Q&As are generated bi-annually during the Fiscal Managers Seminar and are intended to complement information provided during the seminar. Questions are categorized by: Budget Process and Timetable, CALSTARS, Auditing, and Accounting.
After each seminar, new Q&As may be added to this site. However,
the answers to prior questions might not be updated. Thus, while most answers
are still appropriate, the accuracy of an answer is dependent upon when the
inquiry was made. Similarly, some of the questions may no longer be relevant,
as the issues have passed or circumstances have changed and made the question
moot. Where applicable, links are provided to other portions of our website.
Readers are encouraged to review all links for further information.
This is covered in the seminarís Budget Process, Part I. Also, see Budgeting and Accounting Relationship in the Budget Analyst Guide (BAG) and the handout in your binder.
One of accountingís functions is to provide past-year revenue and expenditure information which is used as a basis for projecting current and future costs. It also provides the status of the current year Budget. Coordination between accounting and budgeting is essential to effectively and efficiently meet the financial demands of a department.
In addition the Finance, Financial Operations Unitís annual summer departmental budget training classes cover the accounting/budgeting relationship for specific situations (e.g., budget revisions, funds, fund condition statements, executive order changes, transfers and loans between funds, and past year data).
Some budget offices and accounting offices have exemplary relationships. But, more typically, there are problems. While oversimplified, here are some reasons that we have been told and have observed. Accounting offices are more into details; the jobs are more technically oriented. Budget offices are more generalists, have a broader perspective. They do not understand what each other doesójobs/roles/functions/tasks, and how they are dependent on each other. Accounting reports are hard to read. There are probably some natural responsibility and workload conflicts. Sometimes one or the other staffs are instructed not to talk to the other group. Sometimes the offices are physically separate, and this makes interactions more difficult.
Suggestions, partial solutions:
Department of Finance assistance/efforts:
The past-year information for budgeting and accounting is not due at the same time. The annual financial statements are due to the SCO by August 20 (General Fund statements are due at the end of July or the first or second day of August). Budgetary documents for past-year expenditures (Schedule 10s) are due August 31. Budgetary revenue documents (Schedule 10Rs) are due in late September. Once year-end statements are done, transferring that information to budgetary reports should not take more than the number of days provided.Work with your Finance analyst. A few days leeway may be possible.
CALSTARS departments can take advantage of the new CSTARN10 (ďPrior-Year Schedule 10 Summary WorksheetĒ) report to assist in and expedite the reporting of budgetary expenditure information to Finance. Please see the annual Budget Letter regarding Initial Past-Year Schedule 10s.
While it may seem like a long time from when you submit past-year information until the Governorís Budget is released January 10, there is much to do and always a crunch to get it all done in time. Departments that submit past-year information late make the problem worse.
The general budget process and timetable is covered in the seminarís Budget Process, Parts I and II. Also, see the handouts for ďBudget CalendarsĒ in your binder and on the BAG website: http://www.dof.ca.gov/fisa/bag/budgetcalendars.htm. Another helpful document might be ďCaliforniaís Budget ProcessĒ on the BAG website: http://www.dof.ca.gov/fisa/bag/process.htm.
Talk to and work with other departments; develop a network with budget officers in other departments. Work closely with your Finance analyst. Attend as much budget training as Finance and the State Training Center provide. Become familiar with: the SAM Budgeting Chapter, Budget Letters, BAG, Budget Act Control Sections, and statutory budget requirements. Other than on-the-job training and keeping current, there is no one or simple way to get trained in the nuts and bolts of budgeting. The budget process is cyclical in nature and includes a number of complex distinct processes and steps; it often takes two to three years to learn most of what is required.
Unfortunately, there are some errors included in the Governorís Budget and/or the budget bills each year. When this occurs, Finance should be notified immediately. For errors in the printed Governorís Budget, the staff for the budget committees and the Legislative Analyst will be advised of the error by Finance, and any supporting schedules (federal funds, operating expenses, etc.) should be corrected.
Errors in the Budget Bills require a legislative action to correct. If the error is purely of a technical nature involving no policy or substantive issues, the correction may be simply shown as a technical correction on the Finance budget bill language sheets. If it is not a technical error or there may be some sensitivity about the error, it must be included in a separate Finance Letter to the Legislature requesting that the correction be amended into the Budget Bill. Sometimes, errors that appear to be strictly technical in nature to some may be viewed by some members of the Legislature as more than technical corrections, in which case a separate Finance Letter is required. In some cases, the Finance analyst may seek concurrence from legislative staff (including the Legislative Analystís Office) that the correction may be treated as a technical correction.
A reappropriation is a new appropriation of funds that are still available for encumbrance from a previous appropriation. Before a reappropriation is included in the Governorís Budget, a BCP (or other justification as required by your Finance analyst) must be submitted to Finance and approved for inclusion in the Budget and Budget Bill. Because a reappropriation is a Budget Act item, legislative approval is required.
There is no one general reappropriation item in the Budget Act. The reappropriations included in the Budget Act for each department will have a "reference code" (the first three digits after the organization code in the eleven-digit appropriation code) of 490 through 494 and appear immediately preceding all reversion items for the department, if there are any reversion items.
The following has been excerpted (and slightly modified to be responsive to the question) from the Finance website. The entire text can be obtained by visiting: www.dof.ca.gov/fisa/bag/budcks.htm.
Reconciliation with Appropriations
Fund Condition Statements
Summary of Program Requirements (SPR)
During the budget process, who is denied access to confidential budget information and why?
The Governorís Budget is the culmination of the Chief Executiveís budget decision-making process. Until the Budget is published, the information and documents that are considered in the process are confidential. The Governorís decisions obviously must be made known, but his thought processes and the information he uses to make his decisions are confidential. This is called the "deliberative process". This is founded in European and U.S. history and statutory and case law.
No decision-maker likes to have their decisions announced ahead of time, before they release them. Further, they do not like made known all the factors and input that went into their decision-making. If it were otherwise, Chief Executiveís would curtail their inputóand budget decisions would be based on less complete information than currently, than the ideal.
Thus, departments often have to re-write BCPs so that they reflect the decision. This is why revised BCPs and Supplementary Schedules are not made available to the Legislature until after the Governorís Budget is released.
Obviously, there are some exceptions. Departments who are not under the Administration are more independent and often/usually make known their requests to the Governor in a public setting, often in a Finance Committee or a Board meeting. But, even then the decisions are confidential until the Budget is released. To facilitate legislative review of the Budget, Finance does provide advance information to the Legislative Analystís Office on a confidential basis.
Specific questions about confidentiality should be directed to your legal office or your Finance budget staff. If Finance staff do not have the answer, they can contact Financeís Chief Counsel for assistance. At times, the Attorney Generalís Office is also consulted on issues involving confidentiality and public records.
