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This government type selection will limit the accounts to those applicable to the selected government type. Although the listing provided intends to be all inclusive, it is possible that needed account codes will not be included. If this occurs, please use the All option to view the entire chart of accounts and contact LGCSFeedback@sao.wa.gov so the listing can be updated.
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The Excel option provides a spreadsheet which you can format. The PDF is formatted to highlight the different categories of account codes. For display purposes, the account codes contain decimal points which should be excluded in your annual report.
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Above and Prescribed option includes those accounts which are aggregates of detailed account codes and are not valid for reporting in addition to Prescribed accounts which are the valid BARS account codes. Prescribed option only lists valid BARS account codes.
Your annual report requires seven digits for all account codes however, their display in the chart of accounts varies. The expenditure or expense accounts are presented in the export without object codes. Object codes are available in the BARS Manual. The reporting at the subobject level is not required.
2.4.1.10 A budget is a legal document that forecasts the financial resources of a government and authorizes the spending of those resources for a fiscal period. At a minimum, local governments’ budget must meet the requirements of Washington state law and the State Auditor’s Office. The SAO does not prescribe how to budget or what a budget should look like. The adopted budget should be of sufficient detail to be meaningful and meet the intention of the law. The SAO considers budgets showing revenues and expenditures at the legal fund level to be the minimum acceptable level of detail.
2.4.1.20 Budgeting is more than just an activity to satisfy state law. It is a sophisticated process of strategic planning, communication and policy development resulting in a detailed plan of operations for allocating and monitoring the use of limited resources among various competing demands. Teaching how to budget is outside the scope of the BARS. However, there are many educational resources available to local governments, such as the Municipal Research and Services Center (mrsc.org) and the Government Finance Officers Association (gfoa.org).
2.4.1.30 Glossary of Budgetary Terms:
Appropriation. The legal spending level authorized by a budget ordinance or resolution. Spending should not exceed this level without prior approval of the governing body.
Original Budget. The first complete appropriated budget. The original budget may be adjusted by reserves, transfers, allocations, supplemental appropriations, and other legally authorized legislative and executive changes before the beginning of the fiscal year. The original budget should also include actual appropriation amounts automatically carried over from prior years by law.
Final Amended Budget. The original budget adjusted by all reserves, transfers, allocations, supplemental appropriations, and other legally authorized legislative and executive changes applicable to the fiscal year, whenever signed into law or otherwise legally authorized.
Comprehensive Budget. An government-wide budget that includes all resources the government expects and everything it intends to spend or encumber during a fiscal period. The comprehensive budget contains annual/biennial appropriated budgets, the annual/biennial portion of continuing appropriations such as the capital improvement projects, debt amortization schedules, and grant projects, flexible budgets and all non-budgeted funds.
Fixed Budget. Those budgets which set an absolute maximum or ceiling on the expenditures of a particular fund, department, or other specific category. A fixed budget can be either an annual/biennial appropriated budget or a continuing appropriation. Fixed budgets must be adopted by ordinance or resolution, either for the government’s fiscal period or at the outset of a service project, debt issue, grant award, or capital project.
Annual/Biennial Appropriated Budget. A fixed budget adopted for the government’s fiscal period. The appropriated budget was traditionally used to determine a government’s property tax levy, and a ceiling on expenditures was made absolute so that the expenditures of a government unit would not exceed its revenues. This budget was also historically a balanced budget, estimated revenues equaling appropriations. The appropriated budget is still used to set tax levies and some budget statutes still require balanced budgets, but it is more generally used to authorize a specific amount of expenditures regardless of whether estimated resources meet or exceed that amount. Appropriated budgets are required by statute in cities (Chapter 35.32A RCW, Chapter 35.33 RCW and Chapter 35A.33 RCW), counties (Chapter 36.40 RCW), and most other local governments in Washington State. These budgets are also called legal budgets, adopted budgets, or formal budgets. The appropriated budgets should be adopted by ordinance or resolution.
Continuing Appropriation. A fixed budget which authorizes expenditures for a fiscal period that differs from the government’s fiscal year, such as capital projects, debt issues, grant awards, and other service projects. These expenditures require an ordinance or resolution to authorize the project, establish the assessment roll, adopt the debt amortization schedule, or accept the grant award. Such ordinances or resolutions set an absolute maximum or ceiling on the expenditures, but the time period for incurring expenditures does not coincide with the government’s fiscal year; it may even cover several years. The major difference between annual/biennial appropriated budgets and continuing appropriations is that the latter do not lapse at fiscal period end; this implies that no legislative action is required to amend the annual/biennial portion of a continuing appropriation, unless the total authorized expenditures would exceed the entire appropriation.
Flexible Budgets. Are usually regarded as managerial tools, which do not set a ceiling on expenses or expenditures but establish a plan for them at various levels of service. They are especially appropriate for the day-to-day operations of a public utility where it is essential to plan fluctuations in the demand for services and where revenues will automatically increase with demand, so that a balanced budget does not depend on establishing a ceiling for expenses.
Working Capital Budget. Combines flexible and fixed budget elements in one document for enterprise and internal service funds. Current operations are flexibly budgeted based on the estimated level of services to be provided and long-range sources and uses of assets are controlled by annual/biennial appropriations and continuing appropriations.
Capital Improvement Budget. Consists of two elements: the annual/biennial portion of capital projects and annual/biennial appropriations for the purchase, construction or replacement of major fixed assets in the current fiscal period.
Operating Budget. Presents the estimated expenditures and available resources necessary to provide the services for which the government was created. An operating budget will contain flexible budgets and fixed budgets; the fixed budgets will include annual/biennial appropriations for services and the annual/biennial portion of continuing appropriations for debt service and for service projects.
Encumbrances. Commitments related to unperformed (executory) contracts for goods or services should be utilized to the extent necessary to assure effective budgetary control and to facilitate cash planning. Encumbrances outstanding at year end represent the estimated amount of expenditures ultimately to result if unperformed contracts in process are completed; they do not constitute expenditures or liabilities.
3.7.1.10 CAUTION: As governments are spending down federal awards issued prior to December 26, 2014, this section covers both the requirements of OMB Circulars (A-87 Cost Principles and A-102 Administrative Requirements) and the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards 2 CFR 200 (Uniform Guidance), which supersedes the OMB Circulars for awards issued on or after December 26, 2014. Click here for the newUniform Guidance.
The requirements described below apply to all local governments who expend federal funds or pass funds through federal funds to subrecipients. Federal assistance can be provided to state and local governments in many forms including project grants, block grants, formula grants, cost reimbursement contracts, loans, loan guarantees, insurance contracts, real property, and personal property. The following procedures apply to programs funded with state and interlocal monies as well as federal funds. This section does not apply to most entitlements or shared revenues, which are treated essentially as local revenues.
3.7.1.20 Excerpts from the Uniform Guidance, 2 CFR 200, and Office of Management and Budget (OMB) Circular A-133, Circular A-87, and Circular A-102 (the Common Rule) are provided in this section. Please note that there are many additional federal laws and regulations that may apply to your grants and loans. Copies of these circulars and other federal documents can be obtained from the OMB website (the link to Uniform Guidance is above).
American Recovery and Reinvestment Act (ARRA) of 2009
3.7.1.30 If municipalities are still spending down grants received as part of ARRA, they are still required to have an accounting system that enables them to separately identify how they spent the ARRA funding (2 CFR 176.210).
The Uniform Guidance Administrative Requirements
3.7.1.40 Subpart C – Pre-Federal Award Requirements and Contents of Federal Awards and Subpart D – Post-Federal Award Requirements of the Uniform Guidance, 2 CFR 200, (§§.200-.213 and §§.300-.345, respectively) contain the Administrative Requirements for grants and cooperative agreements to state and local governments and are effective for new awards and additional funding increments to existing awards issued by the federal government after December 26, 2014. The financial management systems of local governments and subgrantees must meet the following standards of 2 CFR §200.302:
“…(b) The financial management system of each non-Federal entity must provide for the following (see also §§200.333 Retention requirements for records, 200.334 Requests for transfer of records, 200.335 Methods for collection, transmission and storage of information, 200.336 Access to records, and 200.337 Restrictions on public access to records):
1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the CFDA title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any.
