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BARS GAAP Manual

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BARS Account Export


Select a government type/Select basis of accounting

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.

Select export type

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.

Select a reporting level

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.

This section was last edited by SAO on 03/10/20
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Introduction

2.4 Budget Compliance

2.4.1 Introduction

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:

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

This section was last edited by SAO on 12/17/20
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Fund Types and Accounting Principles

3.1 Accounting Principles and Internal Controls

3.1.1 Fund Types and Accounting Principles

Quick Links
3.1.1.20 Accounting and reporting capabilities
3.1.1.30 Fund accounting systems
3.1.1.40 Types of funds
Governmental funds
Code 000 - General (Current Expense) Fund
Code 100 - Special Revenue Funds
Code 200 - Debt Services Funds
Code 300 - Capital Projects Funds
Code 700 - Permanent Funds
Proprietary funds
Code 400 - Enterprise Funds
Code 500 - Internal Service Funds
Fiduciary funds
Code 600 - Fiduciary Funds
Codes 600-609 - Investment Trust Funds
Codes 610-619 - Pension (and Other Employee Benefit) Trust Funds
Codes 620-629 - Private-Purpose Trust Funds
Codes 630-698 - Custodial Funds
Code 699 - External Investment Pool Fund
3.1.1.50 Number of funds
3.1.1.60 Reporting capital assets
3.1.1.90 Reporting long-term liabilities
3.1.1.100 Government-wide financial statements
3.1.1.110 Fund financial statements
3.1.1.120 Budgeting, budgetary control and budgetary reporting
3.1.1.130 Transfer, revenue, expenditure and expense classifications
3.1.1.140 Common terminology and classifications
3.1.1.150 Annual financial reports

3.1.1.10 The following principles of accounting and financial reporting are based on those set forth in the Governmental Accounting Standards Board’s (GASB) Codification of Governmental Accounting and Financial Reporting Standards. The BARS manual permits accounting and financial reporting that conforms to these principles in all respects and requires GAAP municipalities to account and report in conformity with these principles, except that the annual report required is not as extensive as the Comprehensive Annual Financial Report (CAFR).

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3.1.1.20 Accounting and reporting capabilities

A governmental accounting system must make it possible both: (a) to present fairly and with full disclosure the funds and activities at the government in conformity with generally accepted accounting principles; and (b) to determine and demonstrate compliance with finance-related legal and contractual provisions.

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3.1.1.30 Fund accounting systems

A governmental accounting system should be organized and operated on a fund basis. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. Fund financial statements should be used to report detailed information about primary government, including its blended component units. The focus of governmental and proprietary fund financial statements is on major funds.

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3.1.1.40 Types of funds

In fund financial statements, governments should report governmental, proprietary, and fiduciary funds to the extent that they have activities that meet the criteria for using these funds.

Presented below is a system to classify all funds used by local government and the assignment of code numbers to identify each type of fund. A three digit code is used: the first digit identifies the fund type and the next two digits will be assigned by the governmental unit to identify each specific fund.

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Governmental funds

Code 000 - General (Current Expense) Fund – should be used to account for and report all financial resources not accounted for and reported in another fund.

Although a local government has to report only one general fund in its external financial reports, the government can have multiple general subfunds for its internal managerial purposes. These managerial subfunds have to be combined into one general fund for external financial reporting.

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Code 100 - Special Revenue Funds – should be used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specific purposes other than debt service or capital projects. Restricted revenues are resources externally restricted by creditors, grantors, contributors or laws or regulations of other governments or restricted by law through constitutional provisions or enabling legislation (similar to restricted component of net position used in government-wide reporting). Committed revenues are resources with limitations imposed by the highest level of the government, and where the limitations can be removed only by a similar action of the same governing body. Revenues do not include other financing sources (long-term debt, transfers, etc.).

The term proceeds of specific revenue sources establishes that one or more specific restricted or committed revenues should be foundation for a special revenue fund. They should be expected to continue to comprise a substantial portion of the inflows reported in the fund. While GASB Statement 54 has not provided a numeric range for substantial portion of inflows, it was recommended that at least 20 percent is a reasonable limit for reporting a special revenue fund. Local governments need to consider factors such as past resource history, future resource expectations and unusual current year inflows such as debt proceeds in their analysis.

They may use the calculation below to determine whether an activity would qualify for reporting as a special revenue fund.

Other resources (investment earnings and transfers from other funds, etc.) also may be reported in the fund if these resources are restricted, committed, or assigned to the specific purpose of the fund.

Governments should discontinue reporting a special revenue fund, and instead report the fund’s remaining resources in the general fund, if the government no longer expects that a substantial portion of the inflows will derive from restricted or committed revenue sources.

The Statement requires all revenue to be recognized in the special revenue fund. If the resources are initially received in another fund, such as the general fund, and subsequently remitted to a special revenue fund, they should not be recognized as revenue in the fund initially receiving them. They should be recognized as revenue in the special revenue fund from which they will be expended. So, the local governments can either receive resources directly into the special revenue fund, or account for the resources as agency deposits in the receiving fund and, after remitting them, recognize them as revenue to the special revenue fund.

Special revenue funds should not be used to account for resources held in trust for individuals, private organizations, or other governments.

The general fund of a blended component unit should be reported as a special revenue fund.

The state statutes contain many requirements for special funds to account for different activities. The legally required funds do not always meet GAAP standards for external reporting. So, while the local governments are required to follow their legal requirements, they will have to make some adjustment to their fund structure for external financial reporting.

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Code 200 - Debt Service Funds – should be used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Debt service funds should be used to report resources if legally mandated. Financial resources that are being accumulated for principal and interest maturing in future years also should be reported in debt service funds. The debt service transactions for a special assessment for which the government is not obligated in any matter should be reported in an agency fund. Also, if the government is authorized, or required to establish and maintain a special assessment bond reserve, guaranty, or sinking fund, GASB Statement 6 requires using a debt service fund for this purpose.

Note: Debt service funds should not be used in proprietary funds (400 and 500). Use enterprise funds (400) or internal service (500) for debt payments related to utilities and other business type activities.

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Code 300 - Capital Projects Funds – should be used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays including the acquisition or construction of capital facilities or other capital assets. Capital outlays financed from general obligation bond proceeds should be accounted for through a capital projects fund. Capital project funds exclude those types of capital-related outflows financed by proprietary funds or for assets that will be held in trust for individuals, private organizations, or other governments (private-purpose trust funds).

Note: Capital project funds should not be used in proprietary funds (400 and 500). Use enterprise funds (400) or internal service (500) for capital payments related to utilities and other business type activities.

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Code 700 - Permanent Funds – should be used to account for and report resources that are restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government’s programs – that is for the benefit of the government or its citizens (public-purpose). Permanent funds do not include private-purpose trust funds which account for resources held in trust for individuals, private organizations, or other governments.

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Proprietary funds

Code 400 - Enterprise Funds - may be used to report any activity for which a fee is charged to external users for goods or services. Enterprise funds are required for any activity whose principal revenue sources meet any of the following criteria:

  • Debt backed solely by a pledge of the net revenues from fees and charges.
  • Legal requirement to recover cost. An enterprise fund is required to be used if the cost of providing services for an activity including capital costs (such as depreciation or debt service) must be legally recovered through fees or charges.
  • Policy decision to recover cost. It is necessary to use an enterprise fund if the government’s policy is to establish activity fees or charges designed to recover the cost, including capital costs (such as depreciation or debt service).

These criteria should be applied in the context of the activity’s principal revenue source.

The term activity generally refers to programs and services. This term is not synonymous with fund. As a practical consequence, if an activity reported as a separate fund meets any of the three criteria, it should be an enterprise fund. Also, if a “multiple activity” fund (e.g., general fund) includes a significant activity whose principal revenue source meets any of these three criteria, the activity should be reclassified as an enterprise fund.

The determination of an activity’s principal revenue source is a matter of professional judgement. A good indicator of the activity’s significance may be comparing pledged revenues or fees and charges to total revenue. For example, consider a county auditor’s office that charges fees to provide a payroll service to various taxing districts. Even if the fee is meant to cover the cost of the service, the county auditor function as a whole is primarily supported with tax dollars from the general fund. It would be allowable in this case to leave the activity all within general fund.