What is the best way to get trained in the hands-on processes of State budgeting?
The best training is on the job training (OJT), that is, work your way up through budget positions. Talk to and work with other departments; develop a network. Work closely with your Finance analyst. Attend as much budget training as Finance and the State Training Center provide. Become familiar with: the SAM Budgeting Chapter, Budget Letters, BAG, Budget Act Control Sections, and statutory budget requirements. Other than OJT and keeping current, there is no one or simple way to get trained in the nuts and bolts of budgeting. The budget process is cyclical in nature and includes a number of complex distinct processes and steps; it often takes two to three years to learn most of what is required.
Some or most of this is covered in the seminarís Budget Process, Part I and Part II. Much of this information is on Financeís website in the Information for Government Agencies, BAG , and the Frequently Asked Questions (FAQs). Other information is available in SAM at the Department of General Services' website. To the extent that what you need is not covered, you should first contact your budget office with specific questions. Your Finance analyst also may be a source for some of the information.
Are Enrollment/Caseload/Population (ECP) and Finance Letter (FL) timetables available annually? Do dates change from year-to-year?
The general budget timetable, including Finance Letters, is covered in the seminarís Budget Process, Part I. Also, see the handouts for "Budget Calendars" in your binder and on the BAG website.
Specific due dates are in yearly Budget Letters, particularly the annual Budget Preparation Guidelines issued about April 1, the Budget Policy Letter issued in late July, and the Budget Change Letters issued in mid to late January. The dates normally only vary a day or so each year. ECP due dates are generally referenced in these Budget Letters, but the specific dates, other than those statutorily specified, need to be worked out with your Finance budget analyst.
Could you explain or define Budget/Galley terms such as state operations, adjustments (types), and net profit vs. net income?
There is a Glossary of Budget Terms printed in the appendix to the Governorís Budget, the appendix to the Governorís Budget Summary, and on the Finance website. Another more detailed glossary for budget and accounting is provided in the BAG under "Finance Glossary (Budget and Acctng)".
I would be particularly interested in Fund Condition Statements; specifically what type of information is contained in these and how does it relate to a departmentís budget. How does Finance or other departments use the information?
The fund condition statement is a public document (many are included in the Governorís Budget) used by the Legislature, Finance, departmental staff, and the public to assess the financial condition of a fund. The fund condition statement reflects the revenue sources to the fund, and amounts for expenditure or transfer to other funds. The fund condition statement matches the revenue and expenditure information found in Schedule 10s and 10Rs. A fund balance (for PY, CY, and BY) is determined in part by considering the beginning fund balance and any prior year adjustments that are typically found in the departmentís accounting records.
Typically, individual departmental budgets contain fund condition statements for governmental cost funds (special funds) and selectively for specific non-governmental cost funds for which there is legislative/administrative interest. The departmentís budget which is identified as the administering organization for a particular fund will reflect the fund condition statement in the Governorís Budget.
Please refer to "Fund Conditions and Transfers/Loans" in the BAG and the State Fund Manual. In addition, the Financial Operations Unitís annual summer departmental budget training classes cover fund condition statements in detail.
Coordination is often difficult in the case you describe, where several departments use monies from one specific fund. The problem can be exacerbated by some late budget decisions for another department but which affect "your" fund, i.e., the fund for which you have been designated as the Administering Agency. We stress coordination among departments and Finance staff, but at the end of each process, it is difficult to get everything done on time and keep everyone informed of what they need to know.
You should be aware of departments who are spending from your fund; contact the other departments to get an idea of the magnitude of what they may be requesting and if they have any outstanding issues. Departments, which are requesting funds in a BCP from someone elseís fund, are to include a statement of fund availability from the administering agency. Due to the confidentiality of the budget process, until budget decisions are made public it may be difficult for you to learn of all that is being considered.
Keep in touch with your Finance budget analyst. Your Finance analyst can run: (1) Planning estimate reports of requested BCPs and decisions at any one point-in-time. While they may not be able to share all of the information with you, they can give you some useful information, such as total requests and decisions to date. (2) Fund mismatch reports, reflecting expenditure differences between what is shown in a fund condition and the respective budgets. (3) Reports from Financeís Legislative Information System (LIS) to see signed legislation, which affects a particular fund.
In the annual Budget Preparation Guidelines Budget Letter an attachment lists various funds/programs for which there is a Finance or departmental contact for coordination purposes. If there is a major program/funding area that is not included in the list, contact you Finance budget analyst about getting your department/fund added.
What expenditure authorization controls exist?
This is covered in the seminarís Budget Process, Part I. Also, see Budget Letter 98-27, as well as the handout "Sections 26.00, 28.00, and 28.50 Guidelines" in your binder and on the BAG.
State programs must be administered in accordance with the plan of expenditures approved by the Legislature. With a few exceptions, the Budget Act and other statutes require 30 days notice to the Legislature in advance of making commitments to expend amounts not authorized by current appropriations.
For more information, please refer to the BAG:
1. "Budget Letters" and select BL 01-25, Expenditure Authorization Controls
Much of this is covered in the seminarís Budget Process, Part 1. Also, please see the BAG "Section 26.00, 28.00, and 28.50 Guidelines" and the hand-out in your binder. In addition, Financial Operation Unitís annual summer departmental budget training classes cover Section 28.00 in detail. The training also discusses the document for making the related change to appropriationsóthe Budget Revision. Section 28.00 contains the reporting requirements and administrative requirements for the spending of monies received from entities external to the State, such as monies from the federal government or local entities. Since Section 28.00 does not appropriate additional federal funds received by departments, Section 8.50 operates in conjunction with Section 28.00 to appropriate additional federal funds received. Other monies received must be reimbursements or be appropriated in some other manner.
What is the correct process to request authorization to use federal grant monies during the current fiscal year that were allocated in a prior fiscal year and not used in that year?
A Budget Revision can be used to request authorization and schedule the funds in the current year if the funds carried over from a previous fiscal year: were previously reported to the Legislature as being carried over, will be used for the same purpose, and there is nothing particularly sensitive about the expenditures; or, the expenditures are not more than two hundred thousand. If these conditions are not met, then a Section 28 request needs to be submitted to Finance. If there is a question as to whether a Section letter should be sent, departmental budget staff should discuss the issue with their Finance budget analyst.
Section 28 is covered in the seminarís Budget Process, Part I. Also, see the handout "Sections 26.00, 28.00, and 28.50 Guidelines" in your binder and on the BAG website.
How do you reflect budget adjustments on planning estimates for increases/decreases in federal funding when the amount of funds remains constant?
