BARS Account Exports
In this section, governments can access a report providing information on the allowability of BARS codes in fund types as well as export a chart of accounts specific to a government type.

BARS Codes to Fund Type
BARS codes may be restricted for use in the annual report filing system. The following matrix “Codes to Funds” identifies which fund group(s) that each active BARS code may be reported in.

Download FY2025 Codes to Funds here. Codes are as of December 1, 2025

Note: It is recommended to use this matrix in conjunction with the government specific BARS Account Export provided below.

BARS Account Export
Download a government specific BARS Chart of Accounts in the export box at the bottom of this page.

Your annual report requires seven digits for all account codes however, their display in the chart of accounts export varies. The expenditure or expense accounts are presented in the export without object codes. Object codes will need to be added to the BARS Code to complete the required seven digits for the annual report. Additional details about object codes are available in the BARS Manual 1.4, Object Codes. Reporting at the sub object level is not required.

How to use the BARS Account Export

Select a government type
The government type selection will limit the BARS accounts that are applicable to the selected government type. If all is selected, the export will include BARS accounts for all government types.

Select basis of accounting
The basis of accounting selection will limit the BARS accounts that are applicable to the basis of accounting selected (GAAP or Cash). If all is selected, the export will include all the BARS codes regardless of their applicability to a specific basis.

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 and for printing. 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 all the accounts, including the accounts in which other codes are rolled up into for category presentation. These above prescribed codes are not valid for reporting; however they provide detailed information on the category of the codes. This listing also provides the Prescribed accounts, which are the required accounts for annual report filing.
The Prescribed option includes only the accounts which are the valid BARS account codes for annual report filing.

1 Charts of Accounts

1.1.2 Account Structure

1.1.2.10 All BARS codes are required to be seven-digits for reporting purposes on the Schedule 01. Local governments may include additional digits within their internal account structure, such as fund numbers and added digits for tracking details. If a different system of numbers is used for internal accounting, it must contain equivalent detail throughout the budget, accounting, and reporting process.

See BARS 3.1.1, Fund Accounting and Fund Types for the structure of fund numbers, which are separate from the required structure of BARS codes.

1.1.2.20 The seven-digit BARS code structure has the following components:

First digit

3 (three) represents beginning fund balances/net position, revenues, and other financing sources.

5 (five) represents ending fund balances/net position, expenditures/expenses, and other financing uses.

Second and third digits

Revenue – represents the source (origin or originating category) of revenues. These digits are always prescribed and required for reporting on the Schedule 01.

Expenditures/Expenses – represents the different functions and activities for which the expenditures/expenses are supporting.

Fourth and fifth digits

Revenue – represents further details for specific types of revenues within a particular source.

Expenditure/Expense – represents further details for specific elements and sub-elements of activities related to the particular function and activity.

Sixth and seventh digits

Revenue – these digits are generally not defined and are represented as zeros.  When these digits are represented as zeros, they are available for customization by the local government. However, there are exceptions to this rule. The BARS codes within the 330 series prescribe all seven digits and cannot be customized. Local governments should be aware that as the BARS manual is updated, these digits may be assigned for specific purposes.

Expenditure/Expense – represents the object code, which identifies the specific type of items that support the activity or function. For additional information on object codes, please see BARS 1.4, Object Codes.

1.1.2.30 The tables below provide an overview of the major categories of BARS codes. For the complete listing of all BARS codes with their full definitions, go to BARS Account Export.

Beginning and Ending Fund Balance/Net Position

300		Beginning Fund Balance/Net Position
	308	Beginning Fund Balance/Net Position
500		Ending Fund Balance/Net Position
	508	Ending Fund Balance/Net Position

Major categories of revenues by source 

310		Taxes
	311	Property Tax
	313	Retail Sales and Use Taxes
	316	Business and Occupation Taxes
	317	Excise Taxes in Lieu of Property Tax
	318	Other Taxes
320		Licenses and Permits
	321	Business Licenses and Permits
	322	Non-Business Licenses and Permits
330		Intergovernmental Revenues
	331	Federal Direct Awards
	332	Federal Other Award Revenues
	333	Federal Indirect Awards
	334	State Grants, Awards, and Other Contributions
	335-336	State Shared Revenues, Entitlements and Impact Payments
	337	Local Awards, Entitlements, Tribal Government Distributions, and Other Payments
340		Charges for Goods and Services
	341	General Government
	342	Public Safety
	343	Utilities
	344	Transportation
	345	Natural and Economic Environment
	346	Social Services
	347	Culture and Recreation Fees
	348	Internal Service Funds Sales and Services
350		Fines and Penalties
	351	Superior Court - Felony/Misdemeanor Penalties
	352	Civil Penalties
	353	Civil Infraction Penalties
	354	Civil Parking Infraction Penalties
	355	Criminal Traffic Misdemeanor Fines
	356	Criminal Non-Traffic Fines
	357	Criminal Costs
	359	Non-Court Fines and Penalties
360		Miscellaneous Revenues
	361	Interest and Other Earnings
	362	Rents and Leases
	367	Contributions and Donations from Nongovernmental Sources
	368	Special Assessments
	369	Other Miscellaneous Revenues
370		Proprietary Funds - Other Revenue (Expense) and Capital Contributions
	371	Share in the Joint Venture Income (Increase/Decrease)
	372	Insurance Recoveries
	373	Gains (Losses) on Capital Assets
	374	Capital Contributions-State/Local/Direct Federal
	375	Capital Contributions-State/Local/Indirect Federal
	379	Capital Contributions

Other Increases and Financing Sources

380		Other Increases in Fund Resources
	385	Special or Extraordinary Items
	386	Court Remittances
	388	Other Increases in Fund Balance
	389	Custodial Activities
390		Other Financing Sources
	391	Debt Issued
	392	Premiums on Bonds Issued
	393	Refunding Long-Term Debt Issued
	395	Disposition of Capital Assets
	397	Transfers-In
	398	Insurance Recoveries

Major functions of expenditures

501		Proprietary Funds - Depreciation, Depletion, Amortization
510		General Government
	511	Legislative Activities
	512	Judicial Activities
	513	Executive Activities
	514	Financial, Recording and Election Activities
	515	Legal Services
	517	Employee Benefit Programs
	518	Centralized/General Services
	519	Risk Management Services
520		Public Safety
	521	Law Enforcement Activities
	522	Fire and Emergency Medical Activities
	523	Detention/Correction Activities
	524	Protective Inspection Services
	525	Disaster Services
	527	Juvenile Services
	528	Dispatch Services
530		Utilities
	531	Storm Drainage Utilities
	532	Television/Cable/Internet Utilities
	533	Electric/Gas Utilities
	534	Water Utilities
	535	Sewer/Reclaimed Water Utilities
	536	Cemetery
	537	Solid Waste Utilities
	538	Combined Utilities
	539	Irrigation/Reclamation Utilities
540		Transportation
	541	Roads/Streets modified approach only - condition rating preservation
	542	Roads/Streets Ordinary Maintenance
	543	Roads/Streets General Administration and Overhead
	544	Roads/Streets Operations
	545	Roads/Streets Extraordinary Operations
	546	Airports and Ports
	547	Transit, Railroads and Other Transportation Systems
	548	Public Works – Centralized Services
550		Natural and Economic Environment
	551	Public Housing Services
	552	Employment Opportunity
	553	Conservation
	554	Environmental Services
	557	Community Services
	558	Community Planning and Economic Development
	559	Property Development
560		Social Services
	561	Hospitals, Assisted Living and Convalescent Facilities
	562	Public Health Services
	563	Coroner/Medical Examiner
	564	Mental Health Services
	565	Welfare/Veterans Services/Services for Disabled/Homeless Services/Domestic Violence
	566	Chemical Dependency Services
	567	Children Services
	568	Developmental Disabilities Services
	569	Aging and Disability Services
570		Culture and Recreation
	571	Educational and Recreational Activities
	572	Libraries
	573	Cultural and Community Events
	575	Cultural and Recreational Facilities
	576	Park Facilities
598		Proprietary Funds - Miscellaneous Expenses

Other Decreases and Financing Uses

580		Other Decreases in Fund Resources
	585	Special or Extraordinary Items
	588	Other Decreases in Fund Balance
	589	Custodial Activities
590		Debt Expenditures, Capital Outlays, and Other Financing Uses
	591	Debt Repayment
	592	Interest and Other Debt Service Costs
	593	Advance Refunding Escrow
	594	Capital Expenditures
	595	Roads/Streets and Related Infrastructure: Improvements and New Construction Projects
	596	Issuance Discount on Long-Term Debt
	597	Transfers-Out
	599	Payments for Refunded Debt

Balance sheet codes for Schedule 01 reporting

800		Balance Sheet Accounts
	810	Cash, Cash Equivalents and Investments
	820	Other Current Assets
	830	Noncurrent Assets
	840	Deferred Outflows
	850	Current Liabilities
	860	Noncurrent Liabilities
	870	Deferred Inflows

1 Charts of Accounts

1.5 Determining Operating/Nonoperating Revenues/Expenses in Proprietary Funds

1.5.10 The Proprietary Fund Statement of Revenues, Expenses, and Changes in Net Position requires governments to distinguish operating revenues and expenses from non-operating revenues and expenses. Several BARS codes have been defined as operating or non-operating, however some BARS codes can be either operating or nonoperating. The following matrix “Operating vs. Non-operating” identifies the classifications as they are reflected in the annual filing system. BARS codes that can be either operating or non-operating will need to be allocated in the annual filing system. The governments may use the matrix as a guide for the preparation of their statement of revenues, expenses and changes in net position (operating statements).

Download the Operating vs. Non-Operating matrix here.

1.5.20 Because operating revenues/expenses are not authoritatively defined in the accounting literature, there is no assurance that the usage of these term is standardized. Since the State Auditor’s Office is required to provide comparative statistics for all local governments, the Office made some decisions which are based on a reasonable extension of existing standards that do not have direct citations in GAAP literature.

1.5.30 GASB Statement 34, Basic Financial Statements - Management Discussion and Analysis - for State and Local Governments, paragraph 436, states that there are two criteria to consider when defining revenues and expenses as operating: (1) does the revenue/expense result from the fund’s principal purpose, and (2) is the revenue/expense allowed to be considered operating on the statement of cash flows [again, this is a guideline, not a requirement].

1.5.40 The operating nature of revenue is derived from the source of the revenue NOT its purpose. The fact that the revenue supports the operations does not impact its classification which again refers to the revenue origin.

