MICHIGAN DEPARTMENT OF TREASURY
BUREAU OF LOCAL GOVERNMENT SERVICES
LOCAL AUDIT AND FINANCE DIVISION

ACKNOWLEDGMENTS:

We wish to express our appreciation for the dedicated efforts of the staff members of the Local Audit and Finance Division, Department of Treasury, who devoted many hours to writing, rewriting and reviewing this material prior to submission to the Michigan Committee on Governmental Accounting and Auditing. We also want to thank Dan Hansen, Muskegon County Health Department; John Jacobs, Ingham County Health Department; Dennis Lee, Michigan Department of Community Health; and Richard McCubbin, Michigan Department of Community Health for the time spent in the completion of this project. We also wish to give special thanks to Jon Houserman of Mid-Michigan District Health and Michael T. Gaffney, CPA, Abraham & Gaffney, P.C. for their valuable input.

The following are members of Michigan Committee on Governmental Accounting Auditing:

Richard L. Baldermann, CPA, CGFM, Department of Treasury; Chairman

Larry J. Allen, CPA, Stewart, Beauvais & Whipple; Jim Baker, CPA, Siegfried, Crandall, Vos & Lewis; Robert C. Bendzinski, Bendzinski & Co.; John Bengel, CFE, CGFM, Department of Treasury; Donald R. Breadon, CPA, MBA, Gaudette & Co.; James G. Buckley, CPA, PricewaterhouseCoopers; Darrell Burks, CPA, PricewaterhouseCoopers; Patsy K. Cantrell, City of Farmington; John Cubba, Redford Township; Robert J. Daddow, CPA, Oakland County; Gerald J. Desloover, CPA, Rehmann, Robson & Co.; George Elsworth, Assistant Attorney General; Rana M. Emmons, CPA, Post, Smythe, Lutz & Ziel; Michael J. Frawley, CPA, Yeo & Yeo; Michael T. Gaffney, CPA, Abraham & Gaffney, PC; Joseph C. Heffernan, CPA, Plante & Moran; Susan G. Hendricks, Independence Charter Township; Ernest L. Hodgers, MPA, CGFM, Department of Treasury; Peggy Jury, CPA, Dupuis & Ryden; Karen Lawrence-Webster, CPA, City of Saginaw; Janet L. Lazar, Michigan Municipal League/Benefit Evaluation; Ann Marie Moe, Department of Transportation; John H. Murphy, Cass County; Patrick L. Mutchler, CPA, Brickley Delong; Brad Niergarth, CPA, Dennis, Gartland & Niergarth; John H. Ogden, CPA, City of Port Huron; Thomas W. Ott, Oakland County; Kenneth D. Parrish, CPA, Kent County; Rick J. Sanborn, City of Sterling Heights; Susan D. Sanford, CPA, Department of Treasury; Robert J. Skrobola, Pittsfield Charter Township; John Sobleski, Wayne County; Linda A. Stephen, CPA, Rehmann, Robson & Co.; Aaron M. Stevens, CPA, Abraham & Gaffney, PC; Michael Styczenski, CPA, Deloitte & Touche, LLP; Cary J. Vaughn, CPA, Department of Treasury; Ross J. Wilson, CPA, Maner, Costerisan & Ellis; Patricia E. Wysong, Clinton County Road Commission.

TABLE OF CONTENTS

CHAPTER I--INTRODUCTION

August, 2001

LOCAL HEALTH DEPARTMENTS:

This "Uniform Accounting Procedures Manual for County/District Health Departments in Michigan" is for use in all local health departments. The purpose is to provide for uniformity in financial accounting and reporting. The manual consists of account codes, account explanations, accounting procedures, and sample financial statements.

Your cooperation in adopting the uniform chart of accounts will be appreciated.

Questions you may have concerning this manual should be directed to the Michigan Department of Treasury, Bureau of Local Government Services, Local Audit and Finance Division, Lansing, Michigan 48922.

Richard L. Baldermann, CPA, CGFM
Administrator
Local Audit and Finance Division

This Uniform Accounting Procedures Manual has been prepared to establish the basic accounting procedures and requirements for Michigan County/District Health Departments.

This manual supersedes the previous Uniform Accounting Procedures Manual for County/District Health Departments dated December 1983.

Questions, comments and recommendations may be forwarded to:

The manual is composed of 5 chapters identified by roman numerals (I through V).

