(A) All local public offices shall
maintain an accounting system and accounting records sufficient to enable the
public office to identify, assemble, analyze, classify, record and report its
transactions, maintain accountability for the related assets (and liabilities,
if generally accepted accounting principles apply), document compliance with
finance-related legal and contractual requirements, and prepare financial
statements required by rule 117-2-03 of the Administrative Code.
(B) The management of each local public
office is responsible for the assertions underlying the information in the
public office's financial statements. The accounting system should assure
that the following assertions are achieved for all transaction types and
account balances applicable to the local public office's operations,
considering the basis of accounting applicable to it:
(1) Assertions about
classes of transactions and events, and related disclosures, for the period
under audit:
(a) Occurrence: Transactions and events that have been recorded
or disclosed have occurred, and such transactions and events pertain to the
entity.
(b) Completeness: All transactions and events that should have
been recorded have been recorded, and all related disclosures that should have
been included in the financial statements have been included.
(c) Accuracy: Amounts and other data relating to recorded
transactions and events have been recorded appropriately, and related
disclosures have been appropriately measured and described.
(d) Cutoff: Transactions and events have been recorded in the
correct accounting period.
(e) Classification: Transactions and events have been recorded in
the proper accounts.
(f) Presentation: Transactions and events are appropriately
aggregated or disaggregated and clearly described, and related disclosures are
relevant and understandable in the context of the requirements of the
applicable financial reporting framework, or as prescribed by the auditor of
state.
(2) Assertions about
account balances, and related disclosures, at the period end:
(a) Existence: Assets, liabilities, and equity interests
exist.
(b) Completeness: All assets, liabilities, and equity interests
that should have been recorded have been recorded, and all related disclosures
that should have been included in the financial statements have been
included.
(c) Rights and obligations: The entity holds or controls the
rights to assets, and liabilities are the obligation of the
entity.
(d) Accuracy, valuation, and allocation: Assets, liabilities,
and equity interests have been included in the financial statements at
appropriate amounts, and any resulting valuation or allocation adjustments have
been appropriately recorded, and related disclosures have been appropriately
measured and described.
(e) Classification: Assets, liabilities, and equity
interests have been recorded in the proper accounts.
(f) Presentation: Assets, liabilities, and equity
interests are appropriately aggregated or disaggregated and clearly described,
and related disclosures are relevant and understandable in the context of the
requirements of the applicable financial reporting framework.
(C) The following systems and documents
may be used to effectively maintain the accounting and budgetary records of the
local public office:
(1) All local public
offices should integrate the budgetary accounts, at the legal level of control
or lower, into the financial accounting system. This means designing an
accounting system to provide ongoing and timely information on unrealized
budgetary receipts and remaining uncommitted balances of
appropriations.
The legal level of control is the level (e.g.,
fund, program or function, department, or object) at which spending in excess
of budgeted amounts would be a violation of law. This is established by the
level at which the legislative body appropriates. For all local public offices
subject to the provisions of Chapter 5705. of the Revised Code, except school
districts and public libraries, the minimum legal level of control is described
in section 5705.38 of the Revised Code. For school districts, the minimum legal
level of control is prescribed in rule 117-6-02 of the Administrative Code. For
public libraries, the minimum legal level of control is prescribed in rule
117-8-02 of the Administrative Code. The legal level of control is a
discretionary decision to be made by the local public office's legislative
authority, unless otherwise prescribed by statute.
(2) Purchase orders
should be used to approve purchase commitments and to encumber funds against
the applicable appropriation account(s), as required by division (D) of section
5705.41 of the Revised Code. Purchase orders are not effective unless the
fiscal officer's certificate is attached. The certificate should be
attached at the time a commitment to purchase goods or services is
made.
(3) Vouchers may be used
as a written order authorizing the drawing of a check or an electronic fund
transfer payment in payment of a lawful obligation of the public office. Each
voucher shall contain the date, purchase order number, the account code,
amount, approval, and all other required information. The local office should
also attach supporting documentation to the voucher, such as vendor
invoices.
(D) All local public offices may maintain
accounting records in a manual or computerized format. The records used should
be based on the nature of operations and services the public office provides,
and should consider the degree of automation and other factors. Such records
should include the following:
(1) Cash journal, which
typically contains the following information: the amount, date, receipt number,
check or electronic fund transfer number, account code, purchase order number,
and all other information necessary to properly classify the
transaction.
(2) Receipts ledger,
which typically assembles and classifies receipts into separate accounts for
each type of receipt of each fund the public office uses. The amount, date,
name of the payor, purpose, receipt number, and other information required for
the transactions can be recorded on this ledger.
(3) Appropriation
ledger, which may assemble and classify disbursements or expenditure/expenses
into separate accounts for, at a minimum, each account listed in the
appropriation resolution. The amount, fund, date, check or electronic fund
transfer number, purchase order number, encumbrance amount, unencumbered
balance, amount of disbursement, uncommitted balance of appropriations and any
other information required may be entered in the appropriate
columns.
(4) In addition, all
local public offices should maintain or provide a report similar to the
following accounting records:
(a) Payroll records including:
(i) W-2s, W-4s, I-9s,
and other withholding records and authorizations.
(ii) Payroll journal
that records, assembles and classifies by pay period the name of employee, the
employee's identification number, hours worked, wage rates, pay date,
withholdings by type, net pay, and other compensation paid to an employee (such
as a termination payment), and the fund and account charged for the
payments.
(iii) Check register
that includes, in numerical sequence, the check or electronic fund transfer
number, payee, net amount, and the date.
(iv) Information
regarding nonmonetary benefits such as car usage, employer provided cell
phones, life insurance, and health insurance.
(v) Information, by
employee, regarding leave balances and usage.
(b) Utilities billing records including:
(i) Master file of
service address, account numbers, billing address, type of services provided,
and billing rates.
(ii) Accounts receivable
ledger for each service type, including for each customer account, the
outstanding balance due as of the end of each billing period (with an aging
schedule for past due amounts), current usage and billing amount, delinquent or
late fees due, payments received and noncash adjustments, each maintained by
date and amount.
(iii) Cash receipts
records, recording cash received and date received on each account. This
information should be used to post payments to individual accounts in the
accounts receivable ledger described above.
(c) Capital asset records including such information as the
original cost, acquisition date, voucher number, the asset type (land,
building, vehicle, etc.), asset description, location, and tag number. Capital
assets are tangible assets that normally do not change form with use and should
be distinguished from repair parts and supply items.
(E) Each local public office should
establish a capitalization threshold so that, unless the local public office
establishes a capitalization threshold for any individual item of five thousand
dollars or more, at a minimum, eighty per cent of the local public
office's non-infrastructure assets are identified, classified, and
recorded on the local public office's financial records. Capitalization
thresholds are best applied to individual items rather than to groups of
similar items such as desks and tables, unless the effect of doing so would be
to eliminate a significant portion of total capital assets such as books
belonging to a library district.