1.5.50 GASB Cod. Sec. 2200 "Annual Comprehensive Financial Reporting" requires proprietary fund revenues to be reported by major source (net of discounts and allowances). Codification further requires proprietary to distinguish between operating and nonoperating revenues and expenses.

1.5.60 The objective of the distinction of nonoperating and operating is to display the extent to which operating expenses are covered by revenues generated by principal ongoing operations (2015-1 Comprehensive Implementation Guide, Question 7.73.4). For example, interest is operating revenue if the principal activity of the fund is to provide loans to generate income. The ongoing principal operation is determined by the purpose of the individual enterprise fund.

1.5.70 GASB Statement 34, paragraph 102, indicates that one consideration for defining operating revenues and expenses is how individual transactions would be categorized for cash flows from operating activities in the cash flows statement. Operating revenues are generally those that enter into the determination of the operating income. This is a guideline, not a requirement. [See reference to footnote 42 on page 36, after paragraph 104 of GASB Statement 34.]

1.5.80 According to the GASB Cod. Sec. 2450 "Cash Flows Statements" operating cash flows category would exclude most revenues that considered to be non-exchange and exchange-like transactions and financing and investment-related revenues/expenses, including:

• Operating grants and contributions (both received and made) and grants and contributions that are not restricted to either operating or capital. Capital grants are always excluded. [Grants that are essentially the same as a contract for services, however, may be reported as an operating activity.]
• Exchange-like transaction revenues, such as passenger facility charges, certain tap fees, certain developer contributions and certain grants when restricted for capital or non-capital financing purposes.
• Property or other tax revenues.
• Gains or losses on sales of capital assets.
• Interest and dividends and realized and unrealized gains and losses on investments.
• Interest expense, including premium or discount amortization on debt and debt issue expense.

1.5.90 Generally governments should record the following proprietary fund operating revenues:

• Charges for services/goods (340);
• Fees related directly to their principal operations (e.g., connection fees if offset by current period expenses, i.e., not capitalized, etc.);
• Miscellaneous revenues provided they are operating revenues (i.e., directly related to principal operations).

1.5.100 Taxes (310)

GAAP governments are not created to generate tax revenue. Taxes are not comparable to charges for services, as they are result of statutory authority only. It does not matter how specific the tax is regarding its use or purpose. Property and other taxes should be always reported as nonoperating revenue in proprietary fund statements.

Licenses and Permits (320)

Licenses and permits are generally exchange or exchange-like transactions. Usually the price of paying the cost of issuing a license or permit amounts to the cost necessary to process that permit. Permit may be considered operating if it is an integral component of the enterprise funds’ primary operations, and if it is considered operating from the perspective of the cash flows statement. Another example of permits and licenses being an operating revenue would include a permit fee collected by an enterprise fund whose purpose is to issue permits.

Grants/Intergovernmental Revenues (330)

Operating grants and contributions (both received and made) that are not restricted for capital purposes [these are reported as capital contributions] are excluded from an operating category since these are result of non-exchange transactions. Capital grants are always excluded. GASB Cod. Sec. 2450 specifically includes grants or subsidies provided to finance operating deficits in the noncapital financing category, rather than the operating activities category. Based on that guidance, annual operating grants and subsidies should be reported as nonoperating revenues.

For example grants reported in a transit enterprise funds should not be reported as operating revenue but, rather, as non-operating revenue or as capital contributions [reported separately after non-operating revenues and expenses]. This is because the grants are funding the deficit and are not received because the state/feds are paying on-behalf of riders or passengers.

However, grants that are essentially the same as a contract for services, should be reported as operating revenues. Grants primarily benefit particular grantee furthering grantees own purpose or program. Grantor involvement is limited to administration and monitoring. It also benefits the grantor own program directly (e.g., federal government providing Medicare by law). This is in substance an exchange transaction.

Operating grants (vs. capital) are intended to finance operations, but they are not a result of operations.

Charges for Goods and Services (340)

If these revenues are result of the governments’ principal operations, they should be coded as operating.

Fines and Penalties (350)

GASB Cod. Sec. N50 "Nonexchange Transaction" classifies fines as imposed non-exchange transactions, which excludes them from the operating revenue category. They should be reported as nonoperating revenues.

Miscellaneous Revenues (360)

Majority of the miscellaneous revenues are considered nonoperating unless they are directly related to the government principal operation; if so, then they should be coded in the functional area. For example, interest revenue should be reported as nonoperating. They can be operating only if proprietary fund’s principal operation is to provide loans. We believe there are no governments in the Washington State established only for this purpose.

Also, rentals and leases are all nonoperating unless the rental is directly related to the principal operation, (a port district that primarily functions as marina, should code all non-marina rentals as nonoperating, etc.).

Service-type special assessments are exchange or exchange-like transactions which affect only those who directly benefit from a given service. Unlike the capital-type special assessments which should be reported as capital contributions, the service-type assessments can be reported as operating revenues if they are directly related to the principal operations of the government.

The immaterial amounts of all other revenues, not specifically listed in the BARS manual, should be coded either to 36991, Miscellaneous Other or 36992, Miscellaneous Other Nonoperating depending on their relationship to the governments’ primary operations.

1.5.110 Expenses

Since there is no authoritative definition what constitutes the operating expenses, each government must disclose the basis on which it separates operating from nonoperating expenses. This distinction should allow to demonstrate the extent to which the government is able to recover from its customers the cost of producing goods and providing services. So, the cost of goods sold and services provided constitute operating expenses.

1 Charts of Accounts

1.6 Memorandum Accounts in Proprietary Funds

1.6.10 Introduction

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

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

1.6.20 Capital Assets

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

594	Capital Expenditures/Expenses
595	Road/Streets and Related Infrastructure: Improvements and New Construction Projects

1.6.30 Debt

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

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

391 (Debt Issued/Bond Proceeds)	591 (Redemption of Debt)
392 (Premiums on Bonds Issued)	593 (Advance Refund Escrow)
393 (Refunding Long-Term Debt Issued)	596 (Issuance Discount on Long-Term Debt)

1.6.40 Annual Filing System

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

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

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

1 Charts of Accounts

1.4 Object Codes

00 Depreciation, Amortization, Other Decreases in Fund Resources and Transfers-Out

Use this category with the accounts 501, 581, 582, 585, 586, 588, 589, and 597.

10 Salaries and Wages

Use this object code for the gross amounts paid for personal services rendered by employees in accordance with the rates, hours, terms and conditions authorized by law or stated in employment contracts. This category also includes overtime, hazardous duty or other compensation construed to be salaries and wages. Governments may subdivide this account as necessary for detailed local purpose reporting (i.e., regular pay, overtime pay, sick pay (employee related), sick pay (non-employee related), vacation pay, shift differential, and other taxable compensation).

Personal services do not include fees and out-of-pocket expenditures for professional or consultant services performed on assignments. Such services are properly classified as object code 40.

20 Personnel Benefits

Use this object code for the employer’s share of benefits provided to employees, in addition to compensation, that are part of the conditions of current or past employment. Governments may subdivide this account as needed for detailed local purpose reporting (i.e., health/vision/dental insurance, unemployment compensation payments and/or premiums, Social Security, Medicare taxes, uniforms, pension, and workers' compensation).

Payments for pay-as-you-go health and welfare plans, or pension/OPEB plans would be coded to personnel benefits. Payments to fund either a self-insurance fund for health and welfare type benefits or a pension/OPEB fund would also be coded to personnel benefits, then subsequent payment from the self-insurance funds and non-fiduciary pension/OPEB funds for all claims would use object code 40 for the payments.

30 Supplies for Consumption and Resale

Use this object code for:

• items purchased for consumption and use by the government:
  • Examples: office supplies, forms, agricultural supplies, chemicals, laboratory supplies, cleaning supplies, clothing, construction materials, drugs, electrical supplies, feed for animals, household supplies, lubricants, medicines, painting and plumbing supplies, books, publications, etc.;
  • fuel used to generate power, heating, and operate engines and vehicles (e.g., coal, diesel fuel, gasoline, oil, propane gas, wood, etc.);
  • small tools and minor equipment
• items purchased for resale – (i.e., inventory):
  • Examples: automotive repair parts, grave markers and liners, central store merchandise, maps, code books, concession supplies, fuel, trees, books and other literary materials, office supplies, forms, agricultural supplies, chemicals, laboratory supplies, cleaning supplies, clothing, construction materials, drugs, electrical supplies, feed for animals, household supplies, lubricants, medicines, painting and plumbing supplies, books, publications, etc.; 
  • Note: power, gas, water and waste disposal services purchased for resale only to the government’s customer – for the government’s own use, use object code 40.

40 Services and Pass-Through Payments

Use this object code for professional and technical services which are provided by other governments (federal, state, local), other funds, or by private entities as well as for pass-through payments as described below.

Services include but aren’t limited to the following examples:

• professional services (e.g., accounting, auditing, advertising, computer services, medical, dental and hospital, management consulting, custodial, messenger, testing, monitoring, cleaning, engineering, architectural, legal, investment services, etc.);
• communication (e.g., postage, internet, telephone, facsimile, shipping, etc.);
• travel (e.g., mileage, lodging, meals, etc.);
• taxes (e.g., sales and use, B&O tax, etc.) and operating assessments (i.e., payments to other governments or funds based on levies against property or income of the government or a fund);
• permits, licenses, accreditation, certification and other fees which are necessary for operations paid to the federal, state or local governments (e.g., survey fees, laboratory accreditation fees, disposal fees, discharge permits, biosolid permits, FERC licenses, etc.);
• short-term lease and subscription payments (GAAP entities should use object 60 for long-term leases and SBITAs; cash basis entities should use object 70 for payments on long-term leases and SBITAs);
• insurance payments: e.g., liability, theft, bonds, casualty, etc.; some payments may use object 20 for insurance applicable to personnel benefits (see object code 20 for more information);
• utility services: e.g., water, sewer, gas, electricity, waste disposal, television, etc. that are used by the government itself. Use object 30 for power, gas or water purchased for resale (see object code 30 for more information);
• contracted repairs and maintenance (use object 60 for capital asset construction contracts);
• other (e.g., court costs, investigation, judgments, damages, dues, subscriptions, memberships, registrations, information and credit services, laundry and sanitation services, filing, recording, witness fees, printing, binding, tuition, etc.).

