closing Ledger Steps
Realize Tax Revenue
- Prepaid Taxes Applied
- Overpayments applied and set up
- Senior Citizen & Vet Deductions
- Transfer to Tax Title Lien
Step Four - Closing Ledger Steps
Close Revenues to Budget Operations
-Grants transferred to Grant Fund
Step Five - Closing Ledger Steps
Close Operations to Fund Balance
-Deficit in Operations must be set up as a deferred charge
Current Fund Assets
- Cash-Checking Account
- Cash - CD
- Cash - Change Fund
- Investments
- Due from State Senior & Vet Deductions
- Current Year Tax Rec
- Prior Year Tax Rec
- Delinquent Taxes Rec
- Tax Title Liens
- Revenue Account Rec
- Interfunds Rec (Due From)
- Deferred Charges (Emergencies, Overexpenditures, Expenditure w/out App, Special Emergencies)
Current Fund Liabilities
- Appropriation Reserves
- Reserve for Encumbrances
- Interfund Payable (Due to)
- Payroll Deductions Payable
- Prepaid Taxes
- Tax Overpayments
- School Taxes Payable
- County Tax Payable
- Reserve for Rec
- Reserve for Tax Rec
- Reserve for Tax Title Liens
Current Fund Revenues
- Fund Balance
- Misc Revenues Anticipated (Licenses, Fees & Permits, Court Fines, Interest on Taxes)
- Receipt from Delinquent Taxes
- Amount to be Raised by Taxation
- MRNA
Current Fund Expenditures
- Budget Appropriations (S&W, OE)
- Capital Improvements
- Debt Service
- Statutory Expenditures
- RUT
JE: To Record Budget
Debit: Revenues
Credit: Appropriations
JE: Charging Off RUT (charge non-spending appropriation)
Debit: RUT
Credit: Amount to be raised by taxation
JE: Deferred Charges Raised in Budget
Debit: Appropriations
Credit: Deferred Charges
JE: Capital Improvement Fund (Set up liability and charge budget for CIF raised in budget)
Debit: CIF
Credit: Due to General Capital Fund
JE: Recording Emergency Appropriations
Debit: Deferred Charges to Future Taxation: Emergency Appropriation
Credit: Appropriation
JE: Budget Transfers by Resolution
Debit: Appropriation Transferring From
Credit: Appropriation Transferring To
JE: Record Chapter 159 (Budget Amendment)
Debit: Revenue
Credit: Appropriation
JE: Setting Up Accounts Payable
Debit: Appropriations
Credit: Accounts Payable
JE: Setting Up New Appropriation Reserves
Debit: Appropriations
Credit: Appropriation Reserves
JE: Setting Up County and School Liability
Debit: Amount to be raised by taxation
Credit: School Taxes Payable, County Taxes Payable
JE: Setting up County Liability for Added and Omitted Taxes
Debit: Amount to be raised by taxation
Credit: County Taxes Payable for Added and Omitted Taxes
JE: Setting up Tax Levy
Debit: Tax Receivable
Credit: Reserve for Taxes Receivable
JE: Setting up Tax Levy for Added/Omitted Taxes
Debit: Taxes Receivable
Credit: Reserve for Taxes Receivable
JE: Setting up Sen & Vet Deductions per duplicate
Debit: Due From State - Sen & Vet Deductions
Credit: Taxes Receivable
JE: Setting up Sen & Vet Deductions per Tax Collector
Debit: Due From State - Sen & Vet Deductions
Credit: Taxes Receivable
JE: Record Cancelled Taxes Current Year (Tax Appeals, Vet Granted)
Debit: Reserve for Taxes Receivable
Credit: Taxes Receivable
JE: Record Cancelled Taxes Prior Year (Tax Appeal, Vet Granted)
Debit: Reserve for Prior Year for Taxes Receivable
Credit: Prior Year Taxes Receivable
JE: Record Tax Sale
Debit: Tax Title Liens
Debit: Reserve for Prior Year for Taxes Receivable
Credit: Reserve for Tax Title Liens
Credit: Prior Year Taxes Receivable
JE: Recording Accrued Interest at Date of Sale
Debit: Tax Title Liens