You should check with your Finance budget analyst if you need to, or want to, document individual grant changes through planning estimate adjustments; your analyst may require such documentation from you. Some budget adjustments require specific planning estimate adjustments, e.g., employee compensation, and issues that Finance is tracking on a statewide basis. In this case, offsetting adjustments would need to be made to realign the planning estimate totals with the total federal funds. Regardless of planning estimate adjustments, your federal fundsí planning estimates need to be in agreement with your Supplementary Schedule of Federal Funds.
What are the necessary elements of a well-written BCP?
Generally, the Governorís Budget includes BCPs which:
There is also a discussion of writing effective BCPs and examples of good BCPs in the BAG website. www.dof.ca.gov/fisa/bag/bagtoc.htm.
A hard-line approachóUnless the issue is particularly important, you probably will have to wait until next year. The timeframes are essentially the same year-after-year, so there should be little reason to miss the deadline. There is little sympathy from Finance staff for those who want to submit late BCPs. When you work the amount of overtime that a typical budget analyst or Principal works, you are not interested in adding to your workload by accepting late BCPs. Finance staff meet countless deadlines, many unreasonably shortóthey expect others to meet theirs.
A softer approachóIf you know you are going to be late, discuss it with your budget analyst. Timely request an extension of time from the Assistant Director of Finance, per the Budget Letter instructions. Determine what you might be able to submit on time, and then when you can submit the rest of the information. Develop exceptional relations with your Finance staff. A good deed done for another person usually results in a good deed received in return.
The BCP fiscal sheets are too cumbersome. Many departments donít use some of the line-items. It is difficult to see quickly what the BCP totals. When reading BCPs, one has to page through several of the sheets. Why canít a one-pager be used that quickly shows the details?
There are two different BCP versions available from the Finance website. The latest version, Finance-46 (Word/Excel) (REV 5/98), should resolve the problem. The (Word) BCP cover sheet, Summary of Proposal, includes the "Total Request." The (Excel) Fiscal Sheet includes "Total State Operations and Local Assistance".
The details in the fiscal sheets are important. The form meets several different needs; the spreadsheet (Excel) version was designed with the idea that possibly it could be used in the future to input data into a Finance database, similar to capital outlay BCPs.
Whenever we try to simplify and reduce the details provided by departments, the Legislature or legislative staff often want the detail information. We do recognize that some line-items may not be appropriate or needed for some departments. What works for one department may not work for another. If a particular department never uses certain lines, work closely with your Finance analyst to determine what you need and if you can use a slightly different form.
Normally, administrative costs should be justified with a separate/stand alone BCP. This should/could be done after a series of relatively minor BCPs which incrementally, over a period of time, add to the demand of administrative costs which are no longer absorbable. However, it is not unreasonable for a major BCP to include additional administrative costs. Departments need to work with your Finance Budget staff/Program Budget Manager.
Adjustments to the Governorís Budget for which a BCP is not required are commonly called baseline adjustments. Typical budget adjustments for which a BCP may not be required would be to reflect elimination of one-time costs, to reflect the full budget year cost of a previously approved change which is phased-in over multiple years, to include funds appropriated by a bill (other than the budget bill), to reflect carryovers and reappropriations, to eliminate funds for continuously vacant positions, or for employee compensation adjustments resulting from a new MOU or other action of the Department of Personnel Administration (DPA). In each of these situations, the department should work with its Finance budget analyst to reach agreement about the amount of the baseline adjustment. Backup documentation is required to support the calculations for the baseline adjustment. In some cases there may be some disagreement about how to properly calculate the amount for a baseline adjustment, or the issue(s) may be sensitive, either of which may prompt the Finance to request a BCP before an adjustment is included in the budget.
Departmental staff should work with their Finance Budget Analyst. To realign OE&E, positions and funds, sometimes adjustments can be handled administratively; more significant changes may require a BCP.
During the preparation of the 2001-02 Governor's Budget, Finance conducted a vacant position analysis for departments with 300 or more positions. The results of this analysis resulted in budget adjustments to more accurately reflect how dollars and positions were being used and addressed historical deficiencies. For more information, refer to BL 00-15.
For a SL related BR, your Principal Program Budget Analyst reviews the BR/SL, at a minimum, in addition to your budget analyst. If it is particularly significant or sensitive, the Assistant Program Budget Manager and/or the Program Budget Manager is involved in the review. Since SLs that Finance agrees with will be submitted to the Legislature, the Finance Capitol Office also is involved. Occasionally, the Governorís Office is involved in the decision-making. Before such BRs are submitted to the SCO, their technical propriety is also reviewed by the Financial Operations section in Finance.
The amount of time a BR will be in Finance before it is forwarded to the SCO will vary, based on the completeness and quality of information that is provided by the department, the time of year (what else is going on in Finance that your Finance staff are working on), the significance or sensitivity of the particular request, and whether there is a waiting period before Finance can approve the request. Simple BRs can take from 15 to 20 days. BRs for a SL can take 60 days or more; Finance usually needs to get a lot more information from departments on requests which must be reviewed by the Legislature.
SL requests are not taken lightly. Most of them are reviewed thoroughly; some are reviewed intensely.
Bottom Line: Initially, submit as complete a budget as possible. When adjustments are necessary, submit the request in a timely manner (donít wait until the last minute) and with as much information as is necessary to thoroughly document the need for the adjustment. If possible, provide advance notice to your Finance analyst.
Each year Finance publishes a Budget Letter pertaining to information technology budgeting guidelines and sends copies to Agency Secretaries, Department Directors, Department Budget Officers, and Finance Budget Staff and directs a copy be sent to the Department Chief Information Technology Officer. This Budget Letter is generally published in July. For reference, see the annual Budget Letter regarding Information Technology Budgeting Guidelines.For information technology projects, the department must submit a FSR for new projects or SPR for revised projects to the Department of Information Technology (DOIT) by the required deadline, generally August. If the department requires new or additional funds for the project, the corresponding BCP must be submitted by the required deadline, generally mid-September.
The FSR/SPR is reviewed by the DOIT and Finance and must be approved by both prior to consideration of any associated BCP.
Within Finance, the Technology Investment Review Unit (TIRU) reviews FSRs/SPRs and BCPs which contain information technology components. The TIRU coordinates its review with the appropriate Finance budget unit and with the DOIT.
There are two statewide projects progressing, both within the SCO.
The Automated Travel Expense Claim Project has selected a vendor. The project anticipates a development and implementation period of two years beginning in 2001-02.
The 21st Century Project, also known as the Human Resources Management System, is being jointly developed by the SCO and the Department of Personnel Administration. The Request for Proposal has or soon will be released, with a vendor selection to be made during the spring of 2001. Due to budgetary constraints in 2001-02, no funding has been included in the 2001-02 Budget. Stay tuned.