Pass-through payments include eligible intergovernmental  payments, contributions and grants that the government has received from federal, state, or other local governments and are passed through to other entities.

60 Capital Outlays

Use this object code for expenditures related to the purchase or construction of assets considered capital according to the government’s capitalization threshold policy. This object code should be used only with accounts 594 and 595.

Include expenditures related to acquisition of, rights to, or additions to capital assets, including incidental costs such as legal, appraisal and brokerage fees, land preparation and demolishing buildings, fixtures and delivery costs. This category includes purchases and construction of major capital assets which are purchased or constructed by the external party. Assets constructed or fabricated by the municipality should be classified under other object codes; i.e., wages under object code 10, materials, small tools and minor equipment under object code 30, etc. Include:

• land and related other land improvements (e.g., easements, site improvements such as excavation, fill, grading, utility installation, removal, relocation or reconstruction of property, retaining walls, fencing, landscaping, land acquisition costs and related expenditures, intangible rights to land, etc.);
• acquisition, construction, and improvements of buildings (e.g., administrative and office buildings, garage, shops, firehouses, jails, libraries, zoos, park buildings, coastal and riverine structures);
• infrastructure and other tangible or intangible assets (e.g., alleys, athletic fields, water/sewer systems, fuel depots, dikes, levees, signs and signals, landscape and vegetation, artwork, computer software, etc.);
• machinery and equipment (e.g., vehicles, police dogs and horses, computer hardware, etc.);
• assets acquired under executory conditional sales contracts (RCW 39.30.010).

70 Debt Service – Principal

Use this object code with codes 591, 593, 594 (cash basis only), 596 and 599. Include general obligation, revenue, special assessment bonds, long-term leases/SBITA, installment purchases, anticipation and other notes, anticipation warrants, contracts, intergovernmental loans, other debt, LOCAL program payments, etc.

80 Debt Service – Interest and Issuance Costs

Use this object code with codes 592, 593, 594 (cash basis only) and 599. Include interest on short and long-term external debt, interest on interfund debt, interests on debt to joint ventures and affiliates, LID assessments, interest on intergovernmental debt, leases, interest paid on overdue taxes (RCW 84.69.070), debt issuance and other debt service costs.

1 Charts of Accounts

1.2 Optional - General Ledger Accounts

1.2.10 The specific account numbers contained here are not prescribed, with an exception for selected liabilities accounts which are required to be reported on the Schedule of Liabilities (Schedule 09). This general ledger has been carefully designed to meet several needs. 

1.2.20 First, the accounts provide for identification of assets, deferred outflows, liabilities, deferred inflows and fund balances/net position that any local government fund might acquire. Throughout the general ledger, the fourth or fifth and subsequent digits have been left for local governments to use in establishing more detailed breakdowns where needed.

1.2.30 Second, the general ledger has been designed to permit logical summarization of the detailed accounts at various levels. The table below illustrates in detail the structure of the general ledger.

1.2.40 Third, the comprehensiveness of the general ledger combined with the uniform summarization outlined above is designed to make the preparation balance sheets/statement of net position a simple matter of extracting the balances at the same level for all the funds of a government.  The headings on the attached chart identify which digits to sort or summarize by for reporting purposes. The presentation of a balance sheet/statement of net position is structured in similar manner as the general ledger accounts as shown in the attached chart.

1.2.50 The following excel file provides the list of optional general ledger accounts. The “GL Accounts” tab provides account titles and their corresponding account number. The “GL Accts w Descriptions” tab provides account titles and their corresponding account number along with account descriptions.

Download the excel workbook here: General Ledger Accounts

2 Budgeting

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 – A 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.

 

2 Budgeting

2.4 Budget Compliance

2.4.3 Budget Adoption and Amendments

2.4.3.10 All taxing districts must file certified levies and budgets with the county per RCW 84.52.020. All taxing districts are required to hold a public hearing on the proposed levy and budget (excluding capital, enterprise, and special-assessment funds) and adopt their levy by ordinance or resolution per RCW 84.55.120.

2.4.3.20 Additional specific requirements for local governments that are required to expend within their budget are as follows:

• Air Pollution Control Authorities (RCW 70A.15.1590). The budget year of each activated authority is July 1st to June 30th. On or before the fourth Monday in June of each year, the activated authority must adopt a budget sufficient to carry out the provisions of all applicable ordinances, resolutions, and local regulations related to the reduction, prevention, and control of air pollution.

• Cities over 300,000 in population (Chapter 35.32A RCW). No later than 90 days prior to the beginning fiscal year, the mayor must submit the proposed budget to the city council who may accept or revise the budget. A summary of the proposed budget must be advertised in the official city newspaper at least once. Public hearings must be scheduled on two or more days, and the scheduled hearings must be published in the city official newspaper and provided to general news media. No later than 30 days prior to the beginning of the fiscal year, the city council must adopt an ordinance approving the budget submitted by the mayor. The detail of the budget is specified by the state statute, and in no case can the adopted budget expenditure allowances exceed total estimated revenues unless accompanied by proposed legislation to raise an equivalent amount of additional revenue. The detail of the budget is specified by the state statute.

• Cities under 300,000 in population (Chapter 35.33 RCW). At least 60 days prior to the beginning of the fiscal year (or other time as established by ordinance or charter), the chief administrative officer must submit the preliminary budget to the legislative body. The clerk must publish a notice once a week for two consecutive weeks in the official city newspaper that includes the following information: a copy of the preliminary budget is available to any taxpayer; and the date, time, and place the legislative body will meet to discuss the budget (must be on or before the first Monday of the month preceding the beginning of the fiscal year). Prior to the beginning of the fiscal year, the legislative body must adopt an ordinance approving the budget. A complete copy of the final budget as adopted must be transmitted to the Association of Washington cities. The detail of the budget is specified by the state statute.

• Counties (Chapter 36.40 RCW). On or before the first Tuesday of September each year, the auditor must submit the budget to the board of county commissioners, who may accept or revise the preliminary budget. Immediately following the adoption of the preliminary budget, the county legislative authority must publish a notice once a week for two consecutive weeks in the official county newspaper that includes the following information: a copy of the preliminary budget is available to any taxpayer; and the date, time, and place the legislative body will meet to discuss the budget and making tax levies. Copies of the preliminary budget must be available two weeks prior to the first Monday in October. At the conclusion of the budget hearing the county legislative authority must adopt a resolution approving the budget.

• Diking, Diking Improvement or Consolidated Diking Districts (RCW 85.38.170). On or before December 1st each year, the governing body must adopt a resolution approving the budget and special assessments sufficient to finance the budget. A copy of the resolution must be forwarded immediately to the county commissioners and county treasurer.

• Drainage, Drainage Improvement or Consolidated Drainage Districts (RCW 85.38.170). On or before December 1st each year, the governing body must adopt a resolution approving the budget and special assessments sufficient to finance the budget. A copy of the resolution must be forwarded immediately to the county commissioners and county treasurer.

• Flood Control Districts (RCW 86.09.466). On or before November 1st each year, the board must adopt a budget including the amount of funds necessary for any and all district purposes. The district must submit this budget for approval by the county commissioners, who may accept the budget as submitted or revised. The district’s assessments for the year are limited to the approved budget.

• Flood Control Zones (RCW 86.15.140). Annually, at the same time that county budgets are required to be prepared, the board of supervisors must adopt a budget. The detail of the budget is specified by the state statute. The budget shall only be approved after a public hearing with notice per RCW 36.32.120(7).

• Library Districts (RCW 27.12.210). Annually, prepare and certify a budget to deliver to the county in ample time for the county to levy taxes.

• Sewerage Improvement Districts (RCW 85.38.170). On or before December 1st each year, the governing body must adopt a resolution approving the budget and special assessments sufficient to finance the budget. A copy of the resolution must be forwarded immediately to the county commissioners and county treasurer.

2.4.3.30 Requirements for local governments that are not limited to expenditures within their budget are as follows:

• Fire Districts (RCW 52.16.030). Annually, after the county board has equalized the assessments for general tax purposes, the district secretary must prepare and certify a budget for each fund. The budget must be delivered to the county board in ample time for the tax levies to be made for the district.

• Hospital Districts (RCW 70.44.060(6)). On or before November 1st, the superintendent must prepare and submit a proposed budget to the district commission. The district must publish a notice of a public hearing once a week for two consecutive weeks in a newspaper printed in and of general circulation of the county that states the date, time, and place the commission body will meet to discuss the budget. The hearing must be held on or before November 15th. At the conclusion of the hearing, the commission must adopt a resolution approving the budget. Note: Hospital districts are not required to amend their budgets if actual expenditures exceed those budgeted.

• Housing Authorities. Not required by state law to create or follow a budget. However, authorities are required to create budgets for most of the federal grants they receive. The authority’s responsibilities for these budgets would be a matter of grant compliance.

• Irrigation/Reclamation Districts (RCW 87.80.160). Not required by state law to create or follow a budget. However, Boards of Joint Control established under Chapter 87.80 RCW must prepare annual budgets.

• Port Districts (Chapter 53.35 RCW). On or before the September 15 each year, port commission must prepare a preliminary budget showing estimated revenues and expenses. Between September 15 and the first Tuesday (following the first Monday) in October, the port must advertise, hold a hearing and adopt a final budget by resolution. The port has until the first Wednesday (following the first Monday) in October to submit a certified copy of the budget to the county. However, ports are not required to limit expenses to budgeted amounts.

• Public Development Authorities. Not specifically required by state law to create or follow a budget. However, PDAs operations and funds are subject to the creating government’s limitations and budgeting restrictions.

• Public Facilities Districts. As a proprietary fund, PFDs are not subject to budgeting requirements; they are not required by state law to create or follow a budget.

• Public Utility Districts (RCW 54.16.080). If property taxes are levied, a budget is required, although the PUD is not required to limit expenses to budgeted expenses. On or before the first Monday in September, the district must prepare a preliminary budget. A notice of the budget hearing must be published at least two consecutive weeks in a newspaper of general circulation within the county. The hearing must occur on the first Monday in October, at which the commission must adopt the budget by resolution.

• Water/Sewer Districts. As a proprietary fund, water-sewer districts are not subject to budgeting requirements.