Credit: Reserve for Tax Title Liens
JE: Record Transfer of Current Taxes to Liens at Year End
Debit: Tax Title Liens
Debit: Reserve for Taxes Receivable
Credit: Reserve for Tax Title Liens
Credit: Taxes Receivable
JE: Applying Tax Overpayments
Debit: Tax Overpayments
Credit: Taxes Receivable
JE: Setting Up Overpayments (transfer the actual overpayment to tax overpayments on balance sheet)
Debit: Taxes Receivable
Debit: Prior Taxes Receivable
Debit: Tax Title Liens
Credit: Tax Overpayments
JE: Realizing Tax Revenues (Current Year) - By adjusting reserve
Debit: Reserve for Taxes Receivable
Credit: Amount to be Raised by Taxation
JE: Realizing Tax Revenues (Prior Year) - By adjusting reserve
Debit: Reserve for Prior Year Taxes Receivable
Credit: Receipts from Delinquent Taxes
JE: Realizing Tax Revenue (Tax Title Liens) - By adjusting reserve
Debit: Reserve for Tax Title Liens
Credit: Receipt from Delinquent Taxes
JE: Cancelling Tax Overpayments to Operations
Debit: Tax Overpayments
Credit: Operations
JE: Applying Prepaid Taxes
Debit: Prepaid Taxes
Credit: Taxes Receivable
JE: Lapsing Uncommitted Appropriation Reserves
Debit: Appropriation Reserves
Credit: Operations
JE: Closing Revenue Accounts
Debit or Credit: Revenue Accounts
Debit or Credit: Operations
JE: Closing Operations to Fund Balance
Debit: Operations
Credit: Fund Balance
Definition of Fund
Independent fiscal accounting entity with a self-balancing set of accounts, segregated for the purpose of carrying out specific activities or attaining certain objectives
RMA
- Registered Municipal Accountant
- Conducts Annual Audit
5 Most Common Funds
- Current Fund
- Trust Funds
- Capital Funds
- Utility Funds
- Public Assistance
5 Basic Accounts that Make Up General Ledger
- Assets
- Liabilities
- Fund Balance
- Revenues
- Expenditures
Accounting Equations
Assets = Liabilities + Fund Balance
Balance Sheet Accounts
Assets, Liabilities, & Fund Balance
-Permanent Accounts
Non-Balance Sheet Accounts
Revenues & Expenditures
-Temporary Accounts
Cash Basis
- Revenues are realized when received
- Expenses are realized when paid
Accrual Basis
- Revenues are realized when earned or levied regardless of collection
- Expenses are recorded when incurred or liability becomes known
New Jersey Basis of Accounting
- OCBOA: Other Comprehensive Basis of Accounting
- Modified Accrual
- Revenues are realized when collected
- Expenses are recorded when incurred
Collateral Entries
Since we do not realize revenues until it is received, all receivable balances are offset with a reserve for receivables.
-Extra step when realizing revenues
NJSA 40A:2
Bond Law
NJSA 40A:4
Budget Law
NJSA 40A:5
Fiscal Affairs Law
NJSA 40A: 11
Local Public Contracts Law
File Annual Debt Statement
Calendar Year: January 31
Fiscal Year: July 31
File AFS
Calendar Year: February 10
Fiscal Year: August 10
Introduce Budget
Calendar Year: February 10
Fiscal Year: August 10
Adopt Budget
Calendar Year: March 20
Fiscal Year: Sept 20
Responsible to Prepare & File AFS
CMFO/CCFO
Responsible for Preparing Financial Statements presented in the Audit
CMFO/CCFO - Not Auditor
Fine for Failure to file AFS on time
$5 each day
Definition of Internal Control
Comprises the plan of an organization and all the coordinate methods and measures adopted within a business to safeguard its assets, check the accuracy and reliability of its accounting data, promote operational efficiency, and encourage adherence to managerial policies.