Finding an appropriate fund type requires a careful analysis since there is not always a clear choice. For example, building permit fees may be accounted for in the general fund or a special revenue fund in certain circumstances, such as when they are partially supported by taxes. However, if there is a pricing policy to recover the cost of issuing those individual building permits, they should be reported in an enterprise fund.

In addition, GAAP mandate the use of enterprise funds for the separately issued financial statement of public-entity risk pools. Public-entity risk pools also are accounted for as enterprise funds when they are included within a sponsoring government’s report, provided the sponsor is not the predominant participant in the arrangement. Otherwise, they can use the general fund.

Separate funds should not be reported for bond redemption, construction, reserves, or deposits, for any utility that is accounted for on the full accrual basis, using either the BARS accounts or a nationally recognized utility chart of accounts such as FERC or NARUC. Separate funds should not be reported even though bond covenants may stipulate a bond reserve fund, bond construction fund, etc. The bond covenant use of the term fund is not the same as the use in governmental accounting. For bond covenants, fund means only a segregation or separate account, not a self-balancing set of accounts. (See account 150 in the general ledger chart of accounts.)

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Code 500 - Internal Service Funds – may be used to report any activity that provides goods or services to other funds, departments or agencies of the government, or to other governments, on a cost-reimbursement basis. Internal service funds should be used only if the reporting government is the predominant participant in the activity. Otherwise, the activity should be reported in an enterprise fund.

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Fiduciary funds

Code 600 - Fiduciary Funds – should be used to account for assets, including capital assets (GASB 34, Paragraph 106), held by a government in a trustee capacity or as a custodian for individuals, private organizations, other governmental units, and/or other funds. These include (a) investment trust funds, (b) pension (and other employee benefit) trust funds, (c) private-purpose trust funds, and (d) custodial funds.

For more information on determining if a transaction is fiduciary please see the Determining Fiduciary Custodial Activities page.

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Codes 600-609 - Investment Trust Funds – should be used to report fiduciary activities from the external portion of investment pools and individual investment accounts that are held in a trust that meets the following criteria: the assets are (a) administered through a trust in which the government itself is not a beneficiary, (b) dedicated to providing benefits to recipients in accordance with the benefit terms, and (c) legally protected from the creditors of the government.

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Codes 610-619 - Pension (and Other Employee Benefit) Trust Funds – should be used to report fiduciary activities for the following:

  • Pension plans and OPEB plans that are administered through trusts that meet the criteria in paragraphs 3 of GASB Statement 67 or paragraph 3 of GASB Statement 74, respectively.
  • Other employee benefit plans for which (1) resources are held in trust that meets the following criteria: the assets are (a) administered through a trust in which the government itself is not a beneficiary, (b) dedicated to providing benefits to recipients in accordance with the benefit terms, and (c) legally protected from the creditors of the government and (2) contributions to the trust and earnings on these contributions are irrevocable.

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Codes 620-629 - Private-Purpose Trust Funds – should be used to report all fiduciary activities that (a) are not required to be reported in pension (and other employee benefit) trust funds or investment trust funds, and (b) are held in a trust that meets the following criteria: the assets are (a) administered through a trust in which the government itself is not a beneficiary, (b) dedicated to providing benefits to recipients in accordance with the benefit terms, and (c) legally protected from the creditors of the government.

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Code 630-698 - Custodial Funds – should be used to report all fiduciary activities that are not required to be reported in pension (and other employee benefit) trust funds, investment trust funds or private purpose trust funds. The external portion of the investment pools that are not held in trust that meets criteria listed above should be reported in a separate external investment pool fund column under the custodial funds classification.

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Code 699 - External Investment Pool Fund – The external portion of the investment pools that are not held in trust and meet criteria listed above. Although this is consider a custodial fund, it should be reported in a separate external investment pool fund column under the custodial funds classification.

Note: The custodial funds are required to be used by business-type activities and enterprise funds, if the assets, upon receipt, are normally expected to be held for more than three months.

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3.1.1.50 Number of funds

Governments should establish and maintain those funds required by law and sound financial administration. Only the minimum number of funds consistent with legal and operating requirements should be established. Using numerous funds results in inflexibility, undue complexity and inefficient financial administration.

Local governments should periodically undertake a comprehensive evaluation of their fund structure to ensure that individual funds that became superfluous are eliminated from accounting and reporting.

Elected officials should be educated to the fact that accountability may be achieved effectively and efficiently by judicious use of department, program and other available account coding or cautious use of managerial (internal) funds.

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3.1.1.60 Reporting capital assets

A clear distinction should be made between general capital assets and capital assets of proprietary and fiduciary funds. Capital assets of proprietary funds should be reported in both the government-wide and fund financial statements. Capital assets of fiduciary funds should be reported only in the statement of fiduciary net position. All other capital assets of the government are general capital assets. They should not be reported as assets in governmental funds but should be reported in the governmental activities column in the government-wide statement of net position. The Capital Assets (BARS 3.3.9, 3.3.10 and 3.3.11) sections of the BARS manual provide additional information regarding accounting and reporting of capital assets.

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3.1.1.90 Reporting long-term liabilities

A clear distinction should be made between fund long-term liabilities and general long-term liabilities. Long-term liabilities directly related to and expected to be paid from proprietary funds should be reported in the proprietary fund statement of net position and in the government-wide statement of net position. Long-term liabilities directly related to and expected to be paid from fiduciary funds should be reported in the statement of fiduciary net position. All other unmatured general long-term liabilities of the governmental unit should not be reported in governmental funds but should be reported in the governmental activities column in the government-wide statement of net position.

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Measurement focus and basis of accounting in the basic financial statements

3.1.1.100 Government-wide financial statements

The government-wide statement of net position and statement of activities should be prepared using the economic resources measurement focus and the accrual basis of accounting. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions should be recognized when the exchange takes place. Revenues, expenses, assets, and liabilities resulting from nonexchange transactions should be recognized in accordance with the GASB Statements 24 and 33.

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3.1.1.110 Fund financial statements

In fund financial statements, the modified accrual or accrual basis of accounting, as appropriate, should be used in measuring financial position and operating results.

a. Financial statements for governmental funds should be presented using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues should be recognized in the accounting period in which they become available and measurable. Expenditures should be recognized in the accounting period in which the fund liability is incurred, if measurable, except for unmatured interest on general long-term liabilities, which should be recognized when due.

b. Proprietary fund statements of net position and revenues, expenses, and changes in fund net position should be presented using the economic resources measurement focus and the accrual basis of accounting.

c. Financial statements of fiduciary funds should be reported using the economic resources measurement focus and the accrual basis of accounting, except for the recognition of certain liabilities of defined benefit pension plans and certain postemployment healthcare plans.

d. Transfers should be reported in the accounting period in which the interfund receivable and payable arise.

Note: The various fund types may be grouped in the following manner to more clearly portray their relationship to an accounting basis:

Flow of Current Financial Resources Measurement Focus Funds – use the modified accrual basis:

000

General (Current Expense) Fund

100

Special Revenue Funds

200

Debt Service Funds

300

Capital Projects Funds

700

Permanent Funds

Flow of Economic Resources Measurement Focus Funds – use full-accrual basis:

400

Enterprise Funds

500

Internal Service Funds

600-609

Investment Trust Funds

610-619

Pension (and Other Employee Benefit) Trust Funds

620-629

Private-Purpose Trust Funds

630-698

Custodial Funds

699

External Investment Pool Fund

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3.1.1.120 Budgeting, budgetary control and budgetary reporting

a. An annual/biennial budget should be adopted by every government.

b. The accounting system should provide the basis for appropriate budgetary control.

c. Budgetary comparison schedules should be presented as required supplementary information for the general fund and for each major special revenue fund that has a legally adopted annual/biennial budget. The budgetary comparison schedule should present both (a) the original and (b) the final appropriated budgets for the reporting period ad well as (c) actual inflows, outflows, and balances, stated on the government’s budgetary basis.