(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance….
(3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation.
(4) Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. See §200.303 Internal controls.
(5) Comparison of expenditures with budget amounts for each Federal award.
(6) Written procedures to implement the requirements of §200.305 Payment.
(7) Written procedures for determining the allowability of costs in accordance with Subpart E – Cost Principles of this Part and the terms and conditions of the Federal award.”
The Common Rule Administrative Requirements
3.7.1.41 The OMB Circular A-102 Common Rule sets forth uniform administrative requirements for grants and cooperative agreements to state and local governments. These rules apply to awards issued by the federal government before December 26, 2014. The financial management systems of local governments and subgrantees must meet the following standards:
1. Financial reporting. Accurate, current, and complete disclosure of the financial results of financially assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant.
2. Accounting records. Grantees and subgrantees must maintain records which adequately identify the source and application of funds provided for financially-assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income.
3. Internal control. Effective control and accountability must be maintained for all grant and subgrant cash, real and personal property, and other assets. Grantees and subgrantees must adequately safeguard all such property and must assure that it is used solely for authorized purposes.
4. Budget control. Actual expenditures or outlays must be compared with budgeted amounts for each grant or subgrant. Financial information must be related to performance or productivity data, including the development of unit cost information whenever appropriate or specifically required in the grant or subgrant agreement. If unit cost data are required, estimates based on available documentation will be accepted whenever possible.
5. Allowable cost. Applicable OMB cost principles, agency program regulations, and the terms of grant and subgrant agreements will be followed in determining the reasonableness, allowability, and allocability of costs.
6.Source documentation. Accounting records must be supported by such source documentation as canceled checks, paid bills, payrolls, time and attendance records, contract and subgrant award documents, etc. See Original Supporting Documentation for information regarding original supporting documentation.
7. Cash management. Procedures for minimizing the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by grantees and subgrantees must be followed whenever advance payment procedures are used. Grantees must establish reasonable procedures to ensure the receipt of reports on subgrantees' cash balances and cash disbursements in sufficient time to enable them to prepare complete and accurate cash transactions reports to the awarding agency. When advances are made by letter-of-credit or electronic transfer of funds methods, the grantee must make drawdowns as close as possible to the time of making disbursements. Grantees must monitor cash drawdowns by their subgrantees to assure that they conform substantially to the same standards of timing and amount as apply to advances to the grantees.
Uniform Guidance Cost Principles
3.7.1.50 For new awards and additional funding increments to existing awards issued by the federal government on or after December 26, 2014, expenditures of federal funds and costs claimed for reimbursement or used for matching must be determined in accordance with Subpart E – Cost Principles of the Uniform Guidance: 2 CFR 200 (§§.400-.475).
OMB Circular A-87 Cost Principals
3.7.1.51 Expenditures of federal funds and costs claimed for reimbursement or used for matching must be determined in accordance with the OMB Circular A-87, Cost Principles for State and Local Governments. This circular provides criteria for determining whether costs are necessary, reasonable, and allocable. It also lists specific types of costs and expenditures that are allowable and unallowable.
Uniform Guidance Audit Requirements
3.7.1.60 Subpart F – Audit Requirements (§§.500-.521) set forth the uniform requirements for audits of federal financial assistance provided to state and local governments and is effective based upon the entity fiscal year and not the date of the award. Uniform Guidance audit requirements are effective for audits of fiscal years beginning on or after December 26, 2014.
A non-Federal entity that expends $750,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single or program-specific audit conducted for that year in accordance with the provisions of this part.
3.7.1.70 Uniform Guidance outlines specific auditee responsibilities. In short, the auditee must perform the following:
1. Identify, in the accounting records, all federal awards received and expended (§200.302);
2. Establish and maintain internal control over federal programs that provides reasonable assurance that the grantee is managing federal awards in compliance with laws, regulations, and the provisions of contracts or grant agreements (§200.303);
3. Comply with laws and regulations and the provisions of contracts or grant agreements related to each of its federal programs (§§200.300 and .303);
4. Prepare appropriate financial statements, including the Schedule of Expenditures of Federal Awards (SEFA aka Schedule 16) (§§200.508 and .510). See SEFA requirements here.
5. Ensure audits are performed when required (§200.508);
6. Promptly follow up and take corrective action on audit findings, including preparation of a Summary Schedule of Prior Audit Findings and a Corrective Action Plan §200.511); and
7. Ensure a reporting package and a Data Collection Form are submitted to the Federal Audit Clearinghouse by the applicable deadline (§200.512).
3.7.1.80 Governments that expend less than $750,000 in a year in federal awards are exempt from federal audit requirements for that year, but records must be available for review or audit by appropriate officials of the federal agency, pass-through entity, and General Accounting Office (GAO).
3.7.1.90 The Single Audit Act provides that an audit made in accordance with the Uniform Guidance should be in lieu of any financial or financial compliance audit required under individual federal assistance programs. To the extent that a single audit provides federal agencies with information and assurances they need to carry out their overall responsibilities, they should rely upon and use such information. However, a federal agency should make additional audits which are necessary to carry out its responsibilities under federal law and regulation. Any additional federal audit effort should be planned and carried out in such a way as to avoid duplication.
3.7.1.100 To satisfy the requirements of the Single Audit Act and generally accepted accounting principles, the following accounting for grants is prescribed.
1. Use of Separate Grant Funds
Grants may be accounted for in the same funds as other operations of a municipality or in one or more separate “grant funds,” depending upon grant terms. The Governmental Accounting Standards Board (GASB) recommends that governments establish and maintain the minimum number of funds consistent with legal specifications and operational requirements. Grant transactions coded within the same fund as other operations may be distinguished by using the BARS local option codes.
2. Fund Types
Grants must be accounted for in the type of fund appropriate for the activities being financed. If a grant is to be used for general governmental purposes, it should be accounted for in the general (current expense) or a special revenue fund. If a grant is received for the payment of principal and/or interest on general long-term debt, it should be accounted for in a debt service fund. If a grant is received to support operations of, or acquire capital assets for, a proprietary fund, the grant should be accounted for in a proprietary fund. Other capital grants should be accounted for in capital projects funds. See separate discussion in Pass-Through Grants.
3. Project Coding
At the inception of a grant (award notification), one or more project codes should be assigned locally to identify the particular grant. This coding must be incorporated into the basic coding structure the municipality uses to identify all its transactions. Any available field or fields may be used, so long as the results do not interfere with the prescribed seven-digit BARS code.
The use of multiple codes may be necessary when there is more than one source of funds for a particular grant. For example, when some expenditures must be charged to particular revenue sources or are not allowed under some grantors’ terms, separate budgets for such sources must be established. In addition, it may be desirable or necessary to account for the local share of costs (match) or program income in separate projects. The value of separate projects is that they immediately segregate budgets, revenues, expenditures, cash accounts, receivables, and payables for each grant and for the related non-grant resources used to accomplish the project or operate the program.
4. Local Funding of Grant Projects
Within this project or set of projects, the municipality should account not only for grant resources and expenditures but also for the municipality’s own contributions to the project or program and for related program income. This is necessary to ensure uniform accounting for the entire project or program, not merely that portion supported by grant money.
5. Grant (Project) Budgets
As soon as the terms of the grant award are known, the grant budget entries are to be made. If the exact terms of a grant agreement are not known when expenditures begin to be incurred, approximate budgets must be entered. These entries are not the municipality’s own appropriation entries, which are still required.
To distinguish the grant budget from the municipality’s own appropriated budget, municipalities may use the separate budgetary control accounts 296.10 Grants Authorized and Continuing Grant Appropriation, 296.20 and the separate nominal control accounts, 297.10 Life-To-Date Resources, and 297.20 Life-To-Date Expenditures/Uses. This results in tracking two budgets for the same expenditures because the grant fiscal period often will not coincide with the municipality’s fiscal period. In these cases, continuing appropriations will be necessary.
The Life-To-Date Resources and Life-To-Date Expenditures/Uses accounts are used to keep track of the resources/uses for the grant projects from inception of the grant through the current date. Comparison of these accounts to the 296 accounts (see above) will yield budget analysis on a project basis as opposed to current year transactions.
