3. Accounting
3.4 Liabilities
3.4.11 LOCAL Program Financing
3.4.11.10 Local governments have an efficient financing option provided by the State Treasurer – the LOCAL program – that allows them to pool funding needs into large offerings of securities issued by the State Treasurer in order to take advantage of favorable market conditions.
3.4.11.20 Washington governments may use the LOCAL program to purchase equipment or real estate – everything from radios and computer systems to fire or police cars to building improvements or other construction.
3.4.11.30 Accounting
The State Treasurer issues debt on behalf of the local government. The State Treasurer holds LOCAL program proceeds and makes direct payments to vendors to and from the government’s specially designated LGIP account. Although proceeds are received and payments made by the State Treasurer, the government must account for and report both the debt issuance and capital asset purchase made on its behalf.
3.4.11.40 The debt issuance transaction must be reported as soon as the debt is issued and the resources placed in the Local Governments Investment Pool (LGIP), or other bank account. The date reimbursement requests are submitted to the State Treasurer is not the date the liability has been incurred.
Debt proceeds should be reported in the fund that will be using the proceeds. As with other debt, a local government may use a debt service fund to account for the debt payments.
3.4.11.50 Journal entries
Modified Accrual:
Journal entry for debt issuance:
|
Cash |
$XXX |
|
|
596.XX.70 Issuance Discount on Long-Term Debt (if applicable) |
$XXX |
|
|
592.XX.80 Interest and Other Debt Service Costs (for issuance costs) |
$XXX |
|
|
391.90.00 Other Debt Proceeds |
|
$XXX |
|
392.00.00 Premiums on Bonds Issued (if applicable) |
|
$XXX |
Journal entry for capital asset purchase:
|
594.XX.60 Capital Expenditures |
$XXX |
|
|
Cash |
|
$XXX |
Journal entry for debt repayment:
|
591.XX.70 Debt Repayment (principal) |
$XXX |
|
|
592.XX.80 Interest and Other Service Costs |
$XXX |
|
|
Cash |
|
$XXX |
Full Accrual:
Journal entry for debt issuance:
|
Cash |
$XXX |
|
|
Bond Issuance Costs |
$XXX |
|
|
Original Issue Discount (if applicable) |
$XXX |
|
|
Bonds Payable |
|
$XXX |
|
Bond Premium (if applicable) |
|
$XXX |
Journal entry for capital asset purchase:
|
Capital Asset |
$XXX |
|
|
Cash |
|
$XXX |
Journal entry for debt repayment:
|
Bond Payable |
$XXX |
|
|
Interest Expense |
$XXX |
|
|
Cash |
|
$XXX |
3.4.11.80 Reporting
LOCAL program proceeds must be reported as long-term debt in the financial statements and included in the Schedule 09, Schedule of Liabilities using Debt ID 263.96 LOCAL program financing. Only the face value of the debt should be reported on the Schedule 09. Do not include any premiums or discounts on the Schedule 09.
Debt incurred under this program may be considered either voted or non-voted and it should be included in the calculation of the local government’s debt limitation (see 3.8.5 Compliance – Limitation of Indebtedness).