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3.1.1.130 Transfer, revenue, expenditures and expense account classifications

a. Transfers should be classified separately from revenues and expenditures or expenses in the basic financial statements.

b. Proceeds of general long-term debt issues should be classified separately from revenues and expenditures in the governmental fund financial statements.

c. Governmental fund revenues should be classified by fund and source. Expenditures should be classified by fund, function (or program), organization unit, activity, character, and principal classes of objects.

d. Proprietary fund revenues should be reported by major sources, and expenses should be classified in essentially the same manner as those of similar business organizations, functions, or activities.

e. At a minimum, the statement of activities should present:

(1) Activities accounted for in governmental funds by function, to coincide with the level of detail required in the governmental fund statement of revenues, expenditures, and changes in fund balances.

(2) Activities accounted for in enterprise funds by different identifiable activities.

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3.1.1.140 Common terminology and classification

A common terminology and classification should be used consistently throughout the budget, the accounts, and the financial reports of each fund.

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3.1.1.150 Annual financial reports

a. General purpose external financial reports should be prepared and published. Governments engaged in governmental and business-type activities should include, at a minimum:

(1)  Management’s discussion and analysis (MD&A).

(2)  Basic financial statements.  The basic financial statements should include:

(a) Government-wide financial statements.
(b) Fund financial statements.
(c) Notes to the financial statements.

(3)   Required supplementary information (RSI) other than MD&A.

Governments engaged only in business-type activities should present only the financial statements required for proprietary funds.  They should include:

(1) Management’s discussion and analysis (MD&A)

(2) Proprietary fund financial statements consisting of:

(a) Statement of net position
(b) Statement of revenues, expenses, and changes in fund net position
(c) Statement of cash flows

(3) Notes to the financial statements

(4) Required supplementary information (RSI) other than MD&A, if applicable.

b. The statements and reports listed above follow national standards of financial reporting. They should not be confused with legal reporting requirements, which are prescribed by the State Auditor’s Office for all local governments in Washington State. The legal requirements are consistent with these national standards, but they are not identical. Specific legal reporting requirements are contained in reporting part of this Manual.

c. A comprehensive annual financial report may be prepared and published, covering all activities of the primary government (including its blended component units) and providing an overview of all discretely presented component units of the reporting entity including introductory section, management's discussion and analysis (MD&A), basic financial statements, required supplementary information other than MD&A, combining and individual fund statements, schedules, narrative explanations, and statistical section. The reporting entity is the primary government (including its blended component units) and all discretely presented component units.

d. The financial reporting entity consists 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’ basic financial statements to be misleading or incomplete. The reporting entity's government-wide financial statements should display information about the reporting government as a whole distinguishing between the total primary government and its discretely presented component units as well as between the primary government's governmental and business-type activities. The reporting entity’s fund financial statements should present the primary government's (including its blended component units, which are, in substance, part of the primary government) major funds individually and nonmajor funds in the aggregate. Funds and component units that are fiduciary in nature should be reported only in the statements of fiduciary net position and changes in fiduciary net position.

e. The nucleus of a financial reporting entity usually is a primary government. However, a governmental organization other than a primary government (such as a component unit, joint venture, jointly governed organization, or other stand-alone government) serves as the nucleus for its own reporting entity when it issues separate financial statements. For all of these entities, the provisions the GASB Statement 14 should be applied in layers from the bottom up. At each layer, the definition and display provisions should be applied before the layer is included in the financial statements of the next level of the reporting government.

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This section was last edited by SAO on 12/18/20
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Note 1 – Summary of Significant Accounting Policies

Note 1 – Summary of Significant Accounting Policies

The financial statements of the (city/county/district) have been prepared in conformity with Generally Accepted Accounting Principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The significant accounting policies are described below.

A. Reporting Entity

[1] The (city/county/district) was incorporated on (date) and operates under the laws of the state of Washington applicable to (type of the government).

As required by the generally accepted accounting principles the financial statements present (city/county/district), the primary government, and its component units. The component units discussed below are included in the (city/county/district) reporting entity because of the significance of their operational or financial relationships with the (entity type).

Individual Component Units Disclosures [2]

B. Basis of Presentation ‑ Government-Wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government (and its component units). Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. (Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable.)

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. [3] Direct expenses are those that are clearly identifiable with a specific function or segment. Our policy is to (allocate/not to allocate) indirect costs to a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements or a particular function or segment. Internally dedicated resources are reported as general revenues rather than program revenues. Taxes and other items not properly included among program revenues are reported instead as general revenues.

As a general rule the effect of the interfund activity has been eliminated for the government-wide financial statements. [4] Exceptions to this general rule are _______________________________.

Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

The (city/county/district) reports the following major governmental funds: [5]

The general (or current expense) fund is the (city/county/district’s) operating fund. It accounts for all financial resources of the general government, except those required or elected to be accounted for in another fund.

The (city/county/district) reports the following major enterprise funds: [6]

Additionally, the (city/county/district) reports the following fund types: [7]

Internal service funds account for _________________ and __________________provided to other departments or agencies of the (city/county/district), or to other (cities/counties/districts), on a cost reimbursement basis.
The private-purpose trust fund is used to account for __________________________________.
The investment trust fund is used to account for ______________________________________.
The pension and other employee benefit trust fund is used to account for _________________.

C. Measurement Focus, Basis of Accounting

1. Government-Wide and Governmental Funds

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, similar to the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenue in the year in which they are levied. Grants and similar items are recognized as revenue as soon as eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the (city/county/district) considers revenues to be available if they are collected within ____ days of the end of the current fiscal period. The (city/county/district) considers property taxes as available if they are collected within 60 days after year end. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Property taxes, licenses, and interest associated within the current period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessment receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the (city/county/district).

2. Proprietary Funds

The (proprietary fund OR government-type if reporting stand-alone proprietary entity) statements are reported using the economic resources measurement focus and full-accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when liability is incurred regardless of the timing of the cash flows.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the (city/county/district) are (insert revenue types). [8] Operating expenses for the district include (e.g., the cost of sales and services, administrative expenses, depreciation on capital assets, etc.). All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

D. Budgetary Information

1. Scope of Budget

Annual appropriated budgets are adopted for __________ funds on the __________ basis of accounting. [9] Budgets for debt service and capital project funds are adopted at the level of the individual debt issue or project and for fiscal periods that correspond to the lives of debt issues or projects.

Other budgets are adopted at the level of the fund, except in the general (current expense) fund, where expenditures may not exceed appropriations at the department level and the budgets constitute the legal authority for expenditures at that level.

Appropriations for general and special revenue funds lapse at year-end (except for appropriations for capital outlays, which are carried forward from year to year until fully expended or the purpose of the appropriation has been accomplished or abandoned).

Encumbrances accounting is employed in governmental funds. Encumbrances (e.g., purchase orders, contracts) outstanding at year end are reported as reservation of fund balances and do not constitute expenditures or liabilities because the commitments will be reappropriated and honored during the subsequent year.

2. Amending the Budget

The (city manager/county auditor/finance director/mayor) is authorized to transfer budgeted amounts between (departments within any fund/object classes within departments); however, any revisions that alter the total expenditures of (a fund/the city/the county), or that affect the number of authorized employee positions, salary ranges, hours, or other conditions of employment must be approved by the (city/county) (council/commission).

When (city/county) (council/commission) determines that it is in the best interest of the (city/county) to increase or decrease the appropriation for a particular (fund/department/ object class), it may do so by (ordinance/resolution) approved by one more than the majority after holding public hearing(s).

The budget amounts shown in the financial statements are the final authorized amounts as revised during the year.

The financial statements contain the original and final budget information. The original budget is the first complete appropriated budget. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental appropriations, and other legally authorized changes applicable for the fiscal year.

3. Excess of Expenditures over Appropriations [10]

4. Deficit Fund Net Position [11]

E. Assets, Liabilities, Fund Balance, Net Position

1. Cash and Cash Equivalents

It is the (city/county/district’s) policy to invest all temporary cash surpluses. At December 31, 20__, the treasurer was holding $ _____________ in short-term residual investments of surplus cash. This amount is classified on the balance sheet as cash and cash equivalents in various funds. The interest on these investments is prorated to the various funds or (if not prorated, explain the government’s unique circumstances).