When will schedules, galley, and planning estimates be automated for use by all departments? Can we submit electronic versions now? Will the Governorís Budget Galley be available to programs as an automated template in a spreadsheet and word processing format that allows for preparation of the required computations and required program activity text? When is the budget system going to be updated?
The 2001-02 Governorís Budget includes a Finance BCP for funds to prepare a Feasibility Study for a Continuous Budget System. (Sometimes we refer to this as an integrated budget system, or a year-round budget system.) Such a system most likely will include the functionality/automation in question; but it is too early to determine at what point-in-time such functions will be incorporated.
The idea of automating parts of the budget process is neither new nor easy. There have been previous automation efforts; many have not worked. Some of the problems were incompatibility of equipment or software, Financeís required complex coding schemes caused considerable problems for departments, and Financeís audit/tracking problems with departmental submissions. For the 2001-02 Governorís Budget, five departments successfully participated in a pilot project for Finance to use the Schedule 10s (Supplemental Schedules of Appropriations) to prepare the RWA; these departments did not have to prepare their own budgetís RWA. We are extending this to the rest of the State for the 2002-2003 Governorís Budget. There also is a related project to prepare Fund Condition Statements in a similar manner; it probably will be piloted for the 2003-04 Budget. Further, we also are exploring with the Office of State Publishing the capability for Finance to submit spreadsheets to them, so that they do not have to key in the data and we can have quicker turnarounds of spreadsheet budgets.
CALSTARS has a Budget Development System project underway. Itís objective is to create a single, integrated Budget Development Subsystem that includes budget plan and appropriations, expenditure and revenue data at organization, line-item, appropriation and/or program/element/component/task levels. The subsystem will provide a link between CALSTARS and the Finance Budget Systems for electronic transfer and/or reporting of budget data to Finance. These two projects will be coordinated; they may be merged.
Other than Capital Outlay BCPs and spreadsheet budgets, few budget related documents are submitted electronically to Finance, even though forms and schedules are available from the Internet. If you believe you have something that could be more easily submitted electronically to Finance, contact your Finance budget analyst.
At what points are drills required of departments? Are there set times of the year or only required under special circumstances? What have the drills consisted of (i.e., contents) that departments have had to complete?
There are no set times of the year when "drills" may be required of departments, drills may arise at any time during the year. Drills are more likely to occur during the fall, around May Revise, or during final budget negotiations among the legislative leadership and the Governor.
Over the years, many "drills" have been initiated by Finance to collect data and information needed for budget decisions by the Governor or to answer questions raised by the Legislature. Examples of recent drills are the exercises to collect information about vacant positions and unfounded budget costs. Sometimes "drills" are needed to collect information for across-the-board budget reductions, while other "drills" are needed to collect information about proposed expenditures or policies that will affect several departments.
There are currently 102 different standard reports available at varying levels of detail and sort options. These include reports of:
- Transaction listings for audit trail purposes
- Allotment and appropriation expenditure reporting
- Appropriation cash balance reporting
- Grant and project expenditure reporting
- Budgetary expenditure reporting by program and/or organization
- Vendor payment history reporting
- Document history reporting
- Reportable payment reporting
- Financial statements for month-end and year-end reporting
These and other miscellaneous reports are available at anytime during the day in paper, microfiche, or report file form.
Descriptive information on each CALSTARS standard report, including a report sample, is contained in Volume VI of the CALSTARS Procedures Manual.
In addition, CALSTARS is in the process of developing a separate CALSTARS reporting training class. The agenda will include discussion of the account classification structure in CALSTARS, reading reports, reporting options, report media, and interfaces with other reporting tools.
There are no differences in reporting requirements in CALSTARS department and a non-CALSTARS department.
Can CALSTARS reports be prepared in Excel or Access with descriptive information?
CALSTARS reports from the mainframe CALSTARS system cannot be prepared directly in Excel or Access. However, the reporting processes of the CALSTARS have been modified so that all CALSTARS reports are now available in report file form for download into any agencyís local environment. Through the use of the report mining software, Monarch from the Datawatch Corporation, data from those reports can be easily extracted and imported into any PC-based spreadsheet or database software (e.g., Excel and Access).
What support does CALSTARS offer in terms of budgeting, BCPs, Finance Letters, etc.? What kind of reports would be relevant to compare budgets to actuals? Which other State budgeting documents tie to CALSTARS? Please explain the capabilities CALSTARS provides in producing budgetary/obligations and cash status information for various funding authorities.
CALSTARS currently provides three reports to assist in preparation of the Governorís Budget. These reports (N10, N11, and N20) are designed to provide information for preparation of the Past-Year Supplementary Schedule of Appropriations (Schedule 10) and Supplementary Schedule of Revenues and Transfers (Schedule 10R). They are provided to ensure that the budget data matches the year-end financial statements, save agency staff time, and serve as the first steps for interfacing CALSTARS with budget applications within Finance.
Other than a source of fiscal information, CALSTARS does not provide any direct support for BCPs, Finance Letters, etc., as these are primarily word processing or spreadsheet documents to request budget adjustments.
The appropriation accounts maintained in CALSTARS have been specifically designed to match the appropriation account structure at the SCO. In June 1999 we completed a project to automate the appropriation reconciliation process. Appropriation account balances are now received electronically from the SCO and compared to the appropriation accounts maintained within CALSTARS. Reports (CALSTARS DB2 Ė SCO/CALSTARS Monthly Reconciliation Report and HO2 Ė SCO/CALSTARS Detail Monthly Reconciliation Report) are now available to compare those balances and to list the transactions in both operations to assist the reconciliation processes.
When will "Project Accounting" modules be developed and offered?
CALSTARS currently contains a wide range of project accounting capability within a Grant Project file. This includes accountability for a specific function, activity, contract, grant, or project even though multiple appropriations, programs, and/or funding sources are involved. This accountability can occur even though it spans across multiple appropriation years and has a reporting period different from the State fiscal year. Project accounting is always used for accountability of federal grants by Federal Catalog Number.
The Grant Project file is particularly useful for: accounting costs for an activity that extends for more than one fiscal year or that has start and end dates in more than one fiscal year; State reimbursable contracts; local assistance grants; projects where costs are allowed only within a specified starting and ending date; and unique, high-visibility accounting where costs cross conventional program and organizational lines, and may include multiple funding sources.
More information is available in Volume III of the CALSTARS Procedures Manual. Operational assistance is available from the Finance CALSTARS Client Support Unit.
Are there any plans to migrate from a batch processing system to more of an online/real-time processing system? When?