Internal Control Examples
- Segregation of Duties
- Procedure Manuals
- Competent Staff
- Passwords for computers
- Locking filing cabinets
- Review ledgers regularly
Appropriations Cap
- 2.5%
- Can go up to 3.5% by passing COLA ordinance
Tax Levy Cap
- 2%
- Exceptions: Pension, Health Insurance, Debt, Capital and Emergencies (depends)
Major Budget Revenues
- Fund Balance
- Misc Revenue Anticipated
- Receipts from Delinquent Taxes
- Amount to be Raised by Taxation
Major Budget Appropriations
- Operations
- Contingent
- Capital Improvements
- Debt Service
- Deferred Charges & Statutory Expenditures
- RUT
Line Budget
-Each Appropriation must be categorized between Salary & Wages and Other Expenses
Reserve for Uncollected Taxes
-Amount of the tax levy we do not anticipate to be collected
Temporary Budget
- Provides the operations of the local unit in the new budget year until the budget has been adopted
- Resolution must be passed within 30 days
- Total Appropriations can not exceed 26.25% of prior years appropriations excluding Capital Improvement Fund, Debt Service, Public Assistance
Budget Calendar
- Introduction: C/Y Feb 10
- File Introduced with DLGS: 3 days after intro
- Budget Publication: Mar 10 (10 days prior to adoption)
- Budget Hearing: Mar 20 (not less than 28 days after intro)
- Budget Adoption: Mar 20
Over Expenditure of Budget
- No person shall expend any money where an appropriation has not been provided, in excess of the amount appropriated for said purpose
- Violation of this section is a misdemeanor, and is subject to penalties under criminal law
NJSA 40A:4-85
- Chapter 159 Budget Amendment
- Correction of Title, Text or Amount
- Requires Resolution and Approval by Director of DLGS
NJSA 40A: 4-87
- Chapter 159 Budget Amendment
- Insertion of Special Items of Revenues and Appropriations
- Requires Resolution and Approval by Director of DLGS
Emergency Appropriations
NJSA 40A: 4-46 through 4-55
-A local unit may make emergency appropriations after the adoption of the budget, for a purpose which is not foreseen at the time of adoption thereof, or for which adequate provision was not made herein.
Reserve Year Budget
- Second year of the budget to serve as catch up period for bills that were not paid during the initial year of budget
- The goods had to have been received or services rendered in the year of that budget
Budget Transfers
- Current Year Appropriations: Last Two Months
- Reserve Year Appropriations: First Three Months of new year
- Must be approved by 2/3 vote of full membership
Budget Transfer Restrictions
No Transfers permitted FROM:
- Contingent
- Deferred Charges
- Cash Deficit
- RUT
- Down Payments
- Capital Improvement Fund
- Interest & Debt Redemption Charges
Cancellation of Unexpended Balances
- Any unexpended balance may, by resolution, be cancelled prior to the end of year.
- Helps balance shortfall in revenue to minimize impact of overall operations and Fund Balance regeneration
Lapse of Appropriation Balance
- At end of year, all remaining unexpended balances will automatically lapse
- Any commitments outstanding maybe set up as accounts payable before the funds lapse ensuring that funds are available for these obligations
Tax Point
- Cent or Penny on the tax rate
- One Ten Thousandths of the total amount of assessed valuations
Calculate Tax Rate
Total Tax Levy / Assessed Value of all Properties X 100
GUDPA
- Governmental Unit Deposit Protection
- Guarantees that Governmental Funds are secure in the event that the Bank goes bankrupt
- 1st $250,000 covered by FDIC, remainder covered by GUDPA
Cash Management Plan
CD
- CMFO is charged with administering the plan
- Includes: Designation of Depositories; Designation of Funds Covered; Authorized Investments; Policies for selecting and evaluating investments; guidelines under which CMFO can maximize return on public funds
Securities purchased by municipalities
- US Bonds
- Government Money Markets
- Bonds or other obligations by local unit or school district
- Local government investment pools
- CDs
- Checking & Savings Account
Cash Management Reporting Requirements
- Monthly report provided to governing body and recorded in minutes
- Report contains: Organizations where funds are invested; amount of securities purchased; class or type of investments purchased; Book value, earned income, fees incurred
Petty Cash Fund
NJSA 40A: 5-21
- Permits establishment of petty cash fund
- Approved by resolution; include amount, purpose, custodian
- Approved or denied by Director of DLGS
- Change in custodian must be communicated by resolution and sent to Director of DLGS
- Written policy should be established
- Year End: Petty cash turned over to CFO and then re-established in the new year
Books of Original Entry
- Cash Receipts Journal
- Cash Disbursement Journal
- Payroll Journal
- General Journal
- Provide basic foundation for accounting system
- Maintain double entry principle of bookkeeping
- For every debit there is a credit
General Ledger
- Provides for orderly and systematic recording of financial transactions, usually in summary form as they have been recorded in the books of original entry
- No entry made in general ledger unless first made in book of original entry
Encumbrance
The obligation restricts further charges to an account unless the unencumbered balance is adequate for such future charges
Current Fund Calculations
Worksheet
RUT
Tax Calculations