Public Health

Public Act 368 of 1978, as amended is known and cited as the "Public Health Code."

Section 2406 of the code defines a local public health department as:

Type of Local Health Department	Local Governing Entity Responsible for  Local Health Department
single county health department	county board of commissioners
district health department	county boards of commissioners of the  counties comprising the district
single city health department	mayor and city council of the city
local health department serving a county  within which a single city health  department has been created pursuant to  Section 2422	county board of commissioners elected from  the districts served by the county health  department

Section 2417 states that a claim against a district health department shall be audited by the district board of health which has the same power to allow the claim that a local governing entity has to claims against a county or city. If the district board of health meets less often than once a month, a claim may be allowed by the local health officer and 1 member of the district board of health who shall report the action to the board at its next regular meeting. The same right of appeal from the decision of the district board of health to a claim that exists from a similar decision of a local governing entity. The total amount of the allowed claims shall be apportioned among the local governing entities of the district using a formula approved by the district health board. The formula determined by the district health board shall be approved by the Michigan Department of Treasury. The officers of each local governing entity for its apportioned share shall issue a voucher for an allowed claim.

Section 2433 requires that a local health department shall continually and diligently endeavor to prevent disease, prolong life, and promote the public health through organized programs. Programs may include prevention and control of environmental health hazards; prevention and control of diseases; prevention and control of health problems of particularly vulnerable population groups. Programs may also include the development of health care facilities and health services delivery systems, and regulation of health care facilities and health services delivery systems to the extent provided by law.

Section 2444 allows a local governing entity, or in the case of a district, the district board of health, to fix and require the payment of fees for services authorized or required to be performed by the local health department. The local governing entity or district board may revoke, increase, or amend the fees. The fees charged shall not be more than the reasonable cost of performing the service.

Section 2481 states in part that a local health department shall… report its performance, keep records, and afford access to the records by authorized state, federal, and local officials for audit and review purposes necessary to verify and assure the accuracy and acceptability of the reports.

MICHIGAN DEPARTMENT OF TREASURY

The Department of Treasury has the responsibility to formulate and establish a uniform system of accounting and reporting in all counties in accordance with Public Act 71 of 1919, as amended.

Also, Public Act 2 of 1968, as amended, provides for the formulation and establishment of a uniform budgeting system, uniform charts of accounts, annual financial reports, examination of the books and accounts of local units of government. It also prescribes the powers and duties of the state treasurer and the attorney general to enforce penalties for violations of certain requirements of the Act.

The health fund is a special revenue fund type that requires the modified accrual basis of accounting to be used.

The Michigan Department of Treasury has classified local health department funds as special revenue funds in accordance with GASB Codification Section 1300.104a(2). Special revenue funds are used to account for the proceeds of specific revenue sources (other than expendable trusts or for major capital projects) that are legally restricted to expenditures for specified purposes.

This Health Department/District Health Special Revenue Fund is used to account for earmarked revenue sources. The uses and limitations of the revenues are specified by legal authority as defined in the Public Health Code, Public Act 368 of 1978, as amended.

A FUND IS AN INDEPENDENT ACCOUNTING ENTITY WITH A SELF-BALANCING SET OF ACCOUNTS, CREATED FOR THE PURPOSE OF CARRYING ON A SPECIFIC ACTIVITY. IT HAS ACCOUNTS FOR ASSETS, LIABILITIES, RESERVES, EQUITIES, REVENUE AND EXPENDITURES.

In most cases, the local health department will maintain only one fund. All expenditures and revenue related to health activities must be recorded in the health fund.

The Uniform Accounting Procedures Manual for County/District Health Departments has been organized so that any financial reports that are necessary may be developed from the accounting system.

Each health department is expected to use those accounts applicable to its specific operation. Any health department needing an account number or description, which is not listed in this manual, may contact the Michigan Department of Treasury, Bureau of Local Government Services, Local Audit and Finance Division for assistance at (517) 373-3227.

It is essential that only fund numbers or account numbers that are shown in this manual be used unless prior approval is obtained.

Sample of Total Account Number

Fund 221

Program 440

Account Numbers 702.xx

Explanation of the sample account number (221-440-702)

The level of detail in which each local unit applies the above structure is at the discretion of the individual health department, according to its own needs. The extent of the expansion of the account numbers is at the discretion of the individual health department.

The expansion of an account number is allowed through point-off of the number at the option of the local health department. The major category headings must be observed.