Budget amendments

2.4.3.40 For governmental funds (except those types specifically identified above in 2.4.3.30), budgeted appropriations are legally binding. This means that the government cannot spend more than the amount budgeted. As new information becomes available throughout the year, the government can amend (increase) the budget through formal processes. Budget compliance is determined at the end of the fiscal period. Therefore, amendments may be done at any time during the fiscal period, but cannot be done after the fiscal period. If the entity adopts a biennial budget, amendments may be made at any time during the biennium. Regardless, budgetary authority must be in place before actual expenditures are made.

The following local governments have specific requirements for adoption of supplemental budgets:

• Flood Control Zones (RCW 86.15.140). If additional funds become available, a supplemental budget may be done covering additional authorized improvements. Supplemental budgets shall only be approved after a public hearing with notice per RCW 36.32.120(7).

• Port Districts (RCW 53.35.050). Supplemental budgets may only be adopted by resolution subsequent to a hearing that is advertised between 5 and 15 days in advance of the hearing.

2 Budgeting

2.4 Budget Compliance

2.4.2 Budget Process

2.4.2.10 The budgetary process encompasses a number of different activities and decisions over a period of several months. See the budget calendar below for cities and counties. Similar steps can be used to develop all types of budgets.

BUDGET CALENDAR
Steps in Budget Preparation		Cites	Counties
1	BUDGET ESTIMATES Department heads are requested by clerk to prepare estimates of revenue and expenditures for the next fiscal year.	On or before the second Monday of the fourth month prior to the beginning of the city's/town's next fiscal year (i.e., September).	On or before the second Monday in July.
		RCW 35.33.031 (2nd, 3rd, towns, 1st class	RCW 36.40.010
		RCW 35.34.050 (Biennial Budgets)
		RCW 35A.33.030 (Code Cities)
		RCW 35A.34.050 (Code Cities - Biennial Budgets)
2	BUDGET ESTIMATES Estimates are to be filed with the city clerk/county auditor.	On or before the fourth Monday in September.	On or before the second Monday in August.
		RCW 35.33.031 (2nd, 3rd, towns, 1st class
		RCW 35.34.050 (Biennial Budgets)	RCW 36.40.010
		RCW 35A.33.030 (Code Cities)
		RCW 35A.34.050 (Code Cities - Biennial Budgets)
3	PROPOSED PRELIMINARY BUDGET Estimates are presented to the chief administrative officer for modification, revision, or additions.	On or before the first business day in October.	County auditor or chief financial officer shall prepare the county budget.
		RCW 35.33.051 (2nd, 3rd, towns, 1st class	RCW 36.40.040
		RCW 35.34.070 (Biennial Budgets)
		RCW 35A.33.050 (Code Cities)
		RCW 35A.34.070 (Code Cities - Biennial Budgets)
4	PRELIMINARY BUDGET Chief administrative officer provides the legislative body with:	(a) Revenue estimates (setting of levies) due no later than the first Monday in October.	(a) Revenue estimates are part of the preliminary budget process and due when preliminary budget is due. See next section.
	(a) Estimates of revenues (setting of levies),	RCW 35.33.135 (2nd, 3rd, towns, 1st class	RCW 36.40.040; RCW 36.40.090
		RCW 35.34.230 (Biennial Budgets)
		RCW 35A.33.135 (Code Cities)
		RCW 35A.34.230 (Code Cities - Biennial Budgets)
	(b) Clerk's proposed preliminary budget, and	(b) Preliminary budget at least 60 days before the beginning of the next fiscal year and,	(b) Preliminary budget submitted by the auditor to the Board of County Commissioners on or before the 1st Tuesday in September for adoption of the preliminary budget.
	(c) Copies of the preliminary budget are made available to the public.	(c) Copies are made available to the public not later than six weeks before the beginning of the city's next fiscal period.	(c) Copies of the preliminary budget are available to the public not later than two weeks immediately preceding the first Monday in October.
		RCW 35.33.055 (2nd, 3rd, towns, 1st class	RCW 36.40.050; RCW 36.40.060
		RCW 35.34.080 (Biennial Budgets)
		RCW 35A.33.052 (Code Cities)
		RCW 35A.34.080 (Code Cities - Biennial Budgets)
5	NOTICE OF PUBLIC HEARING Clerk publishes notice of filing of preliminary budget with city clerk and publishes notice of public hearing on final budget once a week for two consecutive weeks.	Published no later than the first two weeks in November.	Notice shall be published once each week for two consecutive weeks immediately following adoption of the preliminary budget.
		RCW 35.33.061 (2nd, 3rd, towns, 1st class	RCW 36.40.060
		RCW 35.34.100 (Biennial Budgets)
		RCW 35A.33.060 (Code Cities)
		RCW 35A.34.100 (Code Cities - Biennial Budgets)
6	PUBLIC HEARING Budget hearing is held.	On or before the first Monday of December, and may be continued from day to day but not later than the 25th day prior to the commencement of the new fiscal year.	On the first Monday in October.
		RCW 35.33.071 (2nd, 3rd, towns, 1st class	RCW 36.40.070
		RCW 35.34.110 (Biennial Budgets)
		RCW 35A.33.070 (Code Cities)
		RCW 35A.34.110 (Code Cities - Biennial Budgets)
7	FINAL BUDGET Adoption of budget for next fiscal year.	Following the conclusion of the hearing and prior to the beginning of the fiscal year, the legislative body shall by ordinance adopt the budget in its final form.	At the conclusion of the budget hearing, the county legislative authority shall by resolution adopt the budget.
		A copy of the finalized budget must be sent to the Association of Washington Cities.	A copy of the finalized budget must be sent to the State Auditor's Office.
		RCW 35.33.075 (2nd, 3rd, towns, 1st class	RCW 36.40.080
		RCW 35.34.120 (Biennial Budgets)
		RCW 35A.33.075 (Code Cities)
		RCW 35A.34.120 (Code Cities - Biennial Budgets)

Which funds need budgets?

2.4.2.20 Generally, all governmental funds including the general fund (also called the current expense fund) and special revenue funds of a local government must have annual/biennial appropriated budgets. Most debt service and capital project fund budget requirements are met by the continuing appropriation contained in the enabling legislation. These funds may not need annual/biennial appropriated budgets.

2.4.2.30 Expenses of proprietary, internal service and fiduciary funds are not considered to be appropriations and therefore are only subject to budgeting requirements as required by the government’s policy.

2.4.2.40 Fiduciary and permanent funds are subject to the trust agreement and their use is restricted by such.

2.4.2.50 Local governments may separately account for different aspects of a legal fund in several “sub-funds” on their general ledger for managerial purposes and roll-up these funds for financial reporting purposes. The minimum level of detail for budget purposes is the legal fund level.

2.4.2.60 Budgeted expenditures (or estimated expenses) should be limited to the amount of budgeted revenues plus the beginning fund balance. Governments are not authorized to appropriate (or estimate) more resources for expenditures than are available. Note that this requirement only applies at the legal fund level. Entities may budget a negative fund balance for departments, programs or sub-funds so long as the combined fund balance for the legal fund is positive.

What constitutes appropriations?

2.4.2.70 All final amounts budgeted as expenses, expenditures, transfers and other financing uses for a fund or department is the appropriation. The government cannot legally exceed this amount. Ending fund balance and nonrevenues (BARS 508 and 58X, if shown on the budget) would not be considered an appropriation. Only line items shown as expenditures (BARS 51X-57X and 59X) would be considered appropriations.

3 Accounting

3.1 Accounting Principles and Internal Control

3.1.10 Accounting Principles

Quick Links

3.1.10.20 Common terminology and classification

3.1.10.30 Measurement focus and basis of accounting in the basic financial statements - Government-wide financial statements

3.1.10.40 Measurement focus and basis of accounting in the basic financial statements - Fund financial statements

3.1.10.50 Reporting capital assets

3.1.10.60 Reporting long-term liabilities

3.1.10.70 Revenue, expenditures, expense and transfer account classifications

3.1.10.75 Reimbursements from external parties

3.1.10.80 Annual financial reports

3.1.10.90 Accounting changes and error corrections - Definitions

3.1.10.100 Accounting changes and error corrections - Accounting and reporting

3.1.10.110 Accounting changes and error corrections - Required Supplementary Information (RSI) and Supplementary Information (SI)

3.1.10.10 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 (Cod.). 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 Annual Comprehensive Financial Report (ACFR).

3.1.10.30 Measurement focus and basis of accounting in the basic financial statements - 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 Cod. Section (Sec.) N50 – “Nonexchange Transactions”.

3.1.10.40 Measurement focus and basis of accounting in the basic financial statements - 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. Additionally, governments should review assets received or disbursements made soon after the end of a fiscal year to evaluate the need for accruals in the fiduciary funds.

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:

000-099: General (Current Expense) Fund
100-199: Special Revenue Funds
200-299: Debt Service Funds
300-399: Capital Projects Funds
700-799: Permanent Funds

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

400-499: Enterprise Funds
500-599: 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

3.1.10.50 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 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.

3.1.10.60 Reporting long-term liabilities

3.1.10.70 Revenue, expenditures, expense and transfer account classifications

a.  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.
(3) Contributions to term and permanent endowments, contributions to permanent fund principal, other capital contributions, special and extraordinary items, and transfers between governmental and business-type activities should each be reported separately from, but in the same manner as, general revenues.

b.  In governmental fund statement of revenues, expenditures, and changes in fund balances:

(1) 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.
(2) Proceeds of general long-term debt issues should be classified separately from revenues and expenditures.
(3) Transfers should be classified separately from revenues and expenditures
(4) Special and extraordinary items should be reported separately after “other financing sources and uses”.

c.  In proprietary fund statement of revenues, expenses, and change in fund net position should present:

(1) 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. Revenues and expenses should be distinguished as operating and nonoperating.
(2) Contributions to term and permanent endowments, other capital contributions, and special and extraordinary items should be reported separately after nonoperating revenues and expenses.
(3) Transfers should be reported after nonoperating revenues and expenses.

3.1.10.75 Reimbursements from external parties

Corrections of an error, receipt of a refund for an expense/expenditure (example: returning a supply or cancelling a training class), or the receipt of a vendor discount/rebate awarded after the transaction is completed would qualify as reimbursement and as such, they should be treated in similar manner like interfund reimbursements, see BARS 3.9.4, Interfund Reimbursements. If a local government has an ongoing relationship with an external entity (e.g., phone company, etc.) the amounts of reimbursements most likely would be included in the upcoming bill, so no adjusting entry is required. If the reimbursement is related to the expense/expenditure from the previous fiscal year and is immaterial, the amount of reimbursement should be recorded as revenue. If it is material, the government should record the reimbursement as an error correction, see BARS 3.1.10.100 below. 