There are no current plans to convert from a batch processing system. Conversion to a real-time processing methodology would be a major undertaking with questionable cost benefit compared to the system capabilities that already exist. Currently, transactions can be entered into CALSTARS and posted to several shadow files (i.e., appropriation, allotment, cash control, grant payment, document, and vendor payment) that are condensed versions of the full master files. The use of the shadow file concept allows department fiscal personnel to use CALSTARS as if they were operating in an on-line interactive mode. Pertinent account balances and related information can be accessed on-line, transactions can be edited against the tables and files, and valid transactions can be 'memo' posted to the shadow files so their effect can be determined before posting them to the master files during the batch update cycle.
When will CALSTARS be able to produce invoices as easily as it produces claim schedules and checks?
One of the planned projects for the future is the development of an accounts receivable billing subsystem. One of the intended capabilities of that subsystem is the automatic production of accounts receivable invoices and follow-up dunning notices. Work on that project, however, has been temporarily suspended to provide the resources for other currently higher priority development projects.
Is there a plan to make CALSTARS more user-friendly? Why are ad hoc reports so difficult to generate? Can CALSTARS tables be made easier to access, specifically allocation tables?
We currently are working on several enhancements specifically designed to make CALSTARS more user-friendly. These include a redesign of the transaction input screens, conversion of the input screens to a windows-like Graphical User Interface (GUI), and making CALSTARS available through a web browser. These new features eventually will lead to pop-up windows for code/table listings, on-line Help, and dialogue boxes.
Ad hoc reports can be difficult to design and maintain depending on the type of software being used. For example, the CALSTARS ad hoc reporting process was originally designed using a report writing software called RAMIS. At the time, this was the only mainframe software available for custom reports. With the emergence of the personal computer (PC) environment, other mainframe and PC-based software (e.g., Monarch and PC Focus) became available. They are much more versatile, easier to use, and serve as a bridge between mainframe systems and PC-based applications, e.g., Word, Excel, and Access. For that reason, we no longer support the use of RAMIS as an ad hoc report generator in favor of the Monarch program and other software that agencies are using for that purpose.
What changes are being worked on now?
Several system enhancements are in progress. These include:
More information is available from the CALSTARS Annual Plan, which is available for viewing or copy from the CALSTARS website at: http://www.dof.ca.gov/HTML/CALSTARS/index.html.
There is a Monarch Forum. Is there a forum of budget managers in the State to discuss budget/CALSTARS/accounting issues?
We are not aware of any single "Budget Managers" Forum outside of CALSTARS. The Monarch Forum has evolved into a broader CALSTARS/Monarch Users Group that now covers a variety of CALSTARS related topics and issues, including those that may involve the association between CALSTARS and departmental budgeting procedures and practices. In addition, we are now facilitating a Budget Development System Workgroup consisting of CALSTARS and department staff to identify the needs and requirements for a planned departmental Budget Development System.
CALSTARS is the Stateís accounting system. It is currently in use as the accounting system for approximately 200 organizations throughout the State. Certain departments have been exempted from CALSTARS for unique needs and requirements on a case-by-case basis.
How can program managers (non-fiscal) use CALSTARS reports to their best advantage?
There are several recommendations for insuring the timeliness and usefulness of fiscal management reports from CALSTARS.
What CALSTARS training options are available specifically related to budgeting?
At the present time, the nine individual CALSTARS training sessions cover the fiscal accounting and reporting processes and procedures related to the operation and maintenance of CALSTARS. They do not cover the processes for development of departmental budgets prior to the data entry of budgetary data.
In our department, only the accounting unit has access to CALSTARS, would it be possible to have browse capabilities for the programs?
Access to CALSTARS is possible through coordination with your accounting office. However, that access would be direct to the data files of the system and not direct to any reports separately produced by the system. If you are interested in having on-line access to reports, processes have been developed by various CALSTARS agencies to make their reports available to departmental program management through their Local Area Network and/or Internet capabilities.
When do they intend to add a procurement module?
Our long-range intent is to develop such a module for production of procurement documents and interface to CALSTARS for automatic encumbrance against budget plans. In addition, we have had preliminary discussions with the Department of General Services to interface with their planned on-line procurement system.
I understand that CALSTARS is developing an electronic process for filing of claim schedules between departments and the SCO. Can you please give us a status report on that system?
CALSTARS has completed development and testing of programs and processes to produce claim schedule and remittance advice information for electronic transfer to the SCO. The implementation of this process has been suspended until legal considerations have been addressed by the SCO.
The Office of State Audits and Evaluations (OSAE) performs a variety of audit and evaluation related services. We are a full service organization performing financial audits, financial related audits, program evaluations, program reviews, operational audits, agreed-upon procedures, consulting, and special studies. Our staff hold numerous certifications and have broad experience in all levels of government and the private sector. Our hourly rates range from $34 to $82, including departmental overhead.
In general, when the auditor renders an opinion on financial statements or internal controls, the opinion states that everything is fine except for the listed exceptions. To list all functions that program or department staff perform properly could result in a voluminous report. Additionally, auditors might assume risk of potential loss if they state specifically what is sound and correct. That is, they could be held responsible if things go wrong. Where possible we do try to give some positive feedback in the report. An auditor should include noteworthy accomplishments in the report narrative.
Yes, Finance performs the following roles: (1) point of contact for the State of Californiaís federal cognizant agency and other federal awarding agencies that have single audit findings related to their programs; (2) point of contact, coordinator, and preparer of the Statewide Management Representation Letter; and (3) point of contact, coordinator, and preparer for the Single Audit Reportís Schedule of Federal Assistance, Notes to the Schedule of Federal Assistance, and Summary Schedule of Prior Audit Findings.
As the point of contact for the Stateís cognizant and other federal agencies, Finance is responsible for submitting the Stateís annual Single Audit Report and data collection form to the federal clearinghouse. Additionally, Finance coordinates State department responses to federal agency inquiries concerning the status of corrective action on single audit findings. The Single Audit Report is provided to, and reviewed by, the Stateís federal cognizant agency and other federal agencies that have single audit findings related to their programs. Annually, Finance will receive a letter from the Stateís federal cognizant agency containing specific recommendations regarding the cognizant agencyís federal program/award findings reported in the Stateís Single Audit Report. Finance is responsible for obtaining State agency responses to the cognizant agencyís recommendations and to prepare the statewide written response.2
As required by generally accepted audit standards, each year the State provides a Statewide Management Representation Letter to the Bureau of State Audits (BSA). The letter contains specific representations concerning the Stateís general purpose financial statements and the Stateís administration of federal programs. Finance requires and obtains individual management representation letters from all State agencies and departments and consolidates the individual letters into one statewide letter that is signed by the Director of Finance.