If a separate grant fund is used, the municipality’s own legislated appropriation should be limited to the fund total, and the detail budget should be the terms contained in the grant award and related agreements. If the grant is accounted for within a fund that accounts for other operations of the municipality, either the grant terms or the municipal appropriation may be used for the detail budget. Using the municipal appropriation for the detail budget has the disadvantage that, although grant revenues and expenditures will be identified as they are incurred, they will not be compared to the detailed grant budget and therefore the municipality may have to absorb some grant related costs that turn out not to dovetail with the grant budget restrictions.
6. Grant Schedules
A set of grant schedules is prepared as shown in the Expenditures of Federal Awards (Schedule 16). These schedules meet federal requirements for the Single Audit. After these schedules are complete, the life-to-date control accounts are closed to allow the preparation of a balance sheet. The life-to-date control accounts are reopened as the first journal entry of the succeeding fiscal year.
7. Noncash Awards
The value of noncash awards (e.g., food stamps, food commodities, supplies and equipment, etc.) should be accounted for and reported on the Schedule of Expenditures of Federal Awards (Schedule 16) as the fair market value of non-cash awards received during the year, as determined by the awarding agency. The notes to the schedule should disclose the nature of the amounts reported.
The following diagram illustrates the minimum requirements for general purpose external financial reports.
4.1.1.20 Comparative financial statements mean two complete sets of financial statements for each comparative year. Each set should contain basic financial statements (including notes) and RSI (including MD&A). Both years may be combined in one presentation; however, each element (MD&A, basic financial statements, notes and RSI) have to include information for both years.
1. Management Discussion and Analysis (MD&A)
4.1.1.30 MD&A should introduce the basic financial statements and provide an analytical overview of the local government’s financial activities. It is part of the Required Supplementary Information (RSI), however it should be presented before the basic financial statements. The MD&A should provide an objective and easily readable analysis of the local government’s financial activities. It should include comparisons of current year to the prior year based on the government-wide information. It also includes information regarding the local government budget variances, capital assets, long-term debt activity, and a description of currently known facts, decisions, or conditions expected to have a significant effect on financial position or results of operations.
2. Basic Financial Statements
Government-Wide Financial Statements
4.1.1.40 The government-wide financial statements consist of a statement of net position and a statement of activities. They are prepared using the economic resources measurement focus and the accrual basis of accounting. Each statement distinguishes between the governmental and business-type activities of the primary government and its discretely presented component units.
Statement of Net Position
4.1.1.50 The statement of net position presents the local government as one economic unit rather than a compilation of different funds. The statement focuses on type of activities, rather than type of funds. Local governments should report all capital assets, including infrastructure assets in the government-wide statement of net position. The net position should be reported in three categories: net investment in capital assets, restricted and unrestricted.
Statement of Activities
4.1.1.60 The statement of activities is a report on the results of the local government’s operations. The statement presents the cost of each function and the extent to which each of the local government’s functions, programs or services either contributes to or takes away from the local government’s general revenue.
The required format provides:
Information indicating the extent to which current-year program revenues supported the cost of the current-year services, and
How the local government finances its activities.
Fund Financial Statements
Governmental Fund Financial Statements
4.1.1.70 Governmental funds should be reported using the current financial resources measurement focus and the modified accrual basis of accounting. These funds are presented by general fund; major funds, and aggregated nonmajor funds.
There are two statements required - the balance sheet and the statement of revenues, expenditures and changes in fund balance. General capital assets and general long-term liabilities are not reported in the governmental fund balance sheet. (They are reported in the government-wide financial statements.)
4.1.1.80 The statement of revenues, expenditures and changes in fund balance reports information about the inflows, outflows, and balances of current financial resources of each major governmental fund and for the nonmajor governmental funds in the aggregate.
4.1.1.90 Each statement reports separate columns for the general fund and for other major governmental and enterprise funds. Major funds are funds whose revenues, expenditures/expenses, assets, or liabilities (excluding extraordinary items) are at least 10 percent of corresponding element totals for all funds of that category or type and at least five percent of the corresponding element total for all governmental or enterprise funds combined. The local government may choose to report any other funds as a major fund if they believe they are important to users. The nonmajor funds are reported in aggregate in a separate column.
Proprietary Funds Financial Statements
4.1.1.100 There are three required fund financial statements for proprietary funds:
Statement of Net Position,
Statement of Revenues, Expenses and Changes in Fund Net Position, and
Statement of Cash Flows.
4.1.1.110 Proprietary funds continue to be presented on the economic resources measurement focus and the full accrual basis of accounting. Proprietary funds are reported the same way as in the government-wide financial statements. However, internal service funds should be reported as a fund type (aggregated) in a separate column. Major enterprise funds are reported in separate columns and nonmajor enterprise funds are aggregated in a single column.
4.1.1.120 The proprietary statement of net position presents assets and liabilities in a classified format. Restricted assets are reported separately. Net position should be reported in the following three components: net investment in capital assets, restricted and unrestricted.
4.1.1.130 The proprietary statement of revenues, expenses, and changes in fund net position reports in a specific format prescribed by the GASB Statement 34. All transactions that affect net position are included. Revenues are reported by major source. Expenses are reported by either detail (object) or function level. Revenues and expenses should distinguish between operating and nonoperating.
Fiduciary Fund Financial Statements
4.1.1.140 The following are required financial statements for fiduciary funds:
Statement of Fiduciary Net Position, and
Statement of Changes in Fiduciary Net Position.
The fiduciary statements are prepared using the economic resources measurement focus and full accrual basis of accounting (with some exceptions for liabilities for defined benefit pension plans and certain postemployment health care plans).
4.1.1.160 The statement of fiduciary net position should include information about the assets, liabilities, and net position for each fiduciary fund type and for similarly discretely presented component units of the reporting entity. The local government should provide details for all other fiduciary funds, or clearly indicate where the information is displayed.
4.1.1.170 The statement of changes in fiduciary net position should include information about the additions to, deductions from, and net increase (or decrease) for the year in net position for each fiduciary fund type and similar discretely presented component units. It should provide information about significant year-to-year changes in net position. The local government should provide additional details about investments and provide the level of details for all other fiduciary funds or clearly indicate where the information is displayed.
3. Notes to the Financial Statements
4.1.1.180 Notes to the financial statements are essential to fair presentation of the basic financial statements. The notes include the summary of significant accounting policies and summary disclosure of such matters as significant contingent liabilities, encumbrances outstanding, significant effects of subsequent events, pension plans, accumulated unpaid employee benefits (such as vacation and sick leave), material violations of finance-related legal and contractual provisions, debt service requirements to maturity, commitments under noncapitalized leases, construction and other significant commitments, any excess of expenditures over appropriations in individual funds, deficit balances of individual funds, and interfund receivables and payables. Any other disclosures necessary in the circumstances should also be included.
The NCGA has discussed the notes to financial statements in more detail in its Interpretation 6, which also provides guidance for presenting notes in a logical order.
4. Required Supplementary Information
4.1.1.190 Statements, schedules, statistical data, and other information the GASB deem necessary is reported as required supplementary information (RSI). Except for the MD&A, required supplementary information, including the budgetary comparison information, should be presented immediately following the notes to the financial statements.
There are four types of RSI (other than MD&A) that must be presented:
Budgetary comparisons (for the general fund and other individual special revenue funds), [1]
Infrastructure condition and maintenance data (for local governments using the modified approach),
Pension trend data (for certain pension plans and participating employers),
Revenue and claims development trend data (for public-entity risk pools).
Reporting Entity
4.1.1.200 In June 1991, GASB issued the Statement 14, The Reporting Entity, which is effective for financial statements for periods beginning after December 15, 1992. Statement 14 establishes standards for defining and reporting on the financial reporting entity and applies to financial reporting by primary governments, as well as to separately issued financial statements of governmental component units. The Statement 14 defines the financial reporting entity as consisting of (1) the primary government, (2) organizations for which the primary government is financially accountable and (3) other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete.