The amounts reported as cash and cash equivalents also include compensating balances maintained with certain banks in lieu of payments for services rendered. The average compensating balances maintained during (year) were approximately $ _______________.

For purposes of the statement of cash flows, the (city/county/district’s) considers all highly liquid investments (including restricted assets) with a maturity of three months or less when purchased to be cash equivalents.

2. Investments (See Note X – Deposits and Investments). [12]

3. Receivables [13]

Taxes receivable consists of property taxes and related interest and penalties (See Note X – Property Tax). Accrued interest receivable consists of amounts earned on investments, notes, and contracts at the end of the year.

Special assessments are recorded when levied. Special assessments receivable consist of current and delinquent assessments and related interest and penalties. As of December 31, 20__, $_________ of special assessments receivable were delinquent.

Customer accounts receivable consist of amounts owed from private individuals or organizations for goods and services including amounts owed for which billings have not been prepared. Notes and contracts receivable consist of amounts owed on open account from private individuals or organizations for goods and services rendered. (Unbilled __________ service receivables are recorded at year end.)

4. Amounts Due to and from Other Funds and Governments, Interfund Loans and Advances Receivable

Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either interfund loans receivable/payable or advances to/from other funds. All other outstanding balances between funds are reported as due to/from other funds. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. A separate schedule of interfund loans receivable and payable is furnished in Note X – Interfund Balances and Transfers.

Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources.

5. Inventories [14]

Inventories in governmental funds consist of expendable supplies held for consumption. The cost is recorded as expenditure at the time individual inventory items are (purchased/consumed). The reserve for inventory is equal to the (average/ending) amount of inventory to indicate that a portion of the fund balance is not available for future expenditures. A comparison to market value is not considered necessary.

Inventories in proprietary funds are valued by the (FIFO/LIFO/weighted average) method (which approximates the market value).

6. Restricted Assets and Liabilities

These accounts contain resources for construction and debt service, including current and delinquent special assessments receivable, in enterprise funds. The current portion of related liabilities is shown as Payables from Current Restricted Assets. Specific debt service reserve requirements are described in Note X – Long-Term Debt.

The restricted assets of the enterprise funds are composed of the following:

Special Assessments ‑ Current

$ ___________

Special Assessments ‑ Delinquent

$ ___________

Cash and Investments ‑ Debt Service

$ ___________

Cash and Investments ‑ Construction

$ ___________

 

$ ___________

7. Capital Assets (See Note X – Capital Assets)

Capital assets, which include property, plant, equipment and infrastructure assets [15] (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type columns in the government-wide financial statements. Capital assets are defined by the (city/county/district) as assets with an initial, individual cost of more than $__________ and an estimated useful life in excess of ____ years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation.

Costs for additions or improvements to capital assets are capitalized when they increase the effectiveness or efficiency of the asset.

The costs for normal maintenance and repairs are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects are constructed.

Property, plant, and equipment of the primary government, as well as the component units, is depreciated using the ___________________ method [16] over the following estimated useful lives:

Assets

Years

  
  
  
  

8. Deferred Outflows/Inflows of Resources [17]

9. Compensated Absences [18]

Compensated absences are absences for which employees will be paid, such as vacation (and sick) leave. All vacation and sick pay is accrued when incurred in the government-wide, proprietary, and fiduciary fund financial statements.

Vacation pay, which may be accumulated up to (maximum days or weeks), is payable upon resignation, retirement or death.

10. Pensions

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of all state sponsored pension plans and additions to/deductions from those plans’ fiduciary net position have been determined on the same basis as they are reported by the Washington State Department of Retirement Systems. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

11. Other Accrued Liabilities

These accounts consist of accrued wages and accrued employee benefits.

12. Long-Term Debt (See Note X – Long-Term Debt)

13. Unearned Revenues [19]

This account includes amounts recognized as receivables but not revenues in governmental funds because the revenue recognition criteria have not been met.

14. Fund Balance Classification [20]

15. Fund Balance Details [21]

16. Minimum Fund Balance [22]

F. Other

1. Stabilization Arrangements [23]

2. Miscellaneous [24]

3. (Special Purpose District Specific Disclosures)

Additional example disclosures for hospital districts and risk pools can be found here.


Instructions to preparer:

[1] For type of government describe the legal structure of the government (e.g., noncharter code city with a mayor-council form of government or first-class county with commissioner form of government or home-rule charter city with council-manager form of government) or the formation agreement (e.g., The Pool was formed under [describe the formation agreement]. Pool was established to provide [describe risk transference arrangement including the rights and responsibilities of the pool and pool participants].,etc.).
Return to Reference 1

[2] Provide a brief description of component units and their relationship with the primary government. Discuss the criteria used to identify the component units and method used to present them (blended, discretely presented, or fiduciary) <1>. Provide sufficient detail to clarify the specific criteria under the GASB Statement 61 used to justify the inclusion of each individual component unit including both fiscal dependence and the ongoing relationship of financial benefit or burden. For blended component units, clearly state the blending criteria under the GASB Statement 61.

The following examples are intended to help you describe the government’s circumstances:

Blended component units

The (component unit) is governed by the (number)-member board appointed by the (city/county/district) board. Although it is legally separated from the (city/county/district) the (component unit) is reported as if it was part of primary government because its sole purpose is to finance and construct the (city/county/district) public buildings.

Discretely presented component units

The (component unit) provides ( ) services to the (city/county/district). The (city/county/district) annually provides significant operating subsidiaries to the (component unit).

The (component unit) operates (city/county/district) facilities. The (component unit) operating budget is subject to approval of the (city/county/district) board. The board also approves proposed capital improvements and additions to the (component unit) facilities.

Condensed statement of net position:

The (city/county/district) has following fiduciary component unit(s) . The data for this (these) unit(s) is (are) presented in the fiduciary financial statements.

If the major <2> component units are not presented in the financial statements <3>, the city/county/district should present the condensed financial statements of these component units here. (Non-major component units should be aggregated in one column.)

If the city/county/district chooses to present component units information in the notes, these details should be presented, at a minimum:

Condensed statement of net position:

  • Total assets – distinguishing between capital assets and other assets. Amounts receivable from the primary government or from other component units should be reported separately.
  • Total deferred outflows of resources.
  • Total liabilities – distinguishing between long-term debt outstanding and other liabilities. Amounts payable to the primary government or to other component units should be reported separately.
  • Total deferred inflows of resources.
  • Total net position – distinguishing between restricted, unrestricted, and amounts of net investment in capital assets.

Condensed statement of activities:

  • Expenses (by major functions and for depreciation expense, if separately reported).
  • Program revenues (by type).
  • Net program (expense) revenue.
  • Tax revenues.
  • Other nontax general revenues.
  • Contributions to endowments and permanent fund principal.
  • Special and extraordinary items.
  • Change in net position.
  • Beginning net position.
  • Ending net position.

Also, disclose (for each major component units) the nature and amount of significant transactions with the primary government and other component units.

Include information (addresses) where the complete financial statements of individual component units can be obtained.

List the related organizations (organizations for which the reporting entity is accountable because it appoints a voting majority of the board but is not financially accountable). Disclose the nature of city/town/district's accountability. The following example is intended to help you to describe the government’s circumstances:

The (city/county/district) is also responsible for appointing the members of the board of (organization name), but the accountability for this organization does not extend beyond making the appointments. In , the (city/county/district) appropriated operating grant of $ to the (organization name).

Also list the organizations that are excluded from the combined financial statements.

If there is significant (in relation to the total component units’ column) long-term debt of any component unit, the disclosure of the debt service requirements to maturity should be made.

Additional note disclosures may be needed if the accounting policies or the fiscal year of the component unit differ from those of the government.
Return to Reference 2

If the government itself is a component unit, this note should identify the primary government and describe the nature of the relationship.