Example:
Major Category (Control Account)	Salaries & Wages #702.00
Sub-Category (Detail Account)	Salaries & Wages--Regular #702.01  Salaries & Wages--Temporary #702.02

The activity (program) number should be reflected in all revenue and expenditure accounts. For example:

221-440-702.00

Family Planning Program  Salaries and Wages

The above outlined codification structure is designed to provide for uniform reporting. Note that the structure is easily adaptable to an automatic (computerized) data processing system.

221. HEALTH DEPARTMENT/DISTRICT HEALTH FUND

PURPOSE - This fund is a self-balancing group of accounts used to account for special revenue set aside for the purpose of providing health protection for people within a county, district (group of counties), or other local units.

CHARACTER - This fund is classified as a special revenue fund because of the limited usage (for health protection only) of the assets.

DISTINGUISHING FEATURES - This fund is found primarily in county government and is under the authority of the county board of commissioners or other local unit governing body. The local/district health department has its own accounting system as prescribed by the Michigan Department of Treasury and the Michigan Department of Community Health. This fund may also be maintained by cities.

AUTHORIZATION AND ESTABLISHMENT - This fund is permitted by statute and is required by the Michigan Department of Treasury. The Department of Treasury requires this fund in accordance with generally accepted accounting principles established by the Governmental Accounting Standards Board (GASB).

OPERATION AND PRESENT USE - This fund is used to account for money provided by: (a) general fund appropriations; (b) state and federal grants; (c) charges for services; (d) appropriations from member units of a district; and (e) gifts, grants, bequests or other contributions specified for and restricted to health functions by the donor.

OTHER FUNDS - If other funds are required by statute or regulation in order to properly account for a state or federal grant, a separate fund may be established by the health department and the county clerk or controller.

The health department/district health fund must operate with a budget adopted by the governing body of the city, county, or district in accordance with Public Act 2 of 1968, as amended (MCL 141.421 et al.).

All claims (expenditures) must be approved by the governing body of the local unit of government (single unit health department) pursuant to statutory requirements as follows. Cities-MCL 87.7; Counties-MCL 46.11 (q), 46.71, 46.53, and 46.63; District Board of Health-MCL 333.2417.

It is often necessary to allocate costs to a specific activity or program (service) because of restricted grants from the state or federal government or certain local sources. The term "activity" may include function, sub-function, program (service), sub-program, project, or cost center.

The general ledger accounts are maintained by program (service). The budgets, monthly financial status reports, and the annual financial summary are prepared by program (service).

The following accounts reflect recommended major program (service) categories:

PROGRAM	TITLE	INCLUDES PROGRAM NUMBERS
100	Administration and Support Services	100 - 199
200	Prevention and Control of Environmental  Health Hazards	200 - 299
300	Prevention and Control of Diseases	300 - 399
400	Prevention and Control of Health Problems of  Particularly Vulnerable Population Groups	400 - 499
500	Development and Regulation of Health Care  Facilities and Health Service Delivery Systems	500 - 599
600-900	Other	600 - 999

Specific identification and definition of health services are determined in accordance with requirements of P.A. 368 of 1978, (the Michigan Public Health Code), as amended, and as locally applicable.

All single account numbers shown in the chart of accounts are major category headings and must be observed.

These single account numbers may be pointed off .01 through .99 to show further detail in sub-category accounts.

The Department of Treasury does not prescribe each individual revenue or expenditure account. Instead, a major category title is prescribed and a series of account numbers provided with each grouping for optional use by the local health department. Any revenue or expenditure account may be pointed off .01 through .99 if further detail is needed.

Certain accounts are used only in the accounting for "account group" activity (i.e., General Fixed Assets, General Long-Term Debt) or for government-wide financial reporting for GASB Statement No. 34. Those accounts have been footnoted for reference purposes.