4.1.1.210
Financial accountability:
a. The primary government is financially accountable if it appoints a voting majority of the organization’s governing body and (1) it is able to impose its will on that organization or (2) there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government.
b. The primary government is financially accountable if a special purpose district is fiscally dependent on the primary government and there is a potential for the special purpose district to provide specific financial benefits to, or impose specific financial burdens on, the primary government, regardless of whether the special purpose district has (1) a separately elected governing board, (2) a governing board appointed by higher level of government, or (3) a jointly appointed board.
c. The primary government is financially accountable for a legally separate organization if the primary government’s holding of a majority equity interest in that organization does not meet the definition of an investment.
4.1.1.220 Most organizations determined to be component units under the Statement 14 should be included in the financial reporting entity by discrete presentation – that is, by presentation in one or more columns separate from the financial data of the primary government. However, some component units may, in substance, be the same as the primary government and should be reported as part of the reporting entity – that is, the component unit’s balances and transactions are reported in a manner similar to those of the primary government, by blending. It is likely that an organization considered to be a component unit under existing standards and blended will continue to be considered a component unit under the Statement 14; however, according to the Statement 14, that component unit will probably be reported by discrete presentation.
The following flowchart will help to determine the reporting status of an organization. Refer to the Statement’s Glossary for definitions of the various terms.
When accounting for the transfer of capital and financial assets and future revenues within the same financial reporting entity, the transferee should recognize the assets or future revenues received at the carrying value of the transferor. The difference between the amount paid (exclusive of amounts that may be refundable) and the carrying value of the assets transferred should be reported as a gain or loss by the transferor (revenue in governmental funds) and as a revenue or expenditure/expense by the transferee in a separately-issued statements, but reclassified as transfers in the financial statements of the reporting entity. Application of this Statement should be the same for both discretely presented and blended component units.
4.1.1.240 Hospital Districts: The General Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards, section Ho5.601 supersedes the June 1996 AICPA Audit and Accounting Guide, Health Care Organizations, to the extent of financial reporting. However, the Guide continues to provide guidance on individual transactions that are unique to healthcare organizations. The Guide is considered Category B guidance in the hierarchy of GAAP.
Notes to Financial Reporting Entity Flowchart
PG = primary government, that is, the entity preparing financial statements PCU = potential component unit, that is, the entity under consideration
1. An organization has separate legal standing if it is created as a body corporate or a body corporate and politic, or if it otherwise possesses the corporate powers that would distinguish it as being legally separate from the primary government.
2. Corporate powers give an organization the capacity to have a name; the right to sue and be sued in its own name without recourse to another state or local governmental unit; and the right to buy, sell, lease, and mortgage property in its own name.
3. The primary government’s appointment authority should be substantive and continuing. A primary government’s appointment authority is not substantive if the number of candidates is limited by the nominating process or if its responsibility is limited to confirming appointments made by individuals or groups other than the primary government’s officials or appointees. In the absence of continuing appointment authority, the ability of a primary government to unilaterally abolish an organization also provides the basis for ongoing accountability.
4. An organization is fiscally dependent if it cannot meet all three of the following requirements without substantive approval of a primary government:
Determine it budget,
Levy taxes or set rates or charges, and
Issue bonded debt.
It is also important to make a distinction between substantive and ministerial (compliance) approval. Ministerial approval is often a result of the general oversight of the respective state or local governments. This may include evaluation of programs, review for compliance with the statutory requirements, etc. Being subject to ministerial approval does not qualify an organization as fiscally dependent. Also, a primary government that is temporarily under the fiscal control of another government continues to be fiscally independent.
5. The benefit or burden relationship may result from legal entitlements or obligations, or it may be less formalized and exist because of a decision made by the primary government or agreements between the primary government and component unit.
An organization has a financial benefit or burden relationship with the primary government if any one of these conditions exists:
The primary government is legally entitled to or can otherwise access the organization’s resources.
The primary government is legally obligated or has otherwise assumed the obligation to finance deficits of, or provide financial support to, the organization.
The primary government is obligated in some manner for the debt of the organization.
Exchange transactions between organizations and the primary government are not considered a financial benefit or burden relationship.
The effect of the financial benefits or burdens on the primary government can be either direct or indirect. A direct effect occurs when the primary government itself is entitled to the resources or obligated for the deficits or debits of the organization. An indirect relationship occurs when one or more of the primary government’s component units is entitled to the resources and obligated for the deficits or debts of the organization. In both cases, the primary government has the benefit/burden relationship with the organization.
6. Certain organizations warrant inclusion because of the nature and significance of their relationship with the primary government, including their ongoing financial support of the primary government or its other component units. A legally separate, tax exempt organization should be reported as a discretely presented component unit if all of the following criteria are met:
The economic resources received or held by the organization are almost entirely for the direct benefit of the primary government, its component units, or its constituents.
The primary government is entitles to, or has the ability to otherwise access, a majority of the economic resources received or held by the separate organization.
The economic resources received or held by an individual organization that the specific primary government, or its component units, is entitled to, or has the ability to otherwise access, are significant to that primary government.
7. Other organizations should be evaluated as potential component units if they are closely related to or financially integrated with the primary government and included as component units if the nature and significance of their relationship with the primary governments is such that exclusion from the financial reporting entity would render the financial statements incomplete or misleading. It is a matter of professional judgment to determine whether the nature and the significance of a potential component unit’s relationship with the primary government warrant inclusion.
8. A primary government has the ability to impose its will on an organization if it can significantly influence the programs, projects, activities, or level of services performed or provided by the organization. The existence of any one of the following conditions indicates that the primary government has the ability to impose its will on an organization:
The ability to remove the appointed members of the organization’s governing body at will.
The ability to modify or approve the budget of the organization.
The ability to modify or approve the rate or fee changes affective revenues, such as water usage rate increases.
The ability to veto, overrule, or modify the decisions (other than those in b and c) of the organization’s governing body.
The ability to appoint, hire, reassign, or dismiss those persons responsible for the day-to-day operations (management) of the organization.
There may be other conditions indicating the possibility of imposing will. When assessing them, remember to make the distinction between substantive and ministerial approvals.
A potential component unit for which a primary government is financially accountable may be fiscally dependent on another government. An organization should be included as a component unit of only one reporting entity. Professional judgment should be used to determine the most appropriate reporting entity. A primary government that appoints a voting majority of the governing board of a component unit of another government should make the disclosures required for related organizations.
9. A component unit should be presented as blended when the component unit’s governing body is substantively the same as the governing body of the primary government and (1) there is a financial benefit/burden relationship between the primary government and the component unit or (2) management of the primary government has operational responsibility for the component unit.
Additionally, a component unit should be included using blending method if the component unit is organized as a not-for-profit corporation in which the primary government is the sole corporate member ( GASB Statement 80, Blending Requirements for Certain Component Units).
10. A component unit should be presented as blended when the component unit provides services entirely, or almost entirely, to the primary government or otherwise exclusively, or almost exclusively, benefits the primary government even though it does not provide services directly to it. The essence of this type of arrangement is much the same as an internal service fund – the goods or services are provided to the government itself rather than to the citizenry.
As prescribed in the GASB Statement 85, Omnibus 2017, for a primary government that is a business-type activity and uses a single column for financial statement presentation of its business-type activities, a component unit may be blended only if the component unit meets a criterion for blending in paragraph 53 of the GASB Statement 14, The Financial Reporting Entity.
The GASB Statement 14 (as amended by GASB Statements 34, 39, 61 and 80) allows flexibility in displaying the component units’ financial data. Please refer to the matrix in the Manual for a detailed listing of the possible displays for component units.
3952000, Compensation for Loss/Impairment of Capital Assets
3952000, Compensation for Loss/Impairment of Capital Assets Added the following information: Insurance recoveries that are related to storm cleanup and are realized, or are measurable and available, in the same year as the related cleanup expenditures should be netted against those expenditures. Insurance recoveries that are related to cleanup and are recognized in subsequent periods should be reported as other financing sources or extraordinary items, as appropriate.
3132700, Affordable and Supportive Housing Sales and Use Tax
3132700, Affordable and Supportive Housing Sales and Use Tax A new BARS code 3132700 was assigned to code the sales and use tax authroized by the SHB 1406, Laws of 2019.