[3] The city/county/district is not required to allocate the indirect expenses to other functions. However, some cities/counties/districts may prefer to do so or use a full-cost allocation approach among functions. Some cities/counties/districts may charge funds or programs (through internal service funds or the general fund) for centralized expenses, which may include an administrative overhead component. Governments are not required to identify and eliminate these administrative charges, but they should disclose the policy for their allocation.
Return to Reference 3

[4] The note should disclose how the government distinguishes overhead costs (which are eliminated in the process of consolidation) from interfund services provided and used between functions (which are not eliminated in the process of consolidation).
Return to Reference 4

[5] List and describe major governmental funds. The description should be specific to the government rather than generic. Identify which revenues and other resources are reported in each major special revenue fund.
Return to Reference 5

[6] List and describe all proprietary major funds. The description should be specific to the government rather than generic.
Return to Reference 6

[7] Describe the activities of the internal service and applicable fiduciary fund(s). The description should be specific to the government rather than generic.
Return to Reference 7

[8] Define the operating revenues and expenses. Additional special purpose district examples:
Return to Reference 8

Water/Sewer/Irrigation: Charges for providing ____________________ services. The District also recognizes as operating revenue (e.g., the portion of the top fees intended to recover the cost of connecting new customers to the system, etc.).

Housing Authority: Operating revenues result from fees and charges from providing services in connection with the ongoing operations of providing low income housing. Operating subsidies and grants are reported as non-operating revenues and are presented as cash flows from non-capital financing activities in the statement of cash flows. Operating expenses are those expenses that are directly incurred in the operation of providing low income housing.

[9] List the funds for which the city/county/district prepares budgets and the accounting bases used in these budgets. If the budgetary basis of accounting differs from GAAP, the notes should include reconciliation (if not presented on the face of the statements). The reconciliation should be sufficiently detailed.
Return to Reference 9

[10] List the funds and amounts of overspending in the general fund and annually budgeted major special revenue funds. Also, explain how the expenditures were funded. You can provide this information either here or as a separate note <4> (See Note X – Violations of Finance-Related Legal or Contractual Provisions).
Return to Reference 10

[11] If any of the funds of the city/county/district had deficit fund net position at the year end, disclose the amount of the deficit, reason for it, and the expected means of eliminating this deficit. You can provide this information either here or as a separate note (See Note X – Violations of Finance-Related Legal or Contractual Provisions).
Return to Reference 11

[12] Disclose the following:

a. The methods and significant assumptions used to estimate the fair value of investments, if that fair value is based on other than quoted market prices.

b. The policy for determining which investments, if any, is reported at amortized cost.

c. For any investments in external investment pools that are not SEC-registered, a brief description of any regulatory oversight for the pool and whether the fair value of the position in the pool is the same as the value of the pool shares.

d. Any involuntary participation in an external investment pool.

e. If local government cannot obtain information from a pool sponsor to allow it to determine the fair value of its investment in the pool, the methods used and significant assumptions made in determining that fair value and the reasons for having had to make such an estimate.

f. Any income from investments associated with one fund that is assigned to another fund. See GASB Statement 31 as amended by the 3.2.3, Sweeping Interest and Investment Returns into General Fund for legal requirements related to interest diversion.

For more details, see the GASB Statement 31 as amended by the GASB Statement 40.

For various risks related to the investments see Note X – Deposits and Investments.
Return to Reference 12

[13] Disclose any asset valuation allowances for losses (e.g., on receivables) in government-wide and proprietary funds (GASB Statement 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, paragraph 33).
Return to Reference 13

[14] If city/county/district holds inventories for the purpose of resale, it has to disclose that inventories are reported at lower-of-cost or market.

For the various classifications of inventory items, the basis upon which their amounts are stated and, where practicable, indication of the method of determining the cost, for example, average cost, FIFO, and LIFO should be disclosed for the business-type activities and proprietary funds. (See GASB Statement 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, paragraph 210).
Return to Reference 14

[15] The lack of or partial implementation of retroactive infrastructure reporting should be disclosed. When a change in retroactive infrastructure is implemented it is considered a change in accounting principle and must be disclosed in the accounting changes note.
Return to Reference 15

[16] If city/county/district uses modified approach for reporting eligible infrastructure assets, then it should describe the approach (i.e., types of assets, etc.).
Return to Reference 16

[17] Disclosure of different types of deferred outflows/inflows of resources is required only if the information is not displayed on the face of the financial statements.

In some situations, the amount reported for a component of net position (net investment in capital assets, restricted, and unrestricted) may be significantly affected by a transaction that has resulted in recognition of a deferred outflow of resources or deferred inflow of resources. If the difference between a deferred outflow of resources or deferred inflow of resources and the balance of the related asset or liability is significant, governments should provide an explanation of that effect on its net position in the notes to the financial statements.
Return to Reference 17

[18] Only sick leave which is a part of retirement or termination benefit should be disclosed in this note (GASB Statement 16).

Describe the policy regarding sick leave. For example:

Upon resignation or retirement, any outstanding sick leave is lost.

If an employee terminates with at least ten years of service, he or she will be paid for sick leave balances up to thirty days, at one-half his or her final pay rate.

The (city/town/district) allows (unlimited/up to _____) accumulation of sick leave. Upon separation or retirement, employees do not receive any payment for unused sick leave. However, employees eligible for full retirement benefits may use their unused sick leave toward determining their length of service for purpose of determining their retirement benefits.
Return to Reference 18

[19] The city/county/district may disclose the separate component of the liability for unearned revenue reported on the governmental funds balance sheet.
Return to Reference 19

[20] City/county/district should disclose the following about their fund balance classification policies and procedures:

a. For committed fund balance: (1) the government’s highest level of decision-making authority, and (2) the formal action that is required to be taken to establish (and modify or rescind) a fund balance commitment.

b. For assigned fund balance: (1) the body or official authorized to assign amounts to a specific purpose, and (2) the policy established by the governing body pursuant to which that authorization is given.

c. For the classification of fund balances: (1) whether the government considers restricted or unrestricted amounts to have been spent when an expenditures is incurred for purposes for which both restricted and unrestricted fund balance is available, and (2) whether committed, assigned, or unassigned amounts are considered to have been spent when an expenditures is incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used. The disclosure is required even if there is no formal flow policy.
Return to Reference 20

[21] If restricted, committed, or assigned fund balances are not presented in sufficient details on the face of financial statements, then the specific purposes (not functions) information should be disclosed in the notes. The two components of nonspendable fund balance (1) not in spendable form, and (2) legally or contractually required to be maintained intact should be disclosed in notes if displayed in aggregate on the face of financial statements.
Return to Reference 21

[22] If a city/county/district has formally adopted a minimum fund balance policy, the city/county/district should describe the policy that sets forth the minimum amount.
Return to Reference 22

[23] A city/county/district that established stabilization arrangements, even if an arrangement does not meet the criteria to be classified as restricted or committed, should disclose the following information:

a. The authority for establishing stabilization arrangements (for example, by statute or ordinance),

b. The requirements for additions to the stabilization amount,

c. The conditions under which stabilization amounts may be spent,

d. The stabilization balance, if not apparent on the face of the financial statements.
Return to Reference 23

[24] Include other disclosure which may be necessary (e.g., comparative data column, reclassification of data etc.).
Return to Reference 24


Subnotes

<1> See BARS Manual 4.1.1, GAAP Reporting Requirements for additional discussion.
Return to Sub-reference 1

<2> To determine if component unit is major look at its significant relationship to other component units and the nature and significance of its relationship to the primary government.
Return to Sub-reference 2

<3> Governments can present each major component unit in a separate column in the statement of net position and activities or include combining statements of major component units after the fund financial statements.
Return to Sub-reference 3

<4> Regardless of whether the government presents required budgetary comparison as a basic governmental fund financial statement or as RSI, the notes to financial statements should disclose any material violations of the budget.
Return to Sub-reference 4

This section was last edited by SAO on 12/22/20
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Table of Contents

Index of Sections

Charts of Accounts1.
BARS Account Export
Determining Operating/Nonoperating Revenues/Expenses in Proprietary Funds1.5
General Ledger Accounts1.2
Object Codes1.4
Revenue/Expenditure Accounts Overview1.3
Account Structure1.1
Applicability1.1.1
Structure1.1.2
  
Budgeting2.
Budget Compliance2.4
Introduction2.4.1
Budget Adoption and Amendments2.4.3
Budget Process2.4.2
  