Finance also prepares the Single Audit Reportís Schedule of Federal Assistance, Notes to the Schedule of Federal Assistance, and Summary Schedule of Prior Audit Findings. Finance obtains this information from the SCO and, most importantly, from State departments that administer federal awards/programs. Annually, Finance requests State departments that administer federal awards/programs to provide non-cash federal award information and an updated status of corrective action on prior single audit findings. The State department responses are incorporated into the schedules and notes, which is then provided to the BSA for publication in the Stateís Single Audit Report.
While Finance plays an important role in the single audit process, the cooperation and assistance provided by individual State departments is critical. The information published in the Single Audit Report is essentially information provided by State departments; therefore, it is important that State departments provide accurate and timely information to Finance. It becomes more critical now that the Single Audit Report is due to the federal clearinghouse three months earlier than in previous years.
1 For California, the cognizant agency is the U.S. Department of Health and Human Services (HHS), the federal awarding agency that provides the predominant amount of direct funding.
2 This letter is utilized by the HHS to follow-up on audit findingsĖState department responses to the HHS recommendations are used by the HHS Resolution Official in making a final determination with respect to the findingís resolution.
Are there any rules regarding a need to keep trust and accounting departments separate?
No, and itís not necessarily even desirable. Of course, trust funds must have separate books and records, as with all different funds. However, it is not a personnel or organizational necessity and should be driven by the entityís resources and controls.
What are the "best practices" for internal control mechanisms and their relationship to SAM?
The SAM prescribes the policies and procedures for the State accounting and administrative systems. Internal control includes the system in place to ensure these policies and procedures are functioning properly. Examples of controls are separation of duties, proper authorizations, and sufficient documentation. The structure relates to a control cycle or sub-cycle, with specific guidelines to regulate and control the processes. For example, consider revolving fund disbursements. Revolving fund disbursements can be made for four reasons: (1) salary and travel advances, (2) publications and subscriptions, (3) emergency situations, such as a vendor demanding immediate payment or vital services will be stopped, or (4) to pay a vendor to receive a discount. For one check, letís say a salary advance, there are four cycles and their associated controls, other than the revolving fund, which must be in place. They are cash disbursements, payroll, accounts receivable, and cash receipts. It is managementís responsibility to ensure the structure is in place to appropriately authorize, record, issue, and then clear the revolving fund disbursement. Thatís the best practice. A separate session on best practices is not currently in the works.
Does Finance plan to update the Information Security and Risk Management Audit program to be more relevant to current information systems and technology advances?
The current guide is not intended to be a detailed technology assessment. It is based on State policy as promulgated by the DOIT and is subject to update as that policy evolves. We would like to continue to ensure it represents the current state of affairs.
Our audit schedule is based on our risk assessment of the State departments and programs, requests from the Governor, requests from the Legislature, statutory requirements, and requests from departments. We prepare and regularly revise our annual plan based on the above information. The BSA audits the Stateís financial statements annually. Additionally, some federal moneys require audits on a specifically scheduled basis. Programs/departments are chosen for a variety of reasons. A risk assessment is prepared and each program/department is analyzed based on several risk factors. Some of those risk factors could be financial materiality, management (both internal and external) concerns, prior audit findings, and relationship to the scope of the audit. A negative report can result in consequences ranging from a slight embarrassment to loss of funding or substantial repayment.
What is the most common issue/area of non-compliance among State agencies?
We have no overall summary; however, the BSA regularly reports fixed assets accounting and inventory as a statewide issue in its Single Audit Management Letter. Our experience supports that issue as well.
What are the rights of an agency during the audit process?
In a routine audit engagement, the agency has the right to be fully informed about the scope of the audit and what steps are being taken to achieve results. This should include open communication (i.e., through entrance and exit conferences and regular status meetings) and professional courtesy. The auditee should also be given an opportunity to respond to a draft report of findings. If the audit is investigative in nature, all of the above may be suspended.
What types of internal controls should we have in place (at the very least) for good fiscal management?
Internal control is discussed in SAM Section 20003. The required procedures throughout SAM are components on internal control. Another good source for definitional material is the Committee on Sponsoring Organizations (COSO) website: http://www.coso.org/. Finally, check out the OSAE web page and review our audit guide. It explains the controls we look for and the methods we use to verify their existence.
Is there any recommended boilerplate language to include in contracts re: audits, internal controls, etc. when the State is using federal dollars via a contract to get work done under a federal grant (i.e., the grant is a sub recipient)?
Federal Office of Management and Budget (OMB) Circular A-133 provides sample boilerplate language.
In addition, the OMB A-133 Compliance Supplement issued March 2000 states governmental subrecipients are subject to the provisions of the A-102 Common Rule "Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments." However, the A-102 Common Rule permits states to impose their own requirements on their governmental subrecipients. Thus, in some circumstances, the auditor may need to refer to State rules and regulations rather than federal requirements.
For specific information regarding OMB A-133, reference the OMB circular, website: http://www.whitehouse.gov/OMB/circulars/.
What aspects of auditing impact the budget operations?
Audit results provide information that may affect budget allocations. For example:
Of course, the use of audit results in the budget process will only occur if budgeting and auditing are appropriately linked. A budget process should be structured to regularly review existing audit results. Moreover, if internal control, compliance, or performance problems are suspected with respect to previous budget allocations, special audits could be requested to provide feedback to the budget process.
What is the process for revolving fund deficiency claims?
Government Code Section 16400, as amended by Chapter 726, Statutes of 1994, dictates that, subject to approval of the Director of Finance, deficiencies resulting from the use of the revolving fund may be replenished from an existing appropriation designated by the department. In addition, the amendment also transferred the responsibility to approve claims filed by departments from the California Victim Compensation and Government Claims Board (formerly known as the Board of Control) to the Director of Finance. The Director of Finance has delegated this responsibility to the OSAE.
All claims must be filed on a Form 27A, Claim for Reimbursement. A copy of both sides of the canceled check from the transaction that caused the deficiency must be included with the Form 27A. All approved claims are ultimately processed through the regular claim schedule process with the SCO. The claim schedule filed with the SCO should not include any other types of expenditures.
The collection procedures required in SAM must be undertaken before a claim is filed for reimbursement. This documentation does not need to be sent with the claim, but must be maintained in-house for audit. The internal audit unit must also review the claim, if one exists within the department.
If the Form 27A is $1,000 or more, the claim schedule is $2,500 or more, the copy of the canceled check is unavailable, or the claim is the result of an unresolved claim correction from the SCO, then the claim must be sent to the OSAE for review. If the claim does not fall under the above criteria, then the department files a claim schedule with the SCO for reimbursement. If the OSAE approves the claim, it will be returned with an approval stamp and can be filed for reimbursement.
If the OSAE does not approve the claim, it will be returned to the department with a letter attached explaining why it has been denied. After denial, the department must file the claim as an equity claim with the California Victim Compensation and Government Claims Board.