BARS codes 5990000, Payments for Refunded Debt, these codes should be used for payments to an escrow agent for refunding debt payments and direct payments of refunded debt (e.g., BANs, refinancing or loans, etc.). Note this correlates to current refundings, advanced refundings utilize 5930000 codes.
Other Increases and Other Decreases in Fund Resources Added BARS Codes 3821000, Refundable Deposits, 3822000, Retainage Deposits, and 5821000, Refund of Deposits, 5822000, Refund of Retainage Deposits to be used for deposits that are not custodial activities. These codes are replacing 3891000, 5891000, 3892000, 5892000 which are no longer valid BARS codes.
3.1.3.10 Updated information about the "Green Book." 3.1.3.30 Added information that states the SAO is not part of the internal control functions of a government. 3.1.3.40 Updated the five components of internal controls. 3.1.3.90 Updated information about the different areas that should be reviewed for creating internal controls.
Removed "signed" in 3.6.620 b. which now says "A file must be maintained of those payers who have authorized to add moneys to your account electronically including the proceeds form third party vendors for credit card remittances."
Removed "signed" in 3.8.11.20 b. which now says "A file must be maintained of authorizations by payees who have therby agreed to have moneys added to their accounts electronically."
Added the fourth bullet in 3.8.11.30 which now says "Policies and procedures should be in place to validate these authorization to protect resources being transferred electronically."
Other Postemployment Benefit (OPEB) Plan Schedules, 4.7.340 - 4.7.410 - Updated the requirements to match GASB 74 and 75. Added links to the appropriate templates.
4.8.5.40 Removed reference to the fact that the SEFA must be prepared on the same basis of accounting since Uniform Guidance does not require the SEFA. 4.8.5.50 Removed references to CFDA 10.665: Title I - Schools and Roads, Title II - Special Projects on Federal Land, Title III - County Projects in the Direct costs of expenditure transactions associated with grants, cost-reimbursement contracts, cooperative agreements, and direct appropriations. 4.8.5.128 Revised the requirements for Disbursements to Subrecipients to "expended" rather than "paid." 4.8.5.130 Updated the exceptions for EPA Drinking Water State Revolving Fund (CFDA 66.468) and Clean Water State Revolving Fund (CFDA 66.458). 4.8.5.230 Removed Note 8 American Recovery and Reinvestment Act (ARRA) of 2009 from the SEFA Notes Template.
New account for revenues for Medicaid payments related to an implementation of the Transformation Plans. The addition was communicated on August 1, 2018 in BARS Alert
The account was divided between internal and external legal services. Within each category were created more separate accounts for different specific legal expenditures. The change will allow governments to analyze and compare costs much more effectively. This also aligns accounting records with procedures auditors are required by professional standards to perform an audit on legal liabilities, so it will help make the audit process more efficient. This change was already announced in 2016 and was not required for the FY 2017 reports; however, the new accounts will be required for 2018 reporting.
Object code 50 was removed and the definitions of object codes 30 and 40 adjusted to include the transactions which were previously reported using object 50. For other details see BARS Alert issued August 1, 2018.
GASB Statement 84, Fiduciary Activities – the Statement is effective for reporting periods beginning after December 15, 2018; however we incorporated the required changes in this version of manual. The additional information will be available on our website under Fiduciary Funds in BARS manual.
Also, updated was the discussion of enterprise [400] funds. There are no new reporting requirements and the update expands the current prescription.
The update incorporates the changes to RCW 36.32.210 which removed the annual inventory requirement. The change was communicated on March 21, 2018 in BARS Alert.
Removed requirement to capitalize interests during construction. This is an early implementation of GASBS 89, Accounting for Interest Cost Incurred before the End of Construction Period which is applicable for reporting periods beginning after December 15, 2019.
Added GASBS 86, Certain Debt Extinguishment Issues update regarding accounting and reporting when the debt is refunded with the government’s own resources.
Removed requirement to capitalize interests during construction. This is an early implementation of GASBS 89, Accounting for Interest Cost Incurred before the End of Construction Period which is applicable for reporting periods beginning after December 15, 2019.
New section was added regarding Equipment Rental and Revolving (ER&R) Fund. This guidance was previously available outside the BARS manual and it is now incorporated into the manual allowing an easy access.
Added a new section to provide a general overview of interfund transactions.
REPORTING
GASB Statement 84, Fiduciary Activities – the statement is effective for reporting periods beginning after December 15, 2018; however we incorporated the required changes in this version of manual. The following sections were updated: 4.1.1.150 (removed due to the changes in reporting requirements for custodial funds and they impact on CAFR); 4.1.4.20, 4.3.1.40, 4.3.2.70, 4.8.3.50, and 4.9.140. These changes involved only a title change from the agency to custodial funds.
The most significant change involves changes in financial reporting and these are incorporated into 4.3.5, Fiduciary Funds Financial Statements.
Removed requirement to capitalize interests during construction. This is an early implementation of GASBS 89, Accounting for Interest Cost Incurred before the End of Construction Period which is applicable for reporting periods beginning after December 15, 2019.
Removed requirement to capitalize interests during construction. This is an early implementation of GASBS 89, Accounting for Interest Cost Incurred before the End of Construction Period which is applicable for reporting periods beginning after December 15, 2019.
Removed requirement to capitalize interests during construction. This is an early implementation of GASBS 89, Accounting for Interest Cost Incurred before the End of Construction Period which is applicable for reporting periods beginning after December 15, 2019.
Added reporting requirements of GASBS 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements. This Statement is applicable for reporting periods beginning after June 15, 2018.
Added link to the WA State Department of Revenue page containing information regarding state’s abatements. This update was communicated on March 7, 2018 in the BARS Alert.
Clarified that the governments should be reporting both short- and long-term liabilities on the Schedule. Also added new ID. Numbers for registered warrants and lines of credits.
Revision reflect the clarification for reporting federal grants provided by federal agencies.
Remove discussion of ARRA grants.
The example of reporting FEMA grants was updated.
Updated for changes related to reporting the following grants: EPA Drinking Water (CFDA 66.468), Clean Water (CFDA 66.458), USDA Interim Financing (CFDA10.760) and (CFDA 10.766).
Revised rules for reporting grants with missing CFDA numbers.
The Schedule was revised to provide relevant information needed in assessing and auditing governments’ risk management circumstances.
ONLINE FILING
Schedule 09
The Schedule 09, Schedule of Liabilities, includes a new validation check for net pension liabilities. Governments will receive a red flag if they have pension related liabilities but do not report them on the Schedule 09 or if they are using the incorrect ID No.
Overview of Significant Changes – Applicable to the Reporting Year 2017
Topic
Reference
Description of Changes
CHART OF ACCOUNTS
Revenue/Expenditure/Expense Accounts
3132400, Local Infrastructure Financing Tool (LIFT)
Added a new account for revenues from the local sales and use tax dedicated for LIFT projects.
Revenue/Expenditure/Expense Accounts
3340370, State Grant from CRAB
The title was changed to Rural Arterial Program (RAP).
Revenue/Expenditure/Expense Accounts
3340372, CRAB Road Arterial – Projects
The title was changed to County Arterial Preservation Project (CAPP).
Revenue/Expenditure/Expense Accounts
335/336
The titles for both categories was revised to State Shared Revenues, Entitlements and Impact Payments.
Revenue/Expenditure/Expense Accounts
3360425, Foundational Public Health Services
A new account was added for 2017 distributions from the DOH.
Revenue/Expenditure/Expense Accounts
3360642, Marijuana Excise Tax Distribution
A new account was added for the distribution of the marijuana excise tax from the State.
Revenue/Expenditure/Expense Accounts
3421000, Law Enforcement Services
The definition was expanded to include payments from the WASP for processing the sex and kidnapping offenders’ registration.
Revenue/Expenditure/Expense Accounts
3670000, Contributions and Donations from Nongovernmental Sources
The definition was clarified regarding connection fees.
Revenue/Expenditure/Expense Accounts
379, Capital Contributions
The definition was clarified regarding connection fees.
