Agencies that administer State funds, such as the Highway Fund, Risk Management Fund, Board of Accountancy Fund, etc. should research the enabling statutes that established the fund to determine the type and frequency of reporting requirements. Also, the statutes may require that the reports be audited prior to submission. Annually, the ADOA-GAO prepares two reports: 1) The cash basis Annual Financial Report (AFR) (A.R.S. § 35-131, F.); and 2) the Comprehensive Annual Financial Report (CAFR) on the Generally Accepted Accounting Principles (GAAP) basis of accounting. The CAFR is audited by the Office of the Auditor General. Agencies not required to have audited reports must complete the GAO Closing Package annually after fiscal year end to assist the ADOA-GAO in completing the CAFR. The Closing Package forms and instructions can be found in the "Publications" section of the GAO's web site. The ADOA-GAO is available to assist agencies in researching the statutes and in preparing procedures to fulfill these requirements.
Agencies that receive Federal Financial Assistance are generally required to report to the Federal Grantor Agency on the activity of the grant. These reports usually include a quarterly financial report on receipts, disbursements and obligations (SF269). In addition, the Department of Administration, in conjunction with the Statewide Single Audit, is required to prepare an Annual Statewide Schedule of Expenditures of Federal Awards (SEFA). This Schedule includes the Catalog of Federal Domestic Assistance (CFDA) Number and total disbursements. This Schedule is subject to audit and is included in the Single Audit Reporting Package that is prepared by ADOA-GAO and audited by the Auditor General.
To request an imprest account or to make changes to an existing one, the agency must submit a "Request for Revolving Fund*" form, GAO-33 to the GAO. A copy of this form may be found in the State of Arizona Accounting Manual which is also out on our website.
With the exception of most Federal funds, funds of the State of Arizona are generally subject to legislative appropriation. Included in the appropriated funds are: General, Highway, Licensing Boards*" funds (such as Board of Accountancy, Barbers Examiners, etc.), Game and Fish Fund, etc. Monies in an appropriated fund cannot be spent without legislative authority. If there are any questions as to whether or not a fund is appropriated, either contact the ADOA-GAO or the OSPB. You may also refer to the Appropriations Report published by the Joint Legislative Budget Committee Staff for guidance.
A non-appropriated fund is controlled by statute or other law rather than by the Legislature through the general or special appropriation process. A non-appropriated fund is controlled by the amount of cash that is in the fund and has continuous spending authority in that it does not require further legislative action. However, any disbursements from this fund must be for a valid public purpose and are subject to audit. Therefore, non-appropriated funds must be accounted for in the State Accounting System (AFIS). Non-appropriated funds include, but are not limited to, Federal Grants and Land Endowment Funds.
A non-reverting fund is one in which its monies do not revert back to its original source.
* Agency imprest accounts shall not exceed the amount authorized by ADOA-GAO. * An imprest account may only be established with the approval of the Department of Administration, General Accounting Office. * No disbursement may exceed $500. * Travel advances, expenses and reimbursements must not be paid from the imprest accounts. * The imprest account must be reconciled monthly by the agency. Additionally, annually, a copy of the June 30 bank and revolving fund reconciliations must be submitted to the ADOA-GAO Revolving Fund Coordinator for review; * The imprest account should never be used for making loans or any other unauthorized purpose. All imprest accounts are subject to audit by the Department of Administration who has the authority to request the return of the funds at any time. It is very important to review all other policies and procedures in section II., C., of the State of Arizona Accounting Manual to obtain a complete understanding of responsibilities related to imprest accounts.
A "Reverting Fund*" is one that is usually appropriated and returns the unspent monies to its original source, often at the end of each fiscal year. A reverting fund may also return monies exceeding a particular cap in a fund as determined by the fund's governing statute. This transfer is called a "revertment?. In most cases, the revertment is made to the General Fund but it can be to another fund providing that fund is the original source of the monies. In order to determine if a fund is reverting fund, either contact the ADOA-GAO or refer to the governing Arizona Revised Statutes.
New funds are usually established through the legislative process by addition or amendment to the Arizona Revised Statutes. The Department of Administration is also given the authority to establish funds that are needed to carry out the requirements of the statutes. Periodically, an agency may also find it necessary to request that a new fund be created for accounting necessity or convenience. In order to create a new accounting fund, the agency must submit an application for the new fund to the ADOA-GAO giving the reason for the new fund along with the appropriate statutory reference. See the State of Arizona Accounting Manual for instructions on requesting establishment of funds.
The most common definition of the term "Revolving Fund*" is that it is an Imprest Account Fund or Petty Cash Fund. An imprest account is used for handling minor disbursements whereby a fixed amount of money is set aside for this purpose. Disbursements are made as needed with a receipt or petty cash voucher being completed in each case. At certain intervals, or when the imprest account is completely expended, the imprest account is replenished. The total of petty cash on hand plus the amount of signed receipts or petty cash vouchers at any one time must equal the total amount authorized for the imprest account. See A.R.S. § 35-193 and the State of Arizona Accounting Manual for details regarding the establishment and accounting procedures for imprest accounts.
The fund custodian is the individual who applied for the revolving fund. The fund custodian is responsible for the fund's money, accuracy, use and timely reconciliation of the revolving fund. If there is a change of fund custodian, the "Request for Revolving Fund*" form, GAO-33 must be revised and submitted to the GAO. If GAO is not notified of a fund custodian change, any activity, including improper activity occurring in the revolving fund after the fund custodian has departed the agency is the responsibility of the agency director.