Examples of transactions that should not be accounted for as reimbursements include: state payments for public health services, expert witnesses, police salaries while attending criminal justice training; federal/state/local payments for the care and custody of prisoners and for election costs; local payments for data processing services, police/sheriff services, street maintenance, etc.; private payments for street repairs, culvert installations, weed control, demolition of dangerous property, subleases, etc.

3.1.10.80 Annual financial reports

The items listed below and in BARS 4.1.1, GAAP Reporting Requirements 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 can be found in BARS 4.1.2, BARS Reporting Requirements. 

The financial statements should include the financial reporting entity which 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’s basic financial statements to be misleading or incomplete. For more information see BARS 4.1.1, GAAP Reporting Requirements.

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.

b. 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
(3) Notes to the financial statements
(4) Required supplementary information (RSI) other than MD&A, if applicable.

An Annual Comprehensive Financial Report (ACFR) may be prepared and published covering all activities of the financial reporting entity. The ACFR includes not only the financial reports listed above but also an introductory section, combining and individual fund statements, schedules, narrative explanations, and a statistical section. Preparation of an ACFR is not required.

3.1.10.90 Accounting changes and error corrections - Definitions

The GASB Cod. Sec. 2250 "Additional Financial Reporting Considerations" establishes standards of accounting and reporting regarding accounting changes and error corrections. 

There are four categories of accounting changes and error corrections defined as follows:  

Change in accounting principle:
A change in accounting principle is the application of an accounting principle to transactions, or events, of similar type that is different than the accounting principle previously applied.

A change occurs when:

a. A change in the application of one generally accepted accounting principle to another that is justified on the basis that the new one is preferable  
b. The implementation of new pronouncements 

Change in accounting estimate:
An accounting estimate is an amount subject to measurement uncertainty that is calculated based on inputs and disclosed in the basic financial statements. Inputs can be data, assumptions, or measurement methodologies. 

A change in accounting estimate occurs when the inputs (which could be a change to data, assumptions, or measurement methodologies) used to calculate the accounting estimate have changed. Changes may result from a change in circumstances, new information or more experience.

Change to or within the financial reporting entity: 
A change to or within the financial reporting entity occurs when the any of the following occur: 

a. The addition or removal of a fund that results from the movement of continuing operations within the primary government, including its blended component units 
b. A change in a fund’s presentation from major or nonmajor 
c. The addition/removal of a component unit to the financial reporting entity
d. There is a change in a component unit’s presentation as blended or discretely presented 

Error correction:
An error occurs when any of the following are identified as of the previous financial statement date: 

a. Mathematical mistake 
b. Mistake in the application of accounting principles 
c. Oversight or misuse of facts that existed at the time the financial statements were issued about conditions that existed as of the financial statement date is identified. 

3.1.10.100 Accounting changes and error corrections - Accounting and reporting

Accounting and reporting for each accounting change and error correction category is discussed below. If a government has separately displayed in the financial statements the effects of each accounting change or error correction by reporting unit, those effects need not be repeated in the notes to the financial statements. Additionally, note disclosure requirements for each accounting change and error correction can be found at Note X - Accounting Changes and Error Corrections. 

Change in accounting principle:
In the absence of other specific guidance, governments that experience a change in accounting principle should report the change retroactively by restating the beginning net position, fund balance, or fund net position by the cumulative effect of the change on prior periods.

Change in accounting estimate:
Governments that experience a change to an accounting estimate calculation should recognize the change prospectively in the reporting period that the change occurs, unless other specific requirements address how a change would be reported.

Change to or within the financial reporting entity: 
Governments that experience a change to or within the financial reporting entity should recognize the change by adjusting the current period beginning net position, fund balance or fund net position. The recognition of this will appear as if the change occurred at the beginning of the reporting period.

Error correction:
In the case that a government is required to correct an error, the correction should be reported retroactively by restating the financial statements for all periods presented. The restatement amount should total the cumulative effect of the error on the net position, fund balance or fund net position impacted by the error.

For guidance on how to apply accounting changes and error corrections to comparative financial statements, see GASB Cod. Sec. 2250. 

3.1.10.110 Accounting changes and error corrections - Required Supplementary Information (RSI) and Supplementary Information (SI)

Change in accounting principle and to or within the financial reporting entity 
For reporting periods that are presented in the basic financial statements, the same periods presented in required supplementary information (RSI) (including management’s discussion and analysis [MD&A]) or supplementary information (SI) should be consistent with the manner in which the information for those periods is presented in the basic financial statements. (That is, the reporting periods should be adjusted or restated in the same manner as the basic financial statements.) 

For prior reporting periods that are earlier than those presented in the basic financial statements, information for those prior periods that is presented in RSI (including MD&A) or SI should not be restated for a change in accounting principles or a change to or within the financial reporting entity. 

If prior-period information presented in RSI (including MD&A) or SI is not consistent with current-period information as a result of a change in accounting principle or a change to or within the financial reporting entity, an explanation of why the information is not consistent should be provided in RSI (including MD&A) or SI, as applicable. In MD&A, that explanation should include a reference to the related note disclosure in the basic financial statements. 

Error correction 
For reporting periods that are presented in the basic financial statements, the same periods presented in RSI (including MD&A) or SI should be restated. If the error affects periods earlier than those presented in the basic financial statements, all affected information should be corrected by restating the information for those prior periods in RSI (including MD&A) or SI, if practicable.  

Information presented in RSI (including MD&A) or SI that is affected by an error should be identified as restated or not restated, as appropriate, and an explanation about the nature of the error should be provided in RSI (including MD&A) or SI, as applicable.

In addition, if it is not practicable to restate information in RSI or SI in the reporting year of the error correction, an explanation of why it is not practicable to restate should be provided in RSI (including MD&A) or SI, as applicable. It is expected that the restatement of the RSI and SI will be performed in the next reporting period’s financial statements.

3 Accounting

3.1 Accounting Principles and Internal Controls

3.1.1 Fund Accounting and Fund Types

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

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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 (Cod). 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 Annual Comprehensive Financial Report (ACFR).

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.

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 the primary government, including its blended component units. The focus of governmental and proprietary fund financial statements is on major funds.

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.

Since counties account for special purpose districts in their accounting systems as fiduciary funds, they often provide the districts with reports showing assigned fund codes 630-699. These codes refer to the fund from the county perspective. A district has to “reassign” the county code to the code appropriate to the fund type it is reporting (e.g., if the district’s general fund is coded in the county records as 663, the district in its annual report has to code this fund as 001).

For reporting purposes local governments are required to follow the fund structure described below. However, the local governments may create other funds for accounting or managerial purposes. When preparing external financial reports, those funds should be rolled to appropriate fund types as discussed at BARS 3.1.12, Managerial Funds.

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 funds should follow guidance found at BARS 3.1.12, Managerial Funds.

Code 100 - Special Revenue Funds – are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures 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 the 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 the 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 Cod. Section (Sec.) 1300 "Fund Accounting" 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.

Substantial portion of inflows =	(restricted revenues + committed revenues)
	total resources* reported in the fund

*Total resources would include all revenues and other financing sources. 

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.

Codification 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.

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.

Code 200 - Debt Service Funds – may 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 a custodial fund. Also, if the government is authorized, or required to establish and maintain a special assessment bond reserve, guaranty, or sinking fund, GASB Cod. Sec. S40 "Special Assessments" 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.

Code 300 - Capital Projects Funds – may 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.

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 are required to have a nonspendable fund balance for the principal portion that cannot be spent. Any unspent interest remaining in the fund would be reported under one of the other fund balance classifications, such as restricted. 

Generally, only the principal amounts, interest revenue, and transfers to the appropriate operating fund for interest revenue use should be reported in this fund. Note: if the allowable use of the interest earnings is related to operating expenses that are normally reported in another fund, the permanent fund should transfer the allowable amount to the appropriate operating fund.

Permanent funds do not include private-purpose trust funds which account for resources held in trust for individuals, private organizations, or other governments.

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 mandates 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 or an internal service fund.

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. For more information on accounting for these funds see BARS 3.9.6, Internal Service Funds and for reporting see BARS 4.3.6, Internal Service Funds.

Fiduciary funds

Code 600 - Fiduciary Funds – should be used to account for assets, including capital assets, held by a government in a trustee capacity or as a custodian for individuals, private organizations, other governmental units, and/or other funds (GASB Cod. Sec. 1300 "Fund Accounting"). 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, see BARS 3.1.11, Determining Fiduciary Custodial Activities.  

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.

In addition to the trust criteria requirements above, all individual investment accounts are required to be reported as an Investment Trust Fund.

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 GASB Cod. Sec. Pe5 “Pension Plans Administered through Trusts That Meet Specific Criteria – Defined Benefit" and GASB Cod. Sec. Pe6 “Pension Plans Administered through Trusts That Meet Specific Criteria – Defined Contribution”.
• 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.

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.

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, as stated below.

Note: The custodial funds are required to be used by business-type activities and enterprise funds, except when the resources will normally be held for less than ninety (90) days.

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 considered a custodial fund, it should be reported in a separate external investment pool fund column under the custodial funds classification.

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 fiscal accountability may be achieved effectively and efficiently by use of department, program and other available account coding or the cautious use of managerial (internal) funds. See guidance at BARS 3.1.12, Managerial Funds for additional information regarding managerial funds.

3 Accounting 

3.1 Accounting Principles and Internal Controls 

3.1.11 Determining Fiduciary Activities to be Reported in Custodial Funds

Quick Links

3.1.11.10 Purpose

3.1.11.20 Determination questions

3.1.11.30 Prescribed custodial transactions

Leasehold tax and other state mandated taxes

Department of Licensing accounts (counties only)

Permits and certificates fees (concealed pistol permits, birth certificates, etc.)