Revenue/Expenditure/Expense Accounts
395, Disposition of Capital Assets
Added a clarification regarding use of the account in the proprietary fund.
Revenue/Expenditure/Expense Accounts
398, Insurance Recoveries
The account was split into two 3981, Insurance Recoveries for cash basis governments and 3985, Insurance Recoveries for GAAP. The split was necessary to accommodate reporting by cash basis proprietary funds since the BARS codes in 370 series are not available to them. The revised account 3985 replaces the original 398 code.
Added new account 50195, Depreciation, Depletion, Amortization – Infrastructure to include depreciation related to parking facilities.
Revenue/Expenditure/Expense Accounts
51530, Legal Services
The account was divided between internal and external legal services. Within each category were created more separate accounts for different specific legal expenditures. The change will allow governments to analyze and compare costs much more effectively. This also aligns accounting records with procedures auditors are required by professional standards to perform on legal liabilities, so it will help make the audit process more efficient. This account will be required for 2018 reporting.
Revenue/Expenditure/Expense Accounts
51770, Unemployment Compensation
Changed references to section of the BARS manual to correctly refer the current title (Payroll Accounting vs. Unemployment and Deferred Compensation).
Clarified the definition regarding property insurance.
Revenue/Expenditure/Expense Accounts
51863, General Grants and Financial Assistance to Other Governments
Revised title to General Grants, Financial Assistance and Other Distributions to Local Governments.
Revenue/Expenditure/Expense Accounts
538, Combined Water/Sewer/Solid Waste Utilities
Revised title and definition to correctly reflect RCW 54.16.300 (i.e., Combined Utilities).
Revenue/Expenditure/Expense Accounts
562, Public Health
The WA State DOH added additional detail accounts 562.11-562.15 for local governments subject to the DOH’s jurisdiction.
Revenue/Expenditure/Expense Accounts
593, Advance Refunding Escrow
Added to the definition a reminder that this account should be reported also for proprietary funds.
Revenue/Expenditure/Expense Accounts
595, Roads/Streets and Other Infrastructure
Added to the definition a reminder that this account should be reported also for proprietary funds.
Revenue/Expenditure/Expense Accounts
599, Payments to Refunded Debt Escrow
Added to the definition a reminder that this account should be reported also for proprietary funds.
Account Structure
1.1.2
The section was revised to discontinue the old terminology regarding the seven-digit account codes (i.e., Prime, BASUB, etc.). The digits are now referred by their location within the code (i.e., first, second, etc.). This change was applied in all places in the BARS manual and the revised sections are not itemized in this listing.
Revenue/Expenditure Accounts Overview
1.3.10
The section was revised to discontinue the old terminology regarding the seven-digit account codes (i.e., Prime, BASUB, etc.). The digits are now referred by their location within the code (i.e., first, second, etc.).
ACCOUNTING
Fund Types and Accounting Principles
3.1.1.60-3.1.1.80
These paragraphs were related to capital assets and were removed since the topics are covered extensively in Capital Asset Accounting (3.3.10).
Utility Tax Levies
3.2.6
The section is no longer needed since we do not prescribe the G.L. accounts. The section was replaced with accounting and reporting for the B&O tax related to utilities (Utility Tax, 3.6.13).
Capital Assets Accounting
3.3.10.80
Added a flowchart to determine if the expenditures should be capitalized.
Leases
3.4.1.10
Clarified in the bullet 2 that the future lease principal payments should be recorded as debt redemption rather than other financing uses.
Refunding Debt
3.4.4.120
Updated the bullet 2 regarding remaining prepaid insurance (GASBS 86, Certain Debt Extinguishment Issues).
Accounting and Reporting of Property Tax
3.5.2.30
The section was revised to better describe the reporting of property tax (no substantive change).
Diversion of County Road Property Tax
3.6.5.20
The BARS previous procedures were revised to better assist compliance with the provisions of the law.
Working Advances from DSHS
3.6.10
The section was revised to provide accounting requirements reflecting the current status of the advances from the DSHS.
Payroll Accounting
3.8.1
The title was change to Unemployment and DeferredCompensation to better reflect the content of this section. There are no changes in the prescription.
Loans
A new paragraph (3.9.1.30) was added. The paragraph discusses an issue of a government incorrectly using its own debt instruments as investments.
Voucher Certification and Approval
3.8.5
Updated the section to include electronic payments.
REPORTING
GAAP Reporting Requirements
4.1.1
Flowchart and Notes to the Flowchart: The flowchart was updated to incorporate GASBS 80, Blending Requirements for Certain Component Units regarding situation when the government is the sole corporate member. Also, paragraph 12 was updated to incorporate the GASBS 85, Omnibus 2017 regarding blending component units with business-type activities.
BARS Reporting Requirements
4.1.2
The matrix of reporting requirements was updated to eliminate reporting Schedules 07 and 11.
Summary of Reporting Requirements
4.1.4
The Matrix of Statutory Reporting Requirements was updated to eliminate reporting Schedules 07 and 11.
Note X – Asset Retirement Obligations
A new note was added to meet the disclosure requirements of the GASBS 83, Certain Asset Retirement Obligations. Please note that the requirement is applicable for reporting years starting after June 15, 2018.
Note X – Deposits and Investments
The note was revised to make the disclosure easier by adding tables and additional samples of text. There are no substantive changes.
Note X – Long-Term Debt
Added additional instructions for preparers regarding disclosures when the debt is refunded with the government’s own resources. This addition incorporates the GASBS 86, Certain Debt Extinguishment Issuesapplicable for the year begining after June 15, 2017.
Note X – Tax Abatement
Added a matrix to summarize the disclosure requirements for governments’ own abatements and abatements of others. Also added discussion regarding disclosure when, regardless of a tax abatement agreement, the overall tax revenue is not reduced.
Schedule 01
4.8.1.50
Column 4 – clarified the instruction regarding reporting of revenues and expenses for proprietary funds.
Schedule 09
Added 4.8.3.71 and 4.8.3.81 regarding reporting loans with forgiveness clause.
ONLINE FILING
Annual Street/Road Finance Report
The pilot project with DOT has been extended another year to explore the possibility of an alternative reporting process to the existing Street/Road Finance Report required to filed to DOT for cities and counties.
Fund Balance – Beginning Check
A minimum variance requirement within $1,000 added summarizing Schedule 01 funds reported.
Overview of Significant Changes – Applicable to the Reporting Year 2016
Topic
Reference
Description of Changes
CHART OF ACCOUNTS
Revenue/Expenditure/Expense Accounts
31720, Leasehold Excise Tax
The definition was updated to clarify that this tax can be imposed only by counties and cities and other governments receiving their share of this tax should code the proceeds to 337, Local Grants, Entitlements and Other Payments.
Revenue/Expenditure/Expense Accounts
31740, Timber Excise Tax
The definition was updated to clarify that this tax can be imposed only by counties and other governments receiving their share of this tax should code the proceeds to 337, Local Grants, Entitlements and Other Payments.
Revenue/Expenditure/Expense Accounts
32180, Concessions
A new account was added. This account should be used for revenues from awarding rights to use government’s property. Previously these proceeds were comingled with proceeds from an actual sales and coded to account 36280, Concession Proceeds and 36290, Other Rents, Leases and Concession Proceeds. Proceeds from governments own sales should be accounted for in 34170, Sales of Merchandise.
Revenue/Expenditure/Expense Accounts
32191, Franchise Fees and Royalties
This account was updated to include royalty payments. Previously the royalties were accounted for in 36290, Other Rents, Leases and Concession Proceeds (e.g., property rights, etc.), 34790, Other Fees (e.g., publication royalties, etc.).
Revenue/Expenditure/Expense Accounts
36210, 36230, 36240, 36250, 36260
These accounts were combined into 36200, Rents and Leases. This account is designed only for rentals and leases which are not a part of the governments’ principal operation [those rents and leases should be accounted in the appropriate 340s service and sales accounts]. The new section Determining Operating/Nonoperating Revenues/Expenses in Proprietary Funds provides guidance for classification of revenues/expenses as operating/nonoperating for the proprietary funds.