Cash shortages in trust accounts and bank accounts, which create a deficiency in an established fund balance, are equity claims.
Finally, departments must prepare a report for the period ending June 30 of each fiscal year. This report details the disposition of all claims for reimbursement. This report must be submitted to Finance, OSAE by September 30 of each year. A report must be submitted even if the department had no activity in this area.
What we look for
The claim is evaluated to ensure proper signatures, the correct information for the type of deficiency has be completed, the appropriate explanations are included, such as a statement as to whether or not the deficiency is a result of a claim correction, why a copy of the canceled check is not included and what steps have been taken to correct the problem so it does not occur again, and a copy of the canceled check (if available) is attached to the form. The review also includes an evaluation of the type of payment originally made to ensure it was a legal payment/use of the revolving fund.
The majority of the problems relate to not adequately completing the Form 27A, in terms of internal processing.
In terms of the types of problems with the revolving fund, the majority is related to illegal use of the revolving fund and non-collection of advances back from employees in a timely manner.
The OSAE conducts internal control reviews of State departments in accordance with a five-year audit plan. The initial step in any audit plan is to utilize some process to assess risk, and thereby be able to prioritize workload and staffing requirements.
In developing our next five-year plan, the OSAE has used data from a number of sources including the Governorís Budget, previous audits and reviews, and a survey document, the "Risk Assessment Questionnaire," sent to over one hundred and fifty departments. Data from all these sources is currently being analyzed in order to arrive at the gradations of internal control risk that exist among State departments and the potential workload and staffing needs that would result for the OSAE.
Try these five steps.
None have been completed to date. We believe the first ones will be completed before the end of the calendar year. We are using a review guide very similar to that of the National Association of Local Government Auditors. Check their website at http://www.nalga.org.
Auditing is the independent verification of information or performance by measuring a sample of data against a stated criteria and measuring the difference. Auditors typically combine various techniques (research, interview, survey, analysis, etc.) to determine whether the subject of the audit (financial statement or event, program operation, internal control, contract performance, etc.) occurred, was completed thoroughly, accurately and timely, and in conformance with the controlling rules, regulations, policies, and procedures. Eliminating the deficiencies auditors note can be as simple as implementing their recommendations. Preventing their occurrence entails the techniques and procedures discussed in other answers in this section.
The question is not whether a department has to comply with audit exceptions, but whether the department agrees or disagrees with the audit exception. Audit exceptions are the conditions that would, in the opinion of the auditor, significantly impair the effectiveness of the organizationís internal controls or its compliance with laws, regulations, or contract requirements.
A department can either agree or disagree with an audit exception. If the department disagrees with a reported audit exception, the department is generally given an opportunity to provide a written explanation and reasons for the disagreement that is included in the final report. In some cases, if the department can provide additional verifiable evidence proving the audit exception is inaccurate, the finding can be modified or eliminated. However, if a department agrees with a reported internal control audit exception, department management is required by the FISMA to implement a corrective action plan.
Audit exceptions are always accompanied by audit recommendations. These audit recommendations are the actions the auditor believes necessary to correct the exceptions. Department management may agree with a finding but disagree with the recommendation, and may choose to comply or not to comply with the audit recommendations. Whether department management decides to comply with audit recommendations or not, management should assess all of the risks of not complying and whether those risks are acceptable. If the risks are judged to be not acceptable and the department plans to implement corrective action, the department will normally have the discretion in developing a plan that is most suited for its operating environment.
A private firm could audit a State agency if it were partnering with a private entity or other governmental entity that used a private audit firm. In addition, some State entities, the Lottery and Department of Insurance Conservation and Liquidation Division for instance, are routinely subject to CPA firm audits.
The process itself can be relatively short and sweet. However, it may seem like it takes forever because of the time it takes to get the claim in the right hands, and then having those ďright handsĒ have time to devote to processing the claim.
Every audit has a different goal. A financial statement audit is looking to verify that the amounts reported on Revenue/Expenditure reports and Balance Sheets accurately reflect the entityís financial position as of a certain date for a certain period. A performance audit is to verify that a program has achieved certain goals using the resources it has been authorized. An investigative audit may be to identify and quantify accountability for specific actions or transactions under question. In general, an audit verifies activity in accordance with established rules and criteria and reports on the outcome.
Understand what the auditors want (any auditor should be able and willing to discuss the audit, its objectives, and the documentation necessary to achieve those objectives) and have the relevant documentation available. Setting aside specific time for auditor questions can help; also, operating in a spirit of cooperation can facilitate the auditís timely completion.
Hopefully, our presentation and the handouts have explained the function of FSCU and how we "fit in" the State's budget, accounting, and reporting processes.
We can provide consulting services, on a reimbursement basis, relative to a departmentís fiscal operations. Detailed written requests must be submitted to the Chief of FSCU who will consider the needs of the requesting department and the current FSCU workload. However, your budget staff are familiar with your departmental operations, programs, and funding sources. As such, they should be able to prepare a cost analysis of internal fiscal services vs. outsourcing.
See the response to Accounting question #2, above.
The CALSTARS unit does not offer any service to do the actual Cost Allocation Plan "preparation". They do provide consultation, guidance, and assistance in recommendations for structuring CALSTARS and its tables to provide a cost allocation process that is reasonable, equitable, and consistent with state/federal guidelines.
No, FSCU does not provide consulting services for departmental budgeting practices. The Finance website lists various training offered to departmental staff and the BAG, which is available at http://www.dof.ca.gov/fisa/bag/bagtoc.htm, is an excellent source of information. In addition, the State Training Center offers workshops in the legislative and budget processes.
Has the role of the FSCU changed? What is the primary service to the State agencies?
We have additional responsibilities such as administering the Cash Management Improvement Act and ensuring the Stateís conformance to IRS information return reporting requirements. However, our primary purpose is to ensure a statewide uniform system of accounting. This includes:
No, our time is not limited if 1) a written request for assistance is received, 2) the area is within our responsibility, and 3) the issue is statewide. In this situation, FSCU staff will assist, make recommendations, and/or provide resolution. If the issue is unique to your department, you can request our consulting services. See Accounting question #2, above.
The non-reimbursed General Fund costs of FSCU are
recovered from special and federal funds through Pro Rata and SWCAP. See Accounting questions #1-6, above, for information about
Is there a list of contact names and phone numbers for FSCU staff?
The FSCU website lists staff names, phone numbers, and areas of responsibility. However, verbal and written requests for information do not need to be addressed to a specific analyst.
Questions regarding CALSTARS reports should be directed to a departmentís CALSTARS analyst, if assigned, otherwise to CALSTARS Hotline at (916) 327-0100 or e-mail at HOTLINE@dof.ca.gov. In addition, CALSTARS is in the process of developing a training class that will specifically explain the reports, their contents, and all of the reporting processes available from CALSTARS. A future CALSTARS Operations Memo will announce this class as soon as it is available.