Flexible Savings Accounts (FSA) and Health Savings Accounts (HSA)

3.1.11.40 Prescribed non-custodial activities

Impact fees (cities & counties only)

Retainage and refundable deposits

Payroll clearing accounts

Flexible Savings Accounts (FSA) and Health Savings Accounts (HSA)

3.1.11.50 Court accounting

Cities and counties with their own court

1. Administrative Office of the Courts (AOC) mandated fees (BARS Codes 386/586)

2. Local government revenue fines and fees BARS Codes

3. State distributions to local government

Cities and counties that contract for court

1. Administrative Office of the Courts (AOC) mandated fees (BARS Codes 386/586)

2. Local government revenue fines and fees BARS Codes

3. Payment for court services

GAAP – providing court services

1. Administrative Office of the Court (AOC) mandated fees (386/586)

2. Court provider’s collection/remittance of the fines and fees for the city/county receiving the court service

3. Revenue for court services

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3.1.11.10 Purpose

Due to the generally accepted accounting principles established by the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards (Cod.) Section (Sec.) 1300 - "Fund Accounting" and Washington State law that requires the Office of the Washington State Audit to prescribe a uniform system of accounting for local governments, fiduciary activities implementation is required by all local governments. The accounting standards for these activities only provide a framework which could lead to incorrect implementation, therefore the Auditor’s Office has prescribed certain activities as custodial and therefore should be reported in a Fiduciary Custodial Fund. Additionally, the Auditor’s Office has prescribed certain activities that may appear custodial but are ultimately not custodial and therefore would be reported in the appropriate governmental or proprietary fund.

Business Type Activities: If the resources are normally held for less than 90 days, then fiduciary reporting is not required for those resources.

3.1.11.20 Determination questions

1. Are the assets associated with the activity controlled by the government?

A government is considered to be controlling assets if either:

(a) The government holds the assets. An example of holding assets is when a government receipts money or has the money in the government’s bank account.

or

(b) The government has the ability to direct the use, exchange, or employment of the assets in a manner that provides benefits to the specified or intended recipients.

For purposes of this criteria a government uses an asset when it expends or consumes that asset for the benefit of individuals, organization, or other governments, outside of the government’s provision of services to them.

Restrictions from legal or other external restraints that stipulate the assets can be used only for a specific purpose do not negate a government's control of the assets. When a government appoints a designee to act on its behalf, the designee is performing the government's fiduciary duties and not assuming them. Thus, appointing a designee to act on its behalf does not alter the government's ability to direct the use, exchange, or employment of the assets.

Examples include:

The government is the treasurer for another government or acting as their bank.

The government is on the bank account.

Any asset the government is holding for another government and the holding government is not using the asset for their own operations.

If "no", this is not a fiduciary custodial activity; if "yes", proceed.

2(a). Are the assets derived solely from the government's own-source revenues?

Own-source revenues are revenues that are generated by a government itself. They include exchange and exchange-like revenues (for example, water and sewer charges for service) and investment earnings. Derived tax revenues (such as leasehold taxes) and imposed nonexchange revenues (such as property taxes) are also included in own-source revenue. Derived tax revenues (such as leasehold taxes) and imposed nonexchange revenues (such as property taxes) are also included.

Examples include:

When a local government leases office space the lease revenue is own-source revenue while the collected leasehold excise tax is not own-source revenue because that portion is imposed by the state under Chapter 82.29A RCW.

When a county or city imposes an impact fee those revenues are generated by that government and are own-source revenue even when those resources are required to be 100 percent remitted to other governments (such as to a school, fire or park district). The county’s or city’s ability to levy the fee by RCW means this revenue is own-source revenue.

If "yes", this is not a fiduciary custodial activity; if "no", proceed.

2(b). Are the assets associated with the activity from either government-mandated or voluntary nonexchange transactions?

Government-mandated nonexchange transactions, occur when a government provides resources to another government and requires the recipient government to use the resources for a specific purpose (for example, federal programs that state or local governments are mandated to perform or state programs that local governments are mandated to perform).

Example:

Washington State Department of Revenue’s requirement that all sales tax be remitted to the State for allocation and disbursement.

Washington State’s mandate on cities and counties to perform concealed permit processing.

Voluntary nonexchange transactions, result from legislative or contractual agreements, other than exchanges, entered into willingly by the parties to the agreement (for example, certain grants and private donations for government programs).

Example:

Administrative Office of the Courts mandated fees collected by cities and counties.

Washington State Department of Licensing functions that counties are contracted to perform.

Donations to a government for one of its programs would be voluntary nonexchange revenue and the answer would be "yes". However, a donation given to a government for the benefit of a third party would be answered "no" (this revenue classification does not apply because the resources are not governmental revenue).

If "no" (meaning not government-mandated or voluntary exchange transactions), proceed to step (3); if "yes" proceed to 2(c).

GAAP – See BARS 3.6.9, Revenue Accruals in Governmental Funds for definitions.

2(c). Are the assets from pass-through grants for which the government does not have administrative involvement or direct financial involvement?

A government has administrative involvement if it, for example (a) monitors secondary recipients for compliance with program-specific requirement, (b) determines eligible secondary recipients or projects, even if using grantor-established criteria, or (c) has the ability to exercise discretion in how the funds are allocated.

A government has direct financial involvement if it, for example, (a) finances some direct program costs because of grantor-imposed matching requirements, or (b) is liable for disallowed costs.

An example is:

A government does not have administrative involvement when a jail corrections officer approves inmate purchases ordered outside the corrections facility (to help ensure that contraband does not enter the facility). Keeping contraband out of the facility is a general goal of the government and not specific to overseeing the use of those funds.

If "no" (meaning the government has administrative or direct financial involvement), this is not a fiduciary activity; if "yes", proceed.

3. Are any one of the following three sets of criteria true? (all parts of the individual set must be met)

3(a). 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.

If this set of criteria is true the assets should be reported in a fiduciary trust fund.

or

3(b). The assets are:

(a) for the benefit of individuals and

(b) the government does not have administrative involvement with the assets or direct financial involvement with the assets.

(c) In addition, the assets are not derived from the government's provision of goods and services to those individuals.

Provision of goods and services examples:

The government sells maps, umbrellas, utilities (water/sewer), etc.

The government provides services such as finger printing, background checks, etc.

Examples of when this set of criteria is true is inmate accounts for commissary purchases and patient accounts in certain medical facilities.

or

3(c). The assets are:

(a) for the benefit of organizations or other governments that are not part of the financial reporting entity and

(b) not derived from the government's provision of goods or services to those organization or other governments.

Examples include:

In evaluating each component of a transaction — collected leasehold excise tax is fiduciary because those specific dollars are for the benefit of the state and the tax is not derived from the collecting governments provision of goods or service to the state (the provision of services is to a third party).

When a government has a component unit that is considered part of the financial reporting entity, the component unit would not be reported in the fiduciary funds. The exception would be if the government was the acting fiscal agent, then the government would report the component unit in its custodial funds.

If "yes" to any one of the three sets of criteria, fiduciary reporting is applicable and activities should be reported in the custodial funds; if "no", this is not a fiduciary activity.

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3.1.11.30 Prescribed custodial transactions

Below is a list of prescribed custodial fund activities, including the responses to the custodial criteria questions.

Leasehold tax and other state mandated taxes

Step 1 – Are the assets associated with the activity controlled by the government?

Yes, the collecting government receives the tax and is holding the monies in their bank account until the monies are remitted to the State.

Step 2(a) – Are the assets derived solely from the government's own-source revenues?

No, these taxes are levied by the State through RCWs therefore they are not solely from the reporting government’s own-source revenue.

Step 2(b) – Are the assets associated with the activity from either government-mandated or voluntary nonexchange transactions?

Yes, these monies are from derived government-mandated tax revenue.

Step 2(c) – Are the assets from pass-through grants for which the government does not have administrative involvement or direct financial involvement?

No, these monies are not from a grant and the reporting government does not have administrative or direct financial involvement.

Step 3(a) – Are the assets held in a trust or equivalent arrangement and the government itself is not a beneficiary?

No, these monies are not in a trust.

Step 3(b) – Are the assets for the benefit of individuals and the government does not have administrative involvement or direct financial involvement?

No, these monies are not for the benefit of individuals.

Step 3(c) – Are the assets for the benefit of organizations or other governments that are not part of the financial reporting entity? Are assets held for organizations or other governments not derived from the collecting government’s provision of goods or services to those organizations or other governments?

Yes, these monies are for the benefit of the State and the State is not part of the collecting government’s financial reporting entity. Yes, the collecting government did not provide a good or service to the State.

Conclusion: Leasehold tax and other state mandated taxes are fiduciary activities and should be reported in the custodial funds.

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Department of Licensing accounts (counties only)

Step 1 – Does the government control the asset?

Yes, the collecting government’s name and tax identification number are on the bank account.

Step 2(a) – Are the assets derived solely from the government’s own-source revenue?

No, the State amounts are collected in addition to the local government’s revenues and are mandated by state law.

Step 2(b) – Are the assets derived from government-mandated or voluntary nonexchange transactions?

No, these monies are not from a government-mandated or nonexchange transaction.

Step 2(c) – Are the assets derived from a pass-through grant for which the government has administrative involvement or direct financial involvement?

No, these monies are not from a grant and the collecting government does not have administrative or direct financial involvement.

Step 3(a) – Are the assets held in a trust or equivalent arrangement and the government itself is not a beneficiary?

No, these monies are not in a trust.

Step 3(b) – Are the assets for the benefit of individuals and the government does not have administrative involvement or direct financial involvement?

No, these monies are not for the benefit of individuals.

Step 3(c) – Are the assets for the benefit of organizations or other governments that are not part of the financial reporting entity? Are assets held for organizations or other governments not derived from the collecting government’s provision of goods or services to those organizations or other governments?

Yes, these monies are for the benefit of the State and the State is not part of the collecting government’s financial reporting entity. Yes, the collecting government did not provide a good or service to the State Department of Licensing.

Conclusion: The portion of the licensing fees that are the State’s portion are fiduciary activities and should be reported in the custodial funds. The collecting government’s portion of these fees are the government’s own-source revenue and should be reported in the reporting government’s governmental or proprietary funds.

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Permits and certificates fees (concealed pistol permits, birth certificates, etc.)

Step 1 – Does the government control the asset?

Yes, the collecting government receives the fees and is holding the monies in their bank account until the monies are remitted to the State.

Step 2(a) – Are the assets derived solely from the government’s own-source revenue?

No, the State amounts are collected in addition to the local government’s revenues and are mandated by state law.

Step 2(b) – Are the assets derived from government-mandated or voluntary nonexchange transactions?

No, these monies are not derived from a government-mandated or nonexchange transaction.

Step 2(c) – Are the assets derived from a pass-through grant for which the government has administrative involvement or direct financial involvement?

No, these monies are not from a grant and the reporting government does not have administrative or direct financial involvement.

Step 3(a) – Are the assets held in a trust or equivalent arrangement and the government itself is not a beneficiary?