Revenue/Expenditure/Expense Accounts
36280, Concession Proceeds
Account removed. For revenues from awarding rights to use government’s property use 32180, Concessions. Proceeds from governments own sales should be accounted for in 34170, Sales of Merchandise.
Revenue/Expenditure/Expense Accounts
362900, Other Rents, Leases and Concession Charges
Account removed. The revenues should be accounted in 36200, Rents and Leases, 32191, Franchise Fees and Royalties 34170, Sales of Merchandise or other appropriate account.
Revenue/Expenditure/Expense Accounts
36850, Special Assessment- Operating
The title was changed to Special Assessment – Service and the definition was updated. If the service assessments are related to the governments’ principal operations, they should be coded in 340s as proceeds from sales of goods and services.
Revenue/Expenditure/Expense Accounts
36910, Sale of Scrap and Junk
The title was changed to Sale of Surplus and a definition was added.
Revenue/Expenditure/Expense Accounts
36950, Special Items
The account changed to account 385, Special/Extraordinary Items to better reflect the substance of the transaction [i.e., special items should not be classified as revenue] The account can be also used for extraordinary items, and the title was adjusted to reflect this.
Revenue/Expenditure/Expense Accounts
380, Nonrevenues
The title of this section of the chart was changed to Other Increases in Fund Resources.
A new account 385, Special/Extraordinary Items was added [previously accounted for in 36950, Special Items – see above row for description].
The account 388, Prior Period Adjustments was changed to 38810 and account 38850, Cumulative Effect of Change in Accounting Principle(s) was added.
Accounts 386 (1), Agency Deposits and 389, Other Nonrevenues were pooled and rearranged into:
38910, Refundable Deposits,
38920, Retainage Deposits,
38930, Agency Type Collections,
38940, Agency Type Deposits,
38960, Agency Type Interest Earnings, and
38990, Other Custodial Activities.
These accounts are still optional for GAAP governments.
[Updated the definition of these codes to clarify that they should be used for custodial activities only – to record receipts and disbursements from fiduciary funds as well as any custodial activity reported in other fund types. Subaccount detail allows for reporting by major types of custodial activities in order to provide further clarity, align with internal tracking of custodial balances and support analysis.]
(1) The change applicable to the courts’ deposits and remittances was updated on March 14, 2017. The following BARS Alert was sent to all cities and counties at that time.
The BARS codes for agency deposits/remittances were revised this year and BARS account 386/586 was replaced by several 389/589 accounts. However, the recent submissions of the Schedule 01 indicate that this change creates some confusion. To avoid further misunderstanding at this time the Online reporting system will accept court related deposits and remittances coded as 386/586. All other non-court items should be coded to appropriate 389/589 accounts. We have updated the summary of significant changes in the BARS manual.
Revenue/Expenditure/Expense Accounts
51170, Lobbying Activities
New account. The lobbying services were excluded from account 51120, Advisory Services and are now reported separately.
[Lobbying expenditures are subject to specific compliance and reporting requirements, so governments need to separately track them. Also, the separation will allow cross-checking figure against PDC filings.]
Revenue/Expenditure/Expense Accounts
531, Storm Drainage Utilities
The account description was revised to ensure that this account is used only when a local government has a separate utility for storm drainage. The storm drainage projects that are an integral part of streets and roads should be accounted with transportation codes which are generally accounted for in governmental funds.
Revenue/Expenditure/Expense Accounts
580, Nonexpenditures
The title of this section of the chart was retitled to Other Decreases in Fund Resources.
A new account 585, Special/Extraordinary Items was added [previously accounted for in 36950, Special Items – see account 385 for description].
The account 588, Prior Period Adjustments was changed to 58810 and account 58850, Cumulative Effect of Change in Accounting Principle(s) was added.
Accounts 586 (1) and 589, Other Nonexpenditures were pooled and rearranged into:
58910, Refunds of Deposits,
58920, Refund of Retainage,
58930, Agency Type Remittances,
58940, Agency Type Disbursements, and
58990, Other Custodial Activities.
These accounts are still optional for GAAP governments.
The change applicable to the courts’ deposits and remittances was updated on March 14, 2017. The following BARS Alert was sent to all cities and counties at that time.
The BARS codes for agency deposits/remittances were revised this year and BARS account 386/586 was replaced by several 389/589 accounts. However, the recent submissions of the Schedule 01 indicate that this change creates some confusion. To avoid further misunderstanding at this time the Online reporting system will accept court related deposits and remittances coded as 386/586. All other non-court items should be coded to appropriate 389/589 accounts. We have updated the summary of significant changes in the BARS manual.
Determining Operating/Nonoperating Revenues/Expenses in Proprietary Funds
1.5
A new section was added with a guidance regarding classification of revenues/expenses as operating or nonoperating. This section is applicable only to proprietary GAAP funds. It contains a discussion and a spreadsheet showing the BARS classification. The new section should help governments to resolve the discrepancy between operating/nonoperating categories in their financial statements and in the FIT presentation.
ACCOUNTING
Capital Assets
3.4
Capital asset guidance that was previously split into nine different sections (3.3.1 – 3.3.7 and 4.2.5 – 4.2.6) were consolidated into three. While content has not fundamentally changed, most topics were updated and re-written to improve guidance and match the current environment and user needs. In particular, internal control guidance was expanded to help local governments with management of capital assets.
Deposits and Investments
3.2.1
Updated content to focus on an overview of requirements for deposits and investments and refer to the Office of State Treasurer’s Guide to Public Funds Investing for Local Governments publication for details.
Pensions – Application of GASB Statement 68, Accounting and Financial Reporting for Pensions
3.4.2
The pension section has been updated for the second year of pension reporting.
REPORTING
Liabilities (Schedule 09)
4.8.3.110
Added requirement for cities and counties to provide a BARS code for redemption and specific ID Numbers of debt related to streets/roads to accommodate the DOT Annual Street/Road Finance Report.
Note X – Self-insurance
The note was removed. The information required in this note is already provided in other risk management related disclosures.
Note X – Deposits and Investments
The note was updated to incorporate reporting requirements contained in GASB Statement 72, Fair Value Measurement and Application.
Note X – Pension Plans – Pensions Provided Through Certain Multiemployer Defined Benefit Pension Plans (nongovernmental Plans)
Added a new note required when a government participates in a nongovernmental pension plan (GASBS 78).
Note X – Pension Plans
The note instructions for local government plans that do not comply with GASBS 67/68 have been updated for the first phase of the implementation of GASBS 73.
The pension notes and RSI templates for both state sponsored and local sponsored plans have been updated with 2016 information.
The GAAP-basis pension illustration spreadsheet has been significantly updated for year two reporting including note disclosure examples, amortization tables, and reconciliation examples.
Note X – Tax Abatement
This disclosure is required for fiscal years starting after December 15, 2015 (GASBS 77).
ONLINE FILING
Annual Street/Road Finance Report
Steps added as a pilot project exploring an alternative to the DOT Annual Street/Road Finance Report.
591/594 in GAAP Enterprise Funds
Added validation checking each individual enterprise fund for reporting accounts 591, Debt Repayment and 594, Capital Expenses as indicated in these accounts description. Both accounts should be reported even if the dollar amounts are $0.
Balance sheet footing requirement
Section 4.8.1.25 adds balance sheet/statement of net position minimum variance requirements within $1,000. Validation tests each reporting fund.
Overview of Significant Changes – Applicable to the Reporting Year 2015
Topic
Reference
Description of Changes
CHART OF ACCOUNTS
General Ledger Accounts
1.2
The following accounts were added to accommodate the accounting for pension: 193.50 [Pension Asset], 198.40 [Deferred Outflows: Pension], 264 [Pension Obligation (Net)], 271.80 [Deferred Inflows: Pension]. Reminder: the BARS numbering system in the general ledger is optional. The above codes are for informational purposes only.
The new revenue/expenditure/expense chart of accounts is an interactive application. To see accounts applicable to your government choose an appropriate government type.
Revenue/Expenditure/Expense Account
30810/50810
30880/50880
The accounts 30810/50810 [Beginning/Ending Reserved Fund Balance (GAAP)] were changed to 30819/50819 [Beginning/Ending Restricted Net Position]. The accounts 30880/50880 [Beginning/Ending Unreserved Fund Balance (GAAP)] were changed to 30889/50889 [Beginning/Ending Unrestricted Net Position].