The State provides its citizens with a variety of services. In order to account for resources, obligations, revenues and disbursements the State uses the Fund Accounting method. A Fund is defined as a separate accounting entity with its own self-balancing set of accounts. Typically the largest fund in any governmental unit is the General Fund. Each budget unit is responsible for all of the activities of the funds assigned to them.
Although not inclusive of all funds in the State, following are the more common funds you should be aware of for an agency your size: * The General Fund is used to account for all General Taxes and other Revenues that are not dedicated to be used for another purpose. * Special Revenue Funds are those that receive financing from a specific source that is to be used for a specific purpose. An example of a special revenue fund would be a 90/10 board. "90/10*" is a term that is usually applied to a regulatory board such as the Board of Accountancy, Board of Medical Examiners, etc. The term "90/10*" is used because the Fund is allowed to keep 90% of its revenue to carry out its regulatory responsibilities and the remaining 10% is deposited in the General Fund. "90/10 Funds*" are considered to be "revolving*" in nature because its expenses are financed 100% by its revenues. * Revolving Funds (imprest accounts) are used to account for resources in which a State Agency provides a service to another State Agency (e.g., Motor Pool) or to the general public (e.g., Arizona Highways Magazine). A revolving fund is a fund in which the amount of the cash receipts is normally equal to the amount of cash disbursements. In Arizona, there are five types of revolving funds: 1) internal service funds; 2) enterprise funds; 3) 90/10 funds; 4) statutorily mandated funds such as Public Assistance and Administration Revolving Fund; and 5) imprest funds. Specific accounting, reporting and reversion requirements of all types of revolving funds are established by statute. Please contact ADOA-GAO for more information. For the purpose of this document, we will focus on the application of the imprest funds.
General Relief Bill
There is statutory authority to submit vendor's claims that are more than one fiscal year, but less than four years old to the Legislature. Only appropriated funds are eligible for payment under the Relief Bill. There must be sufficient authority remaining in the lapsed appropriation for the fiscal year of the claim to be included in the Relief Bill which is approved by the Legislature for payment. (A.R.S. § 35-191, C.) As with administrative adjustments, line item integrity is not lost. Every December, the ADOA-GAO sends letters to all agencies requesting invoices that meet the General Relief Bill criteria. Agencies submitting items for inclusion in this bill should be ready to testify before the legislature regarding their request, if necessary.
There are several Federal Publications that are needed to apply for Federal Financial Assistance. These Publications include: 1) Catalog of Federal Domestic Assistance (CFDA) which lists all Federal programs, contacts for submission of grant applications, and other details of the program. This catalog may be accessed through the Web address: http://www.cfda.gov. 2) Federal agencies*" program guidelines which are included in the Federal Register; and 3) Grant application. Once a grant application has been approved, the grant recipient is notified of the award through an award letter. This award letter indicates the accounting and reporting requirements of the grant.
Installment Purchase Agreements
An installment purchase agreement is a contract used to finance the acquisition of assets. Under the terms of such an agreement, the buyer pays the seller the full purchase price by making a series of partial payments over time. The payments include stated or imputed interest. The buyer takes title to the property at the inception of the agreement. The seller retains a security interest in the property until all of the specified payments have been made. The Constitution of the State of Arizona, Article 9, Section 5, currently prohibits State agencies from using installment purchase agreements to finance acquisitions. It is strongly recommended that any contracts employing periodic payments to finance the acquisition of assets be submitted to the Office of the Arizona Attorney General for review. For additional information on leases and assets, please see the State of Arizona Accounting Manual, Section II, G.
Any budget unit which purchases, on account, goods or services from the private sector shall pay the account, in full, within 30 days after receipt of the goods and services, and receipt of the invoice documenting the amount due. If payment is not made within 30 days, the budget unit is subject to paying interest on the outstanding balance at a rate of prescribed by law (A.R.S. § 44-1201) (currently 10%); unless good faith dispute exists as to the agency's obligation to pay all or a portion of the account. (A.R.S. § 35-342) All interest payments in excess of $25.00 are sent by agencies to ADOA-GAO for processing (see procedures in the State of Arizona Accounting Manual). The vendor accounts of the budget unit shall not be deemed paid in full until all interest is paid in full. If a good faith dispute exits on only a portion of the account due, interest shall be paid on the remaining, undisputed, balance due. (A.R.S. § 35-342)
There are 10 main categories of internal control with two additional categories for agencies receiving any Federal financial assistance. The 10 main areas are as follows: 1) General Internal Controls 2) Cash 3) Investments 4) Inventories 5) Fixed Assets 6) Purchasing, Receiving and Expenditures 7) Long-Term Debt 8) Revenues 9) Personnel and Payroll 10) EDP Application Control If the agency receives any Federal financial assistance, the two additional categories are as follows: 1)Program Receipts-Federal/Indirect Costs 2)Cost Approval/Unallowable Federal Costs The State of Arizona Accounting Manual prescribes the specific control procedures that are to be followed for each of the above categories of Internal Control. It is also recognized that some agencies will not have all the categories listed. For example, not all agencies collect revenue. However, each agency is required to follow the internal control procedures for the categories that it does have. If there are any questions, contact the ADOA-GAO.
Significantly. State law requires that the charges incurred in connection with accepting payment cards are handled in a very specific way that results in a certain amount of complexity. The proper way to handle payment card receipts and any charges connected with payment card activity is outlined in a series of Technical Bulletins (TB 00-5 and TB 00-7, at the time of this writing), published by the GAO.
Yes. State law requires that certain payment card related information be reported to the Joint Legislative Budget Committee, the Office of Strategic Planning and Budgeting and the Government Information Technology Agency (GITA). State policy requires that this information be filed with the State Comptroller, as well. See A.R.S. § 35-142, K., and the GAO's Technical Bulletins for more details.