BALANCE SHEET ACCOUNTS
Current Assets (001-129)
001.00	Cash
002.00	Cash--Savings
003.00	Certificates of Deposit
004.00	Imprest (Petty) Cash
007.00	Cash--Payroll
018.00	Accounts Receivable (Control)
040.00	Accounts Receivable (General)
071.00	Due From Cities
075.00	Due From Schools
078.00	Due From State of Michigan
079.00	Due From Federal Government
081.00	Due From Other Governmental Entities
083.00	Due From Employees
084.00	Due From Other Funds (Same Unit of Government)
089.00	Cost Settlement Receivable (Control)
108.00	Inventory--Materials and Supplies
128.00	Prepaid Expenditures
Capital Assets (130-179) (Used only for "account group" and GASB No. 34 reporting)
130.00-144.00	Land  Land Improvements  Accumulated Depreciation--Land Improvements  Depletable Assets  Accumulated Depletion--Depletable Assets  Buildings, Additions and Improvements  Accumulated Depreciation--Buildings, Additions and Improvements
145.00-159.00	Equipment  Office Equipment and Furniture  Accumulated Depreciation--Office Equipment and Furniture  Vehicles  Accumulated Depreciation--Vehicles
160.00-179.00	Other Capital Assets  Accumulated Depreciation--Other Capital Assets
Other Assets (180-199)
199.00	Long-Term Advances to Other Units of Government
Current Liabilities (200-299)
201.00	Vouchers Payable
202.00	Accounts Payable
207.00	Notes Payable (Short-Term)
214.00	Due to Other Funds
221.00	Due to Cities
228.00	Due to the State of Michigan  .01 Social Security  .02 State Income Tax Withheld  .03 Employees Retirement  .23 State Sales Tax  .27 Unemployment Compensation
229.00	Due to Federal Government  .01 Federal Income Tax Withheld
231.00	Payroll Deductions Payable (Hospital Insurance, Union Dues, Deferred Compensation, etc.)
257.00	Accrued Wages Payable
258.00	Accrued Taxes Payable
260.00	Accrued Vacation Leave Payable--Current
261.00	Accrued Sick Leave Payable--Current
264.00	Other Accrued Liabilities
281.00	Advances Payable (Short-Term)
Long-Term Liabilities (300-319) (used only for "account group" and GASB No. 34 reporting)
300.00	Bonds Payable
307.00	Notes Payable
310.00	Accrued Vacation Leave Payable
311.00	Accrued Sick Leave Payable
Other Liabilities (320-344)
328.00	Advances From State of Michigan (Long-Term)
329.00	Advances From Federal Government (Long-Term)
330.00	Advances From Other Units of Government (Long-Term)
331.00	Advances From Others
339.00	Deferred Revenue
Fund Reserves and Equities (345-399)
368.00	Fund Balance Reserved for Supplies Inventory
371.00	Fund Balance Reserved for Advances to Other Units of Government
383.00	Fund Balance Reserved for Restricted Contributions
390.00	Fund Balance
398.00	Adjustments to Fund Balance (Prior Years Activity)  (Should Use Account #697)
399.00	Investment in Capital Assets (Used only for "account group"  and GASB No. 34 reporting)
REVENUE AND OTHER SOURCE ACCOUNTS
400.00	Revenue (Control)
401.00	Taxes
451.00-500.00	Licenses and Permits      Mobile Park (Camp License) Fees      Contractor and Other Registrations      Building Permits      Burial Permits      On Site Sewage Permits      Well and Pump Installation Permits      Sanitary Landfill Permits      Other Licenses and Permits
516.00-535.00	Federal Grants
555.00-560.00	State Grants      State Funded Programs          Immunizations          Family Planning          Substance Abuse          W.I.C.          Local Public Health Operations          Other State Funding
585.00	Grants/Contributions From Local Units of Government  .11 Cities  .12 Counties  .13 Schools  .14 Townships  .15 Villages
626.00-641.00	Charges for Services Rendered--Fees      Clinic Fees      Home Health Services     Laboratory Services      Plat Filing and Inspection Fees      Other Health Services or Inspection Fees
642.00-650.00	Charges for Services--Sales      Sale of Printed Material      Sale of Scrap and Salvage
655.00	Fines and Forfeits
664.00-666.00	Interest (Dividend) Earnings
667.00-668.00	Rents and Royalties
671.00	Other Revenues
673.00	Sale of Fixed Assets
675.00	Contributions (Donations) From Private Sources  .01 Gifts & Bequests  .02 Research Grants  .03 Contributions--Other
677.00-692.00	Reimbursements and Refunds
693.00	Gain on Sale of Depreciable Fixed Assets (Used Only for  GASB No. 34 Reporting)
694.00	Cash Over and Short
697.00	Adjustments to Prior Years Activity (See Account #398)
699.00	Operating Transfers In (Appropriations From Other Funds)
EXPENDITURE AND OTHER USE ACCOUNTS
700.00	Expenditures (Control)
702.00-713.00	Salaries and Wages
714.00-725.00	Fringe Benefits      FICA (Social Security)      Hospitalization Insurance      Life Insurance      Retirement      Workers' Compensation      Unemployment Compensation (MESC)      Other Fringe Benefits
726.00-799.00	Supplies      Office Supplies      Environmental Health Supplies      Library Supplies      Operating Supplies      Medical Supplies      Janitorial Supplies
801.00-831.00	Contractual or Professional Services      Consultants      Legal      Laundry--Contractual      Other Contractual Services
832.00-834.00	Subgrantees/Subrecipients
835.00-841.00	Health Services      Autopsies      Ambulance Services      Outpatient Care
849.00-858.00	Telephone and Telecommunication Expenditures
859.00-873.00	Travel and Transportation Expenditures      Employee Travel      Board of Health Travel      Other Travel (Consultants)      Freight and Express (Portion Which Cannot be Allocated to          Another Expenditure Account)
899.00-909.00	Printing and Publishing      Advertising      Other Printing
910.00-919.00	Insurance and Bonds
920.00-929.00	Utilities
930.00-938.00	Repairs and Maintenance Expenditures      Building      Equipment      Vehicles      Other Equipment
939.00-952.00	Rentals      Building      Equipment
953.00	County Overhead Allocation
954.00	Distributive Cost (Control)  .01 Distributive Cost--Agency Support  .02-.49 Distributive Cost--Other Support Services  .51 Distributive Cost--Agency Support (Contra)  .52-.99 Distributive Cost--Other Support Services (Contra)
955.00-962.00	Miscellaneous Expenditures      Memberships and Dues      Other Miscellaneous Expenditures
970.00-979.00	Capital Outlay
980.00	Depreciation (Used Only for GASB No. 34 Reporting)
990.00	Debt Service
999.00	Operating Transfers (Out) (Appropriations to Other Funds)