Revenue/Expenditure/Expense Account
3086000
The account Net Investment in Capital Assets was added.
Revenue/Expenditure/Expense Account
3132100
The account title was changed to Public Transportation Systems.
Revenue/Expenditure/Expense Account
3322100
The account Equitable Sharing of Federally Forfeited Property was removed.
Revenue/Expenditure/Expense Account
3350301
The account LEOFF Special Funding was added.
Revenue/Expenditure/Expense Account
3360641
The account Marijuana Enforcement was added.
Revenue/Expenditure/Expense Account
3451100
The detailed codes listed in the 3451100, Soil and Water Conservation Services are optional and not required to be reported on the Schedule 01.
Revenue/Expenditure/Expense Account
3573900
The account Miscellaneous District/Municipal Court Cost Recoupment was removed.
Revenue/Expenditure/Expense Account
3688000
The account Deferred Assessment was removed.
Revenue/Expenditure/Expense Account
5010000
The account Depreciation was added.
Revenue/Expenditure/Expense Account
51860
The account 51860 [Risk Management] was changed to 519; account 51920 [Judgements and Settlement] became 51861, account 51970 [Jobbing and Contacting] became 51862; added account 51863 [General Grants and Financial Assistance to Other Governments].
Revenue/Expenditure/Expense Account
5510000
The account 55920 [Public Housing] was moved to 5510000 [Public Housing Services].
Revenue/Expenditure/Expense Account
8000000
New 800 series accounts - aggregated balance sheet information:
810 Cash, Cash Equivalents and Investments
820 Other Current Assets
830 Other Noncurrent Assets
840 Deferred Outflows
850 Current Liabilities
860 Noncurrent Liabilities
870 Deferred Inflows
were added for GAAP reporting governments.
Object Codes
00
The object 00 was updated to include account 501[Depreciation] and exclude account 508 [Ending Balances].
ACCOUNTING
Cash Receipting
3.6.1.50
Added new section discussing requirements when a local government receives payments through third party vendors.
Electronic Fund Transfer
3.6
The section was divided into two sections: one for receipts (3.6.6) and other for disbursements (3.8.11).
Voucher Certification and Approval
3.8.5
Added checks and electronic payments.
Grants – Accounting
3.7.1
This section was updated for the New Uniform Guidance. The following subsections contain new information: 3.7.1.10, .40, .50 and .60.
Pensions – Implementing GASB Statement 68, Accounting and Financial Reporting for Pensions
3.4.2
This section discusses the new accounting and reporting requirements for single-employer and state sponsored pension plans mandated by GASBS 68. It also contains links to Excel spreadsheets containing instructions and examples of calculation of pension liabilities.
Transportation Benefit Districts (TBD)
3.11.1.120
This new section discusses accounting and reporting requirements for cities and counties assuming the TBDs as authorized by the 2015 legislation.
Accounting and Reporting for Property Tax
3.5.2
This new section provides detailed guidelines for reporting property tax according to GASBS 65.
REPORTING
GAAP Reporting Requirements
4.1.1
The Financial Reporting Entity Flowchart (and accompanying notes) was updated to include relationships other the component units that would have an effect on reporting entity. The GAAP criteria for reporting of component units and other types of relationships did not change; however the new chart will better reflect the existing reporting requirements.
Proprietary Funds Financial Statements
4.3.4
There are no substantive changes in proprietary funds reporting. This section was reformatted to accommodate the inclusion of the stand-alone reporting guidance for ports, transits, PUDs, housing authorities, risk pools, hospital, water, sewer and irrigation districts.
Required Supplementary Information (RSI)
4.7.261-.267
Sections 4.7.260-.330 were replaced with new (GASBS 68) reporting requirements for pensions. The new sections contain links to Excel spreadsheets with examples of required schedules.
Notes to Financial Statements
The notes contain requirements for all different types of local governments. Some notes are applicable to all or most local governments. However some are unique to a very specific type of government. It’s the government responsibility to choose all applicable and necessary disclosures.
Note 1 – Summary of Significant Accounting Policies
The new paragraph regarding pension plan policy was added (E.10). Other than this addition, there are no substantive changes in this disclosure. This note was reformatted to accommodate the inclusion of the stand-alone reporting guidance for ports, transits, PUDs, housing authorities, risk pools, hospital, water, sewer and irrigation districts.
Note X – Long-Term Debt
The note was expanded to incorporate (if applicable) disclosures regarding loans with forgiveness clauses and grants with recoverable clauses.
Note X – Pension Plans
The note was updated to meet the GASBS 68 requirements. It contains links to the WORD version.
Supplementary and Other Information
Schedules 09 (Liabilities) and 16 (SEFA), if applicable, are required from all local governments; however since they are an integral part of the audit reports they were moved from the SAO Annual Report Schedules category to Supplemental and OtherInformation category to properly align with the audit reports.
Revenues/Expenditures/
Expense (Schedule 01)
4.8.1.25
Local governments completing the Schedule 01 for fiscal years ended on or after December 31, 2015 must ensure the data submitted is accurate. The online filing system will calculate ending fund balances/net position using government-submitted information. If the SAO calculated ending balances/net position result in a variance from the local government’s submitted ending balances of greater than $1,000, the local government will not be able to submit its annual report until corrected.
Liabilities (Schedule 09)
Schedule 09 debt and liability IDs were changed from categorizing by fund type to categorizing based on obligation type (i.e., general obligations, revenue and other non-G.O. obligations and assessment obligations). The change allows for better alignment of categories with the debt limit calculation and avoids the need to allocate certain liabilities between different IDs in different categories. Since Schedule 09 uses general, revenue and assessment obligations as titles, the re-alignment will also improve the accuracy of this presentation. In addition, several ID numbers were added to facilitate calculation of debt limit and an ID number was also added for pension liabilities (264.30). Please review and update ID numbers.
Expenditures of Federal Awards (Schedule 16)
4.8
This is a transition year between the requirements of OMB Circular A-133 and the new Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards 2 CFR 200 (Uniform Guidance). This section has been updated for the new Uniform Guidance as it will be applicable for the majority of the BARS users, specifically those entities with a calendar year end. The effective date for the Audit Requirements, which include the SEFA requirements, of the new Uniform Guidance found in Subpart F of 2 CFR 200 is for fiscal years beginning after December 26, 2014. For those entities which the Audit Requirements of the new Uniform Guidance is not effective yet (fiscal years beginning prior to December 26, 2014), we left the references to the OMB Circular A-133 in parenthesis. Click here for the new Uniform Guidance. Also sections 4.8.5.125 and 126 were added and Question 2 was revised.
Information for Schedule 16 was updated in the BARS Manual in the fall of 2015; however, several items were inadvertently missed in those updates. The changes, which were put into effect on April 20, 2016.
Here are the changes to the SEFA, with corresponding information from the Uniform Guidance:
Amounts passed through to subrecipients: Same information, but a location change.
(b) Schedule of Expenditures of Federal Awards. ... At a minimum, the schedule must:
(4) Include the total amount provided to subrecipients from each Federal program.Change: Therefore, a column is being added to the SEFA and input for these amounts, and the disclosure will not be needed. No additional information is being requested, since the pass-through information was previously reported in the notes.
Use of de minimis indirect cost rate: Additional affirmative disclosure by governments.(6) Include notes that describe that significant accounting policies used in preparing the schedule, and note whether or not the non-Federal entity elected to use the 10% de minimis cost rate as covered in § 200.414 Indirect (F&A) costs.Change: The BARS Manual information for the SEFA notes has been updated, along with an instruction stating that it’s not an optional disclosure.
Basis of Accountingnote disclosure: (Minor change) Language was added to the sample note to recognize the fact that pre- and post-Uniform Guidance grants may have different bases for recognizing costs (i.e., cost principles). This disclosure will be needed during the transition period when a mixture of pre- and post-Uniform Guidance awards may be shown on the SEFA.
Risk Management (Schedule 21)
Minor updates to add options and clarify questions encountered in practice.