What is the Cash Management Improvement Act (CMIA)?
The definition and purpose of the CMIA were provided during the FSCU
presentation of the seminar. Additional information is available at the
Finance web site, in the Governorís Budget for organization code 9625, and
in SAM Sections 8010-8014.
Any State program receiving federal funds is subject to the provisions
of the Cash Management Improvement Act. Departments that have programs receiving
$87 million or more are required to report quarterly to FSCU the receipts
and expenditure information for those programs. Anytime departments receive
$50 million or more in new federal funds, they must immediately
report the program and funding information to FSCU. The information should
also be provided to your Finance budget analyst.
For the past two years the federal government owed a net interest liability to the State for the interest incurred on administrative costs. However, the requirement to track the information is regulatory and we must comply. The draft revision of the CMIA regulations does not appear to continue this requirement but the new regulations will not be effective until fiscal year 2001-02.
The seminar includes a brief explanation of the Pro Rata and SWCAP processes. Pro Rata is the plan the State uses to recover its administrative costs from special funds other than federal funds. The administrative costs are the costs of the central service agencies, (e.g., Finance, SCO, DPA). SWCAP is the acronym for the Statewide Cost Allocation Plan. It is the plan the State uses to recover its administrative costs from the Federal Trust Fund. The State uses two plans because some costs recovered from special funds (e.g., Legislature) are not allowable by the federal government. The calculation is dependent upon State department usage and fund sources, the central service agenciesí General Fund non-reimbursed costs, the mix between these, and other miscellaneous factors. Therefore, the calculation and allocation process cannot be explained within a few sentences. Additional information, including training offered by Finance, is available at http://www.dof.ca.gov/FISA/PROSWCAP/ProSWCAP.htm.
See Accounting question #13, above. Our training includes suggestions and guidelines for the allocation of the Pro Rata and SWCAP costs. In addition, SAM Section 9200 et seq. provides information regarding cost allocation procedures.
All direct charges are deducted from central service function costs; therefore, only the non-reimbursed General Fund costs are recovered through Pro Rata. The Government Code authorizes the recovery of central service agency costs through the Pro Rata plan. Departments may request specific services that are not common to other departments. In those situations, a direct bill may be appropriate but the payment terms are subject to negotiation.
What can be paid for out of special funds, Lottery, and Special Repairs funding?
All expenditures must be in accordance with the legal disposition of a fundís resources and the appropriation or spending authority. The Manual of State Funds includes the legal citation, the history and purpose, the major sources, and the disposition for all State funds. The broad intent or purpose of an appropriation is contained in the Budget Act, Constitution, or statute. If you have a specific question regarding whether a certain expenditure item can be paid from a fund or an appropriation, you should contact your departmental legal counsel or your Finance budget staff. Since the early 1990s, there have been a number of lawsuits and settlements that have further defined appropriate uses of special fund revenues.
What manuals/management acts apply to "doing business" in a State hospital; i.e., major areas of influence/concern?
As a State entity, a State hospital is subject to the controls, laws, rules, and regulations of the State. Therefore, unless statutorily exempted, "doing business" requires adherence to the Stateís policies and procedures, e.g., SAM and the Uniform Codes Manual.
I need to change the title of a revenue code. We have an agency code that further delineates the revenue source, but the higher level code that is displayed in the Governorís Budget is incorrect. In fact, for the revenue source we are concerned about it actually appears to be illegal. The revenue code is 125400. How can I fix this-I can only see changing the title or obtaining a new code but I have had no luck in doing either.
If the revenue code is inappropriate or inaccurate, you should consult with your Finance budget analyst. You may also need to contact your departmental staff counsel regarding the legal provisions of the resources. If a new revenue code or a change to an existing code is justified, a request must be submitted to the Uniform Codes Manual Committee for their approval. The committee is chaired by Finance and comprised of representatives from various DOF units, the SCO, and the Bureau of State Audits.
My particular interest in this section would be in the area of the CMIA, Late Payment Penalties, and Special Deposit Fund (SDF) Accounts.
All three areas were discussed during the FSCU presentation of the seminar. Additional information is available as follows:
Why doesnít the unit provide written clarifications or suggestions to general and/or gray areas under SAM?
We provide written instructions and clarification to any departmental written request, provided the subject matter is within the responsibility of FSCU. The responsibilities of FSCU are listed at: www.dof.ca.gov/fisa/fscu.responsib.htm.
It seems that some of the items in SAM are not up-to-date. How often is the revision done?
Our area of SAM (generally Sections 7000-19999) is revised as we become aware of a needed revision but relative to other FSCU priorities. However, the revision process can be very slow. Many revisions involve other control agencies (e.g., SCO, STO) that must approve the revision. The CALSTARS unit and all FSCU staff also review the proposal before we submit it to DGS for publication. The DGS will review, format, and return it to us for final approval. The revision will then be included in the next quarterly transmittal.
For multi-year contracts, how long may an encumbrance be carried?
The ability to maintain a valid encumbrance is determined by the type or character of the appropriation and the period specified in the authorizing legislation. Generally, Budget Act support appropriations are available for encumbrance for one year and available for encumbrance liquidation for two additional years. The encumbrance availability of an appropriation may be changed by provisional language to the appropriation. If not otherwise limited by law, the appropriation is available for encumbrance for three years from the date it becomes available. The general provisions governing appropriations are in Government Code Section 16304 et seq.
How does a department ensure that it doesnít end up with overspent appropriations towards the end of the year, considering that budgets already does their quarterly projections?
Departments must maintain current and accurate information in their Allotment Expenditure Ledger (SAM Section 8300 et seq.). This information should be used to regularly and timely reconcile their appropriation balances with the SCO. During the last quarter of the fiscal year, the reconciliation may need to be done more frequently. In addition, the status of appropriations, by allotment, should be regularly communicated to your program managers.
As a State agency how do you avoid late penalties and how do you take advantage of discounts for timely payments?State agencies should efficiently process invoices to avoid late payment penalties by ensuring that all:
Departments should identify those invoices offering discounts for immediate payment and either:
Paying discounted invoices is a permissible use of the ORF. Departments may also use the ORF, on a limited basis, to make immediate payment to avoid late penalties.
Please discuss the rules that govern Internal Service Funds. How should departments keep the two sets of books, legal (governmental) and GAAP?† Please discuss the reporting responsibilities.Internal Service Funds (ISF) are included in the annual budget process because of their relationship to other funds. In addition, many ISFs receive significant revenues from federally funded departments. Therefore, ISFs must account and report in accordance with the Stateís legal/budgetary basis, with generally accepted accounting principles, and with federal provisions.
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