Memorandum Accounts in Proprietary Funds

1 Charts of Accounts

1.6 Memorandum Accounts in Proprietary Funds

1.6.10 Introduction

For GAAP proprietary funds, local governments are required to report financial activity related to debt and capital assets, which are not reported in the operating statement. This activity is required to be reported on the Schedule 01 using memorandum accounts. The collection of this data is necessary for the State Auditor’s Office to produce comparative statistics, as required by state law (RCW 43.09.230).

See BARS 4.8.1, Revenues/Expenditures/Expenses (Schedule 01) for instructions on preparing the Schedule 01.

1.6.20 Capital Assets

For GAAP proprietary funds, when a capital asset is purchased, no expense/outflow is recorded on the on the Statement of Revenues, Expenses, and Changes in Net Position. The use of memorandum accounts allows the local government to accurately report the amount paid for capital related items. The memorandum accounts for capital outlay are listed in the table below:

1.6.30 Debt

For GAAP proprietary funds, when debt is issued, no revenue/inflow is recorded on the Statement of Revenues, Expenses, and Changes in Net Position. The same concept applies when debt is paid in a proprietary fund, no expense/outflow is recorded on the operating statement.

The use of memorandum accounts reports the amount of debt issued and paid, which ensures accurate and complete financial reporting on the Schedule 01. The debt memorandum accounts must be used for all debt and financings, including leases and SBITAs. These accounts are listed in the table below:

1.6.40 Annual Filing System

For GAAP proprietary funds, the memorandum accounts are required to be reported and are used for informational purposes only. These accounts are not included in the filing system calculation for the $1,000 balancing requirement and are not included in the system calculation for total expenditures.

When completing the Schedule 01, the 591 and 594 BARS codes are required to be reported in all GAAP proprietary funds, even if the amount is $0. If these codes are omitted, it will result in a required error. If $0 is reported to the 591 and 594 BARS codes, it will result in a warning error, which is meant to encourage local governments to double-check that reporting $0 for debt and capital payments is accurate. If the amount is truly $0, the warning error may be disregarded, and it will not prevent the submission of the report.

For additional guidance on errors and how to correct them in the annual filing system, see the Error Guide here: BARS & Annual Report Filing FAQs.