Accounting3.
Accounting Principles and Internal Control3.1
Fund Types and Accounting Principles3.1.1
Bank Reconciliations3.1.9
Internal Control3.1.3
Original Supporting Documentation3.1.4
Sources of GAAP3.1.2
Assets3.2
County’s External Investment Pool3.2.2
Compensating Balances3.2.5
Deposits and Investments3.2.1
Joint Ventures3.2.8
Money Held in Trust3.2.4
Special Assessments3.2.7
Sweeping Interest and Investment Returns into General Fund3.2.3
Capital Assets3.3
Capital Assets Accounting3.3.10
Capital Asset Management System Requirements3.3.9
Controls Over Capital Assets3.3.11
Liabilities3.4
Arbitrage Rebates3.4.6
Asset Retirement Obligations (AROs)3.4.19
Bonds and Revenue Warrants3.4.3
Financial Guarantees3.4.12
Issuance of Duplicate Instruments3.4.5
Leases3.4.1
Legal and Other Contingencies3.4.15
Other Postemployment Benefits (OPEB)3.4.17
Pensions3.4.2
Pollution Remediation3.4.20
Refunding Debt3.4.4
Risk Management Principles3.4.9
Solid Waste Utilities: Closure and Postclosure Cost3.4.8
Deferred Outflows/Inflows3.5
Accounting and Reporting of Property Tax3.5.2
Classification of Deferred Outflows/Inflows of Resources3.5.1
Revenues3.6
Cash Receipting3.6.1
County Auditor's Operation and Maintenance Fund (Recording Fees)3.6.2
County Treasurer’s Operation and Maintenance Fund3.6.3
Criminal Justice Funding3.6.4
Diversion of County Road Property Tax3.6.5
Electronic Funds Transfer – Receipts3.6.6
Impact Fees3.6.7
Liquor Tax and Profits – Two Percent Substance Abuse Treatment Programs3.6.8
Prosecuting Attorneys' Salaries3.8.12
Revenue Accruals in Governmental Funds3.6.9
Suspense Funds3.6.11
Utility Tax3.6.13
Working Advances from the Department of Social and Health Services (DSHS)3.6.10
Grants3.7
Grants – Accounting3.7.1
Pass-Through Grants3.7.2
Expenditures3.8
Confidential Funds (Drug Buy Money, Investigative Funds)3.8.9
Electronic Funds Transfer – Disbursements3.8.11
Employee Travel3.8.2
Imprest, Petty Cash and Other Revolving Funds3.8.8
Memberships in Civic and Service Organizations3.8.13
Mobile Devices3.8.3
Paths and Trails – Accounting3.8.10
Purchase Cards3.8.4
Redeemed Warrants/Cancelled Checks3.8.7
Unemployment and Deferred Compensation3.8.1
Use of Payroll and Claims Funds3.8.6
Voter Registration and Election Costs Allocation3.8.12
Voucher Certification and Approval3.8.5
Interfund Activities3.9
Equipment Rental and Revolving (ER&R) Fund3.9.7
Interfund Activities Overview3.9.8
Internal Service Funds3.9.6
Loans3.9.1
Overhead Cost Allocation3.9.5
Property Transfers3.9.2
Reimbursements3.9.4
Utility Surplus Transfers3.9.3
Compliance3.10
Bond Coverage for Public Officials and Employees3.10.3
County Fair Operations3.10.1
Limitation of Indebtedness3.10.5
New Entity Creation and Dissolution Notification3.10.6
Promotional Hosting3.10.7
Public Works Records3.10.4
Reporting Losses of Public Funds or Assets or Other Illegal Activity3.10.2
Special Topics3.11
Transportation Benefit Districts (TBD)3.11.1
  
Reporting4.
Reporting Principles and Requirements4.1
BARS Reporting Requirements4.1.2
Certification4.1.3
GAAP Reporting Requirements4.1.1
GAAP Versus Cash Basis Reporting4.1.7
Summary of Reporting Requirements4.1.4
Government-Wide Financial Statements4.2
Presentation Requirements4.2.1
Statement of Net Position4.2.2
Statement of Activities4.2.3
Classification of Revenues and Expenses for the Statement of Activities4.2.4
Eliminations4.2.7
Net Position4.2.8
Fund Financial Statements4.3
Fund Types4.3.1
Major Funds4.3.2
Governmental Funds Financial Statements4.3.3
Proprietary Funds Financial Statements4.3.4
Internal Service Funds4.3.6
Fiduciary Funds Financial Statements4.3.5
Conversion and Reconciliation between Government-Wide and Fund Financial Statements4.4
Statement of Cash Flows4.5
Notes to Financial Statements4.6
Instructions4.6.1
Required Supplementary Information (RSI)4.7
Supplementary and Other Information4.14
DES Schedule of Expenses – Risk Pools4.14.2
List of Participating Members – Risk Pools4.14.1
Liabilities (Schedule 09)4.14.3
Expenditures of Federal Awards (Schedule 16)4.14.5
SAO Annual Report Schedules4.8
Revenues/Expenditures/Expenses (Schedule 01)4.8.1
Expenditures of State Financial Assistance (Schedule 15)4.8.16
Public Works – Cities and Counties (Schedule 17)4.8.6
Labor Relations Consultant(s) (Schedule 19)4.8.7
Sales and Use Tax for Public Facilities – Rural Counties (Schedule 20)4.8.8
Risk Management (Schedule 21)4.8.9
Assessment Questionnaire (Schedule 22)4.8.14
GFOA Financial Reporting Recognition Programs4.9
This section was last edited by SAO on 12/24/20
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Overview of Changes

BARS Alerts

12/18/2020Annual update, see changes below
04/24/2020COVID-19 BARS Coding
10/01/2020CARES Act Grant Monies Expenditure Codes

Overview of Changes – Applicable to the Reporting Year 2020

Topic Reference Description of Changes 
    Chart of Accounts
BARS Account Export All BARS Codes Remember to download the most current version of the BARS Chart of Accounts
BARS Account Export 386 (Court Remittances) 3860000 –
Updated the referenced RCWs for courts.
Allowed only in Fiduciary Funds.
BARS Account Export 586 (Court Remittances) 5860000 –
Updated the referenced RCWs for courts.
Allowed only in Fiduciary Funds.
BARS Account Export Any use of all functional BARS accounts in fiduciary funds 389/589, 386/586 and 361 are the ONLY codes allowed in fiduciary funds. All other codes will be red flagged.
BARS Account Export 316.40 (Business & Occupation Tax – Utility) 316.40 (Business & Occupation Tax – Utility) –
Not allowed in proprietary funds.
BARS Account Export 341/51P (General Government)

341 and 51P (General Government) BARS Codes →
Allowed only in governmental funds and internal service funds.

Exception - 341.70 Sale of Merchandise - allowed in governmental and proprietary funds.

See additional 518 information below.

BARS Account Export 343.60 (Cemetery Sales & Services) 343.60 (Cemetery Sales & Services) –
Not allowed in permanent funds.
BARS Account Export 343.80/538.00 (Combined Utilities) 343.80/538.00 (Combined Utilities) –
Allowed only for Public Utility Districts.
BARS Account Export 348.00 (Internal Service Funds Sales and Services) 348.00 (Internal Service Funds Sales and Services) –
Allowed only in internal service funds. Read more about the use of 348.00 and internal service funds in the audit connection blog, “BARS Code Spotlight".
BARS Account Export 37P (Other Revenue and Capital Contributions) 37P (Other Revenue and Capital Contributions) –
Only allowed in proprietary funds.
BARS Account Export 398.50 (Insurance Recoveries) 398.50 (Insurance Recoveries) –
Only allowed in governmental funds.
BARS Account Export 518 (Centralized/General Services) Codes

All 518 (Centralized/General Services) –
For general purpose governments only.

518.65 Impact Fee Distributions to Local Governments - General Fund and Special Revenue Fund use only.

518.70 Printing Services - General Fund and Internal Service Fund use only.

518.80 Information Technology Services - General Fund and Internal Service Fund use only.

All other 518 codes not listed above - Allowed in all governmental funds or internal service funds.