No, these monies are not in a trust.

Step 3(b) – Are the assets for the benefit of individuals and the government does not have administrative involvement or direct financial involvement?

No, these monies are not for the benefit of individuals. While the citizen is receiving a certificate/permit from the city or county the citizen is not receiving a good or service from the government imposing the fee and issuing the permits and/or certificates (the State).

Step 3(c) – Are the assets for the benefit of organizations or other governments that are not part of the financial reporting entity? Are assets held for organizations or other governments not derived from the collecting government’s provision of goods or services to those organizations or other governments?

Yes, these monies are for the benefit of the State and the State is not part of the collecting government’s financial reporting entity. Yes, the collecting government did not provide a good or service to the State.

Conclusion: The portion of the permit/certificate fees that are the State’s portion are fiduciary activities and should be reported in the custodial funds. The collecting government’s portion of these fees are for the direct benefit of the collecting government and should be reported in the collecting government’s governmental or proprietary funds.

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Flexible Savings Accounts and Health Savings Accounts (Government holds the monies for an administrator and reimburses based on administrator determination).

Step 1 – Does the government control the asset?

Yes, the collecting government is holding the monies for an administrator.

Step 2(a) – Are the assets derived solely from the government’s own-source revenue?

No, these deposits are from the employee’s revenues and not the government’s directly.

Step 2(b) – Are the assets derived from government-mandated or voluntary nonexchange transactions?

No, these monies are not government-mandated or voluntary nonexchange transaction.

Step 2(c) – Are the assets derived from a pass-through grant for which the government has administrative involvement or direct financial involvement?

No, these monies are not from a grant and the reporting government does not have administrative or direct financial involvement.

Step 3(a) – Are the assets held in a trust or equivalent arrangement and the government itself is not a beneficiary?

No, these monies are not in a trust.

Step 3(b) – Are the assets for the benefit of individuals and the government does not have administrative involvement or direct financial involvement?

Yes, these monies are for the benefit of employees under the IRS requirements.

Step 3(c) – Are the assets for the benefit of organizations or other governments that are not part of the financial reporting entity?

No, the administrator and the government have a contract that requires the government to collect the monies for the employees and reimburse for approved expenses.

Conclusion: Flexible Savings Accounts and Health Savings Accounts where the reporting government is holding the monies for the administrator of the plan and reimburses the employees based on direction from the administrator of the plan are fiduciary funds.

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3.1.11.40 Prescribed non-custodial activities

Impact fees (cities & counties only)

Step 1 – Does the government control the asset?

Yes, the collecting government receives the fees and is holding the monies in their bank account until the monies are remitted to the school, fire, or park district.

Step 2(a) – Are the assets derived solely from the government’s own-source revenue?

Yes, these fees can only be levied by the collecting government per state law (RCW 82.02.050 - 82.02.110 and WAC 365-196-850).

Conclusion: Not a fiduciary activity. Under state law, only cities and counties can authorize and levy impact fees for school, fire, or park districts. Since the city or county is levying the impact fees these monies would be own-source revenue and reported in the governmental funds of the city or county.

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Retainage and refundable deposits

Step 1 – Does the government control the asset?

Yes, the collecting government receives the fees and is holding the monies in their bank account until the contracting party meets their obligations.

Step 2(a) – Are the assets derived solely from the government’s own-source revenue?

Yes, although these deposits could be revenues for the collecting government, as revenue recognition is dependent on the contracting party meeting certain criteria in order for the collecting government to remit the retainage and/or deposit to the contracting party.

Conclusion: Not a fiduciary activity, since these monies are derived from the government’s own-source revenue. Therefore the retainage and refundable deposits should be reported in the government’s governmental or proprietary funds.

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Payroll clearing accounts

Step 1 – Does the government control the asset?

Yes, the collecting government receives the fees and is holding the monies in their bank account until remittance to the mandating government (federal and/or state).

Step 2(a) – Are the assets derived solely from the government’s own-source revenue?

No, these deposits are from the employee’s revenues and not the government’s directly.

Step 2(b) – Are the assets derived from government-mandated or voluntary nonexchange transactions?

No, these monies are not government-mandated or voluntary nonexchange transaction.

Step 2(c) – Are the assets derived from a pass-through grant for which the government has administrative involvement or direct financial involvement?

No, these monies are not from a grant and the reporting government does not have administrative or direct financial involvement.

Step 3(a) – Are the assets held in a trust or equivalent arrangement and the government itself is not a beneficiary?

No, these monies are not in a trust.

Step 3(b) – Are the assets for the benefit of individuals and the government does not have administrative involvement or direct financial involvement?

No, these monies are not for the direct benefit of individuals. While the employee benefits from the employing government withholding and paying the employee’s portion of taxes and other payroll items, the employee’s government is obligated by law to withhold and pay the appropriate employee related payroll withholdings.

Step 3(c) – Are the assets for the benefit of organizations or other governments that are not part of the financial reporting entity?

No, the mandating authority (federal and/or state government) requires the employing government to collect and remit these monies and has the legal authority to enforce the liability on the employing government.

Conclusion: Not a fiduciary activity, since these monies are for the benefit of the collecting government and therefore these items should be reported on the financial statements of the collecting government.

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Flexible Savings Accounts and Health Savings Accounts (Government holds the monies for an administrator and makes reimbursement decisions).

Step 1 – Does the government control the asset?

Yes, the collecting government is holding the monies for an administrator.

Step 2(a) – Are the assets derived solely from the government’s own-source revenue?

No, these deposits are from the employee’s revenues and not the government’s directly.

Step 2(b) – Are the assets derived from government-mandated or voluntary nonexchange transactions?

No, these monies are not government-mandated or voluntary nonexchange transaction.

Step 2(c) – Are the assets derived from a pass-through grant for which the government has administrative involvement or direct financial involvement?

No, these monies are not from a grant and the reporting government does not have administrative or direct financial involvement.

Step 3(a) – Are the assets held in a trust or equivalent arrangement and the government itself is not a beneficiary?

No, these monies are not in a trust.

Step 3(b) – Are the assets for the benefit of individuals and the government does not have administrative involvement or direct financial involvement?

No, while these monies are for the benefit of employees under the IRS requirements since the government is making reimbursement decisions there is administrative involvement.

Step 3(c) – Are the assets for the benefit of organizations or other governments that are not part of the financial reporting entity?

No, the administrator and the government have a contract that requires the government to collect the monies for the employees and reimburse for approved expenses.

Conclusion: Not a fiduciary activity, since these monies are under the administrative control of the government.

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3.1.11.50 Court accounting

Cities and counties with their own court

1. Administrative Office of the Courts (AOC) mandated fees (BARS Codes 386/586)

Step 1 – Does the government control the asset?

Yes, the government is collecting the fines and fees and holding the monies in their bank account until remitting the monies to the State.

Step 2(a) – Are the assets derived solely from the government’s own-source revenue?

No, the AOC/state amounts are collected in addition to the local government’s revenue.

Step 2(b) – Are the assets derived from government-mandated or voluntary nonexchange transactions?

No, these monies are not a government-mandated or nonexchange transaction.

Step 2(c) – Are the assets derived from a pass-through grant for which the government has administrative involvement or direct financial involvement?

No, these monies are not from a grant and the reporting government does not have administrative or direct financial involvement.

Step 3(a) – Are the assets held in a trust or equivalent arrangement and the government itself is not a beneficiary?

No, these monies are not held in a qualifying trust.

Step 3(b) – Are the assets for the benefit of individuals and the government does not have administrative involvement or direct financial involvement?

No, these monies are not for the benefit of individuals.

Step 3(c) – Are the assets for the benefit of organizations or other governments that are not part of the financial reporting entity? Are assets held for organizations or other governments not derived from the collecting government’s provision of goods or services to those organizations or other governments?

Yes, these monies are for the benefit of the state and the state is not part of the collecting government’s financial reporting entity. Yes, these funds are for the state and the local government’s court is not providing a direct service to the state.

Conclusion: AOC fees are fiduciary activities and should be reported in the custodial funds.

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2. Local government revenue fines and fees BARS Codes

Step 1 – Does the government control the asset?

Yes, the government is collecting the fines and fees and holding the monies in their bank account.

Step 2(a) – Are the assets derived solely from the government’s own-source revenue?

Yes, as an example, the city’s police department or the county’s sheriff department issued the tickets during the performance of their public safety function and the revenue is generated by the city/county for their own use.

Conclusion: Not a fiduciary activity, the local government’s fines and fees are the government’s own revenue.

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3. State distributions to local government

Step 1 – Does the government control the asset?

No, the State controls the money and distributes the money.

Conclusion: Not a fiduciary activity, the monies are not reported by the city/county until the money is received by the city/county from the state and would be considered own-source revenue upon receipt.

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Cities and counties that contract for court

1. Administrative Office of the Courts (AOC) mandated fees (BARS Codes 386/586)

Step 1 – Does the government control the asset?

Cities and counties that contract out for court services generally do not remit monies to the Administrative Office of the Courts (AOC). The court providing the service to the city/county generally remits the AOC monies for the contracting city/county. The city/county contracting for court services would therefore not report AOC fines and fees in their custodial funds.

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2. Local government revenue fines and fees BARS Codes

Step 1 – Does the government control the asset?

No, the city or county does not control the asset, since the court the city contracted with holds the asset in their bank account.

Conclusion – Not a fiduciary activity, the monies are not the city/county until remitted from the court provided to the city/county.

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3. Payment for court services

Step 1 – Does the government control the asset?

No, there is no asset. This is an expense for the city or county receiving the court services.

Conclusion: Not a fiduciary activity, this is a direct expense for the city/county receiving the court services and should be coded to BARS code 512.50.PP.

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GAAP – providing court services

1. Administrative Office of the Court (AOC) mandated fees (386/586) – Please see above BARS 3.1.11.50.

2. Court provider’s collection/remittance of the fines and fees for the city/county receiving the court service

Step 1 – Does the government control the asset?

Yes, the court provider is collecting the fines and fees and holding the monies in their bank account.

Step 2(a) – Are the assets derived solely from the government’s own-source revenue?

No, these fines and fees are levied/ticketed by another government.

Step 2(b) – Are the assets derived from government-mandated or voluntary nonexchange transactions?

No, these monies are not a government-mandated or nonexchange transaction.

Step 2(c) – Are the assets derived from a pass-through grant for which the government has administrative involvement or direct financial involvement?

No, these monies are not from a grant and the collecting government does not have administrative or direct financial involvement.

Step 3(a) – Are the assets held in a trust or equivalent arrangement and the government itself is not a beneficiary?

No, these monies are not held in a qualifying trust.

Step 3(b) – Are the assets for the benefit of individuals and the government does not have administrative involvement or direct financial involvement?

No, these monies are not for the benefit of individuals.

Step 3(c) – Are the assets for the benefit of organizations or other governments that are not part of the financial reporting entity? Are assets held for organizations or other governments not derived from the collecting government’s provision of goods or services to those organizations or other governments?

Yes, these monies are for the benefit of the city or county and the city or county is not part of the collecting government’s financial reporting entity. No, the collecting government is providing a service (court) for a fee to another government.

Conclusion: Not a fiduciary activity, the fines and fees are collected by the court provider in which they are providing a service to the local government for a fee and would be reported in the collecting government’s financial reports under Restricted Cash and Due to Other Governments liability accounts.

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3. Revenue for court services

Step 1 – Does the government control the asset?

Yes, the government is collecting the fee holding the monies in their bank account.

Step 2 – Are the assets derived solely from the government’s own-source revenue?

Yes, this is the court provider’s revenue for performing the court service for a fee.

Conclusion: Not a fiduciary activity, the revenues are the court providers own revenue and should be coded to BARS Code 341.49.00.

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3 Accounting

3.1 Accounting Principles and Internal Control

3.1.12 Managerial Funds

A managerial fund is a separate set of accounts that governments may elect to use to track an activity at a more detailed level than may be available in a reportable fund. Creating and using managerial funds is optional. 

For discussion on the minimum number of funds necessary to be established, see BARS 3.1.1, Fund Accounting and Fund Types.

Clearing funds are not considered managerial funds. For more information on clearing funds, see BARS 3.8.6, Use of Payroll and Claims Funds. 

3.1.12.10 Operating a managerial fund

A managerial fund functions as a sub-fund of a reportable fund of the government. The sub-fund is designed to track the financial transactions related to the activity in which the sub-fund was created. A managerial fund does not have any special or specific operating rules and should be operated like all other funds of the government (e.g. debits must equal credits within the managerial fund).

3.1.12.20 Intrafund activity

It is common for managerial funds to engage in financial transactions with their respective reportable fund. These types of transactions are called intrafund activity and include activities such as transferring or lending of cash. Transfer and lending are the most common type of intrafund activity in managerial fund use; however the government should evaluate other transactions between the funds to determine if eliminations of that activity should occur, see BARS 3.1.12.30 below.

To ensure accurate reporting, governments should have a process for tracking and identifying the intrafund activity.

3.1.12.30 Eliminating activity and financial reporting

For financial reporting purposes, governments should roll up all managerial funds into their respective reportable funds. Managerial funds should not be presented separately on the financial statements. While some accounting systems may support this roll up process, other systems may not have the necessary functionality. In these cases, governments can use an off-book consolidation spreadsheet to manually combine managerial fund activity with the reportable fund, ensuring accurate and complete financial reporting.

For example, in a government’s accounting system there is a ‘Grants 301’ fund tracked as a managerial fund of the ‘General 001’ reportable fund. In this case, an off-book consolidation spreadsheet is used to assist the government in rolling the Grants 301 fund into the General 001 fund, as seen below.

		In accounting system		Eliminations	Reported
BARS Account	BARS Name	General 001	Grants 301		General 001
3083P00	Restricted - Beginning	$                           -	$           60,453.00	$                            -	$           60,453.00
3085P00	Assigned - Beginning	$         22,693.00	$                            -	$                            -	$           22,693.00
3111000	Property Tax	$         29,138.00	$           15,000.00	$                            -	$           44,138.00
3164100	Business and Occupation Taxes on Utilities	$         16,065.00	$                            -	$                            -	$           16,065.00
3340423	State Award from Department of Commerce	$                           -	$           50,000.00	$                            -	$           50,000.00
3611100	Investment Earnings	$                16.00	$                    4.00	$                            -	$                  20.00
3970000	Transfer in	$                           -	$           10,000.00	$          10,000.00	$                            -
5142040	Financial Services	$         22,693.00	$                            -	$                            -	$           22,693.00
5186340	General Grants, Financial Assistance and Other Distributions to Others	$                           -	$           44,251.00	$                            -	$           44,251.00
5970000	Transfer out	$         10,000.00	$                            -	$          10,000.00	$                            -
5085P00	Assigned - Ending	$         22,693.00	$                            -	$                            -	$           22,693.00
5083P00	Restricted - Ending	$         12,526.00	$           91,206.00	$                            -	$        103,732.00

In this example, the government has consolidated (rolled up) all activity of the Grants 301 fund into the General 001 fund for financial reporting purposes. During this roll-up process in this example, the transfers in and transfers out were eliminated through the use of the eliminations column to prevent inflating the transfer activity in the financial statements.

Note: The roll-up of managerial funds does not constitute as a change in the reporting entity, as identified in BARS 3.1.10.90, Accounting Changes and Error Corrections, as long as the managerial fund has either consistently been consolidated into the reportable fund or the roll-up is occurring in a subsequent year following initial consolidation.

3.1.12.40 Moving a reported fund to a managerial fund

If a government determines that a previously reported fund on the financial statements will now operate as a managerial fund this would be reported as a change in reporting entity as identified in BARS 3.1.10.90, Accounting Changes and Error Corrections. This change must be disclosed and reported in the first year that the transition occurs.

A change in reporting entity should be reported as if the change occurred at the beginning of the fiscal year. To reflect a change in reporting entity, a government must adjust the beginning balance of the affected funds on the Schedule 01 using BARS codes 388.40.00 and 588.40.00. Additionally, all the reportable financial transactions in the managerial fund must be moved to the new reportable fund to ensure accurate and consistent financial reporting.

Note: Adjustments to consolidate managerial funds into the reportable funds are presented on the Schedule 01 only and should not be posted as transactions in the government’s accounting system to ensure both funds are still present in the government’s own systems.

This will require a government to perform a consolidation process. See an example of this process below.

		In accounting system		Reported Funds
BARS Account	BARS Name	General 001	Grants 301	General 001	Grants 301
3083P00	Restricted - Beginning	$                           -	$           60,453.00	$                            -	$           60,453.00
3085P00	Assigned - Beginning	$         22,693.00	$                            -	$           22,963.00	$                          -
3884000	Change to or within Reporting Entity	$                          -	$                           -	$            60,453.00	$                           -
3111000	Property Tax	$         29,138.00	$           15,000.00	$           44,138.00	$                         -
3164100	Business and Occupation Taxes on Utilities	$         16,065.00	$                            -	$           16,065.00	$                         -
3340423	State Award from Department of Commerce	$                           -	$           50,000.00	$           50,000.00	$                         -
3611100	Investment Earnings	$                16.00	$                    4.00	$                  20.00	$                         -
3970000	Transfer in	$                           -	$           10,000.00	$                            -	$                            -
5142040	Financial Services	$         22,693.00	$                            -	$           22,693.00	$                            -
5186340	General Grants, Financial Assistance and Other Distributions to Others	$                           -	$           44,251.00	$           44,251.00	$                            -
5970000	Transfer out	$         10,000.00	$                            -	$                           -	$                            -
5884000	Change to or within Reporting Entity	$                          -	$                            -	$                            -	$            60,453.00
5085P00	Assigned - Ending	$         22,693.00	$                            -	$           22,693.00	$                            -
5083P00	Restricted - Ending	$         12,526.00	$           91,206.00	$        103,732.00	$                            -

In the initial year of transition, a fund reclassified as a managerial fund will still be reported on the financial statements. However, it will only display the beginning balance and the disclosure of the change in reporting entity, indicating where the beginning balances of the fund went. After the initial year, the fund is now considered a managerial fund and will follow the standard roll up process for reporting following the guidance in the section BARS 3.1.12.30 above.

3.1.12.50 Moving a managerial fund to a reported fund

If a government decides to begin reporting a fund – previously treated as a managerial fund and consolidated into another fund – as a standalone fund in the financial statements, this would constitute as a change in reporting entity as identified in BARS 3.1.10.90, Accounting Changes and Error Corrections, for the first year the decision is made. This change must be disclosed and reported in the first year that the transition occurs.

A change in reporting entity should be reported as if the change occurred at the beginning of the fiscal year. To reflect a change in reporting entity, a government must adjust the beginning balance of the affected funds on the Schedule 01 using BARS codes 388.40.00 and 588.40.00. Additionally, all the reportable financial activities that were reported in the initial managerial fund must now be moved to the new reported fund. This process is the reverse of the example shown in BARS 3.1.12.30, since the financial statements will now report both funds.

Note: Adjustments to separate a managerial fund from its reportable fund are presented on the Schedule 01 only. The government’s accounting system should continue to maintain the separate funds.

See an example of the separation of a managerial fund from its reportable fund below.

		Rolled-up	Reported Funds
BARS Account	BARS Name	General 001	General 001	Grants 301
3083P00	Restricted - Beginning	$ 60,453.00	$ 60,453.00	$  -
3085P00	Assigned - Beginning	$ 22,693.00	$ 22,693.00	$  -
3884000	Change to or within Reporting Entity	$  -	$  -	$ 60,453.00
3111000	Property Tax	$ 44,138.00	$ 29,138.00	$ 15,000.00
3164100	Business and Occupation Taxes on Utilities	$ 16,065.00	$ 16,065.00	$  -
3340423	State Award from Department of Commerce	$ 50,000.00	$  -	$ 50,000.00
3611100	Investment Earnings	$ 20.00	$ 16.00	$ 4.00
3970000*	Transfer in	$  -	$  -	$ 10,000.00
5142040	Financial Services	$ 22,693.00	$ 22,693.00	$  -
5186340	General Grants, Financial Assistance and Other Distributions to Others	$ 44,251.00	$ -	$ 44,251.00
5970000*	Transfer out	$ -	$ 10,000.00	$ -
5884000	Change to or within Reporting Entity	$ -	$ 60,453.00	$ -
5085P00	Assigned - Ending	$ 22,693.00	$ 22,693.00	$ -
5083P00	Restricted - Ending	$ 103,732.00	$ 12,526.00	$ 91,206.00

*Note: the transfer in and transfer out transactions between these funds would now be reported on financial statements since the funds no longer represent a managerial fund/reportable fund relationship.