BARS Account Export 519 (Risk Management Services) For general purpose governments only.
Allowed only in general fund and internal service fund.   
*Exception: Risk Pools may use 519 in enterprise funds.
BARS Account Export 541 (Roads/Streets Construction – Preservation Projects) 541 (Roads/Streets Construction – Preservation Projects) –
This code is for modified approach to infrastructure.
Allowed in all fund types except fiduciary and permanent.
BARS Account Export 548 (Public Works – Centralized Services) 548 (Public Works – Centralized Services) –
Allowed only in general fund and internal service fund.
BARS Account Export GAAP beginning/ending balance codes GAAP Fund Balance and Net Position Codes –
308.20/508.20, 308.30/508.30, 308.40/508.40, 308.50/508.50, 308.90/508.90 – allowed only in governmental funds.
308.60/508.60, 308.19/508.19, 308.89/508.89 – allowed only in proprietary funds.   Exception: 308.19/508.19 allowed in GAAP fiduciary funds.
Revenue/Expenditure Accounts Overview 1.3.10 Other Increases and Other Decreases in Fund Resources
Removed BARS Codes 3821000, Refundable Deposits, 3822000, Retainage Deposits, and 5821000, Refund of Deposits, 5822000, Refund of Retainage Deposits. These should be reported as liability accounts for GAAP basis.
Determining Operating/Nonoperating Revenues/Expenses in Proprietary Funds 1.5.10 Updated the matrix for guidance on determining operating/nonoperating revenues/expenses
     
    Budgeting
Budget Adoption and Amendments 2.4.3 Updated the referenced RCWs and updated for any changes to RCWs
     
   

Accounting

Fund Types & Accounting Principles 3.1.1 Fiduciary funds – Added a reference to the new Determining Fiduciary Activities to be Reported in Custodial Funds
Fiduciary funds – Added a GASB 34, Paragraph 106 reference for capital assets reported in fiduciary funds
Capital Asset Management System Requirements 3.3.9 3.3.9.30 Clarified requirements for capitalization thresholds
Capital Asset Accounting 3.3.10 3.3.10.90 Clarified "placed in service" for definition
Pensions 3.4.2 Annual update for the DRS PEFI changes
OPEB 3.4.17 3.4.17.80 Updated the years in the Measurement date table
Asset Retirement Obligations 3.4.19 Created a new section for the accounting guidance for asset retirement obligations
Pollution Remediation 3.4.20 Created a new section for the accounting guidance for pollution remediation
Liquor Tax and Profits – Two Percent Substance Abuse Treatment Programs 3.6.8 3.6.8.10 Changed "Programs must be approved by the behavioral health organization and the secretary of the Department of Social and Health Services" to "…secretary of the Department of Health" to match RCW 71.24.555
Grants – Accounting 3.7.1 3.7.1 Updated references to Office of Management and Budget (OMB) Circulars
3.7.1.20 Included other federal financial assistance guidance
3.7.1.30 Removed reference to the American Recovery and Reinvestment Act (ARRA)
3.7.1.30 Added Identification of COVID-19 related awards requirements
3.7.1.41 Removed the Common Rule Administrative Requirements section
3.7.1.51 Removed the OMB Circular A-87 Cost Principals section
Unemployment and Deferred Compensation 3.8.1 3.8.1.100 Added requirements for reporting defined compensation plans.
Paths and Trails 3.8.10 Updated references to RCW
3.8.10.70 Updated references to reserved versus restricted
Overhead Cost Allocation 3.9.5 Updated references to RCW
3.9.5.80 Removed references to OMB Circular A-87
3.9.5.100 Removed references to OMB Circular A-87
Added an "Additional resources" section
Limitation of Indebtedness 3.10.5 Updated references to RCW
Created a Footnotes section
Transportation Benefit Districts 3.11.1 3.11.1.120 Changed a reference from a negative 3850000 code to a 5850000 code.
Added an Additional Resources section
     
   

Reporting

GAAP Reporting Requirements 4.1.1 4.1.1.210 Clarified the definition of "financially accountable"
4.1.1.220 Clarified the reporting of component units
Financial Reporting Entity Flowchart updated for determining fiduciary trust funds and defined compensation plans
Net Position 4.2.8 Clarified requirements for reporting and calculations of the components of net position
4.2.8.10 Created a downloadable worksheet for converting governmental fund balances to net position
Risk Pools – Statement of Net Position – Additional Reporting Instructions 4.3.4 Removed this section from proprietary fund financial statement section and created a new section for the additional reporting requirements for risk pools.
Determining Fiduciary Activities Reported in Custodial Funds 4.3.7 New section for determining fiduciary custodial funds
Schedule 09 4.8.3 Section number updated to 4.14.3 (from 4.8.3).
4.83.100 Updated information on reporting pension (264.30) and OPEB liabilities (264.40)
4.8.3.110 Updated the due date instructions to list I.D. Numbers that do not require a due date to be reported.
Schedule 16 4.14.5 Section number updated to 4.14.5 (from 4.8.5).
Annual update for SEFA requirements including updated notes and COVID-19/CARES Act reporting requirements.
Schedule 17 4.8.6 4.8.6.20 Updated reporting requirements for counties due to changes in RCW.
Schedule 21 4.8.9 4.8.9.20 Added information for the Washington Paid Family & Medical Leave self-insurance.
Note X – AROs Note X – Asset Retirement Obligations (ARO) Removed the accounting portion from the note. The accounting portion is now located in Accounting, Liabilities, Asset Retirement Obligations (AROs).
Note X – COVID-19 Note X – COVID-19 Pandemic Created a separate note for COVID-19 reporting requirements.
Note X – Deposits and Investments Note X – Deposits and Investments Reorganized and clarified reporting requirements.
Note X – Derivatives Note X – Derivatives Removed references to LIBOR.
Note X – Going Concern Note X – Going Concern Clarified reporting requirements and included reporting requirements for bankruptcy.
Note X – Pensions Note X – Pensions Annual update for the PEFI changes.
Note X – PFML Note X – PFML Required disclosure if a government is self-insuring the Washington Paid Family & Medial Leave.
Note X – Pollution Remediation Note X – Pollution Remediation Removed the accounting portion from the note. The accounting portion is now located in Accounting, Liabilities, Pollution Remediation.
Note X – OPEB No Qualifying Trust Note X – OPEB No Qualifying Trust Annual update to OPEB note disclosure requirements.
Note X – OPEB Qualifying Trust Note X – OPEB Qualifying Trust Annual update to OPEB note disclosure requirements.

Note X – Subsequent Events

Note X – Subsequent Events Removed reference to COVID-19 required note. There is now a separate note for the COVID-19 Pandemic.
     
    Online Filing
Online Filing Schedules Online Filing Schedules The templates for the online filing schedules have been updated for Fiscal Year 2020 reporting. Schedule templates updated are: Schedule 01, Schedule 16, Schedule 16 Notes, Schedule 21
Pension and OPEB Templates Pension/OPEB Templates Fiscal Year 2020 Pension and OPEB templates are being refreshed and will be available for download.
Online Filing Flag Descriptions Online Filing Flag Descriptions  Guide to Online Filing Flag Descriptions has been added to the Forms and Other Resources section of the BARS Reporting Templates page. 

BARS Alerts

01/13/2020Annual update, see changes below
04/21/2020Note X - Subsequent Events (COVID-19)
04/24/2020COVID-19 BARS Coding
10/01/2020CARES Act Grant Monies Expenditure Codes

Overview of Significant Changes – Applicable to the Reporting Year 2019

 Topic

 

Reference

 

Description of Changes

 

  

CHART OF ACCOUNTS

BARS Account Export 3952000, Compensation for Loss/Impairment of Capital Assets3952000, 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.
BARS Account Export3132700, 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 Account ExportDepartment of Health supplementFor BARS codes 5620000
Added the link to the new Department of Health supplement for BARS codes 5620000 which provides the detailed codes.
BARS Account Export5100000 GuidanceBARS codes 5100000, General government function, these codes should only be used by cities, towns, and counties.
BARS Account Export5990000 GuidanceBARS 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.
Revenue/Expenditure Accounts Overview 1.3.10 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.
Object CodesRemoved the reminder that 2018 was the final year for use of object code 50.
General Ledger Accounts 1.2.30Updated the General Ledger Chart to match the Schedule 09 coding requirement and simplified other sections.
   
  

ACCOUNTING

Internal Control3.1.33.1.3.10 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.
Original Supporting Documentation3.1.43.1.4.10 Updated the link to the Local Government Records Retention Schedule.
Fund Types and Accounting Principles3.1.73.1.7.50 Added clarifying information about Debt service funds, Capital project funds, and Fiduciary funds.
Bank Reconciliations3.1.9New section on bank reconciliations.
Transportation Benefit Districts (TBD)3.11.13.11.1.70 Removed reference to object code 50 in reference to contract expenditure and updated to object code 40.
County's External Investment Pool3.2.2Counties - Rewrote the entire section for counties to report external investments in accordance with GASB 84.
Capital Assets Management System Requirements

3.3.9

3.3.9.40 Added information that is required to be recorded for each capital asset, and clarified some of the tracking system requirements.
County Auditor’s Operation and Maintenance Fund (Recording Fees)3.6.2Counties - 3.6.2.75 Added reference to RCW 36.22.240 and requirements.
Electronic Funds Transfer - Receipts3.6.6Removed "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."
Electronic Funds Transfer - Disbursement3.8.11Removed "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."
Electronic Funds Transfer - Disbursement3.8.11Added 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."
   
  

REPORTING

GAAP Reporting Requirements4.1.14.1.1.210 Updated the guidelines for financial accountability.
Governmental Funds Financial Statements4.3.34.3.3.31 Added information about the category Classification of Fund Balances.
Fiduciary Funds Financial Statements4.3.5Counties - 4.5.5.53 Provided the guidance for counties reporting external investment pools.
Statement of Cash Flows4.5.130Updated the illustration - added a line for "other (payments)."
Required Supplementary Information4.7.10Clarified the RSI requirements.
Required Supplementary Information4.7.20Removed references to GASB 43 and 45 and replaced with GASB 74 and 75.
Required Supplementary Information4.7.340Other 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.
Expenditures of Federal Awards (Schedule 16)4.8.54.8.5.40 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.
Note X - Deposits and InvestmentsInstructions to preparers, footnote 3 -
Included instructions for participants in investment pools.
Note X - External Investment PoolNew Note
Counties - Provided guidance for disclosing external investment pools.
Note X - Pension and /or OPEB Plans - Defined ContributionsAdded information that the requirement to report defined contribution plans is only when the government contributes.
Note X - Pension and /or OPEB Plans - Nongovernmental PlansAdded clarification on when to use the Nongovernmental Plans note.
Note X - Pension PlansAdded guidance for defined contribution pension plans when a government contributes.
Note X - SolvencyRisk Pools - Updated part B. of the note template regarding the requirements for health and welfare pools (joint pools).
   
  

ONLINE FILING

Schedule 01Red FlagsGovernments will receive a red flag if they report functional codes in custodial funds. Note only applicable 36X and 389/589 codes may be used.
Schedule 09263.93, Environmental liabilities Added 263.93 to the Schedule 09 codes for reporting Environmental liabilities (e.g. pollution remediation, certain asset retirement, etc.).
   

BARS Alerts

8/19/2019New BARS Code (This alert applies only to counties and cities)
3/5/2019Reporting of the USDA Federal Loans
8/1/2018BARS Manual Update - New Accounts and Changes to Object Code 50
3/21/2018Capital Assets Inventory in Counties
3/7/2018Tax Abatement information available on the DOR website (GAAP governments only)

Overview of Significant Changes – Applicable to the Reporting Year 2018

 

Topic

 

Reference

 

Description of Changes

 

  

CHART OF ACCOUNTS

BARS Account Export

3132500, Housing and Related Services Sale and Use Tax

New account for governments collecting sales and use tax as authorized in RCW 82.14.530.

BARS Account Export

3329330, Medical Transformation Demonstration

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

BARS Account Export

3329340, Ground Emergency Medical Transportation (GEMT) Payment Program

New account for revenues from Medicaid related to the GEMT program. The addition was communicated on August 1, 2018 in BARS Alert

BARS Account Export

3360211, County Fair Fund

Expanded definition to clarify use of this code.

BARS Account Export

3360700, PFD Lodging Tax Distribution

Code applicable only to Seattle and King County.

BARS Account Export

3432000, Television/Cable/Internet Sales and Services

Expanded the title and the definition to include internet services as authorized by Chapter 186, Laws of 2018.

BARS Account Export

3697000, Pension/OPEB Contributions

Revised title and definition to clarify use of this account for pension and OPEB related revenues only.

BARS Account Export

38110/38120, Interfund Loan Receipts

Removed these accounts since the loans are balance sheet transactions and their reporting on Schedule 01 was always optional.

BARS Account Export

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 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.

BARS Account Export

58110/58120, Interfund Loan Repayments

Removed these accounts since the loans are balance sheet transactions and their reporting on Schedule 01 was always optional.

Object Codes

 

 

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.

   
  

ACCOUNTING

Fund Types and Accounting Principles

 

3.1.1

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.

Capital Assets Management

 

3.3.9

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.

Capital Assets Accounting

 

3.3.10

Based on additional research we made the following changes to clarify different areas related to capital assets:

  • Added guidance for options for accounting for replacements;
  • Moved all the guidance for componentization primarily to this section
  • Added GASBS 69 guidance;
  • Added GASBS 89 guidance;
  • Aligned useful life section with current GASB standards and terminology;
  • Clarified and expanded fully depreciated asset section;
  • Clarified and expanded group/composite depreciation section based on research and GASB codification guidance.

Capital Assets Accounting

 

3.3.10.50

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.

Refunding Debt

 

3.4.4.91

Added GASBS 86, Certain Debt Extinguishment Issues update regarding accounting and reporting when the debt is refunded with the government’s own resources.

Arbitrage Rebate

 

3.4.6.90

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.

Contingencies and Litigations

 

3.4.15

A new section was added to discuss and clarify concepts related to accounting and reporting of contingencies and litigations.

Other Postemployment Benefits (OPEB)

 

3.4.17

The entire section was updated to implement GASBS 74 and 75. [The update contains also notes and RSI requirements.]

County Auditor’s Operation and Maintenance Fund (Recording Fees)

 

3.6.2

The section was updated to reflect the 2018 legislative changes in the amounts of collected surcharges.

ER&R

 

3.9.7

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.

Interfund Activities

 

3.9.8

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.

Statement of Cash Flows

 

4.5.100

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.

Note 1 – Summary of Significant Accounting Policies

Section 7

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.

Note X – Capital Assets

Subsection F, Interest Capitalization + Instructions [7]

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.

Note X – Long-Term Debt

 

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.

Note X – Tax Abatement

 

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.

Schedule 09

 

 

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.

Schedule 16

 

4.8.5.60

4.8.5.120

4.8.5.130

4.8.5180

Note 4, Federal Loans

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.

Added sentence regarding interim financing.

Schedule 21

 

 

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.

   

BARS Alerts

7/20/2017 BARS Manual Update - Coding Marijuana Excise Tax Distribution (Cities/Counties Only)
3/14/2017 BARS Update - Reporting Court Related Agency Deposits and Remittances (Cities/Counties Only)
1/4/2017 BARS Manuals Update - 2017 Filing System Update
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.
Revenue/Expenditure/Expense Accounts 50138, Depreciation Depletion, Amortization – Combined Water/Sewer/Solid Waste Utilities Changed title to Depreciation, Depletion, Amortization – Combined Utilities to correctly reflect the RCW.
Revenue/Expenditure/Expense Accounts 50195, Depreciation Depletion, Amortization – Infrastructure 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).
Revenue/Expenditure/Expense Accounts 51830, Maintenance/Security/Insurance/Janitorial Services 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 Deferred Compensation 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 Issues applicable 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.

BARS Alerts

4/21/2016 BARS Manual Update - Revisions to the Schedule of Expenditures of Federal Awards (SEFA/Schedule 16)
4/5/2016 BARS Codes for a New Distribution
2/10/2016 BARS Manual Update - Cash BARS only - Pension Accounting and Reporting
2/10/2016 BARS Manual Update - GAAP BARS only - Pension Liabilities
2/8/2016 BARS Manuals Update - BARS Coding of Miscellaneous Revenue
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.