These are the asset, liability, and fund equity accounts that make up the balance sheet of each individual fund. These accounts are not closed out at the end of an accounting period. Again, the local health department will use only the accounts that are necessary for each separate fund.

The following is a balance sheet sub-heading covering those current and other assets which are available or can be made readily available to meet current operating costs or to liquidate current liabilities. Included are such accounts as cash, temporary investments, and receivables that will be collected within 12 months of the balance sheet date. Balance sheet accounts 001.00 through 129.00 and 180.00 through 199.00 are included in this category.

Current Assets (001-129)
001.00	Cash - This account reflects the amount of currency, checks, money orders, and bank drafts on hand or on deposit with the custodian of cash and bank deposits in the health fund and/or the county treasurer's common bank account.
This account is:  DEBITED - when cash is received and  CREDITED - when cash is disbursed
Example Entries      Dr 001.00 Cash          Cr 018.00 Accounts Receivable OR          Cr 516.00 Federal Grant--Health      To reflect receipt of cash
Dr 003.00 Certificates of Deposit          Cr 001.00 Cash      To reflect purchase of CD's
Dr 726.00 Supplies          Cr 001.00 Cash      To reflect expenditures
Dr 001.00 Cash          Cr 726.00 Office Supplies      To reflect an expenditure credit for a refund
002.00	Cash/Savings - This account is used to record the amount of money on deposit in savings accounts under the control of the official or agent designated as custodian.
This account is:  DEBITED - when the money is deposited in this account and  CREDITED - whenever money is withdrawn from this account
003.00	Certificates of Deposit - This account reflects the amount paid for Certificates of Deposit. Such certificates are sometimes considered to be investments, if they have a long-term maturity (usually greater than 90 days).
This account is:  DEBITED - with the cost of certificate of deposit purchased and  CREDITED - with the original cost of the certificate of deposit when cashed or redeemed
Example Entries      Dr 003.00 Certificates of Deposit          Cr 001.00 Cash      To reflect purchase of certificates of deposit
Dr 001.00 Cash          Cr 003.00 Certificates of Deposit          Cr 664.00 Interest Earnings      To reflect redemption of certificates of deposit
Note: This account will seldom be used in a special revenue fund but it is possible to use it when the governing board requests the treasurer to purchase certificates of deposit with surplus funds. Any interest earned thereon should be credited to the special revenue fund concerned.
004.00	Imprest (Petty) Cash - This account represents a sum of money, in cash or in a special bank account of a constant amount, set aside for making change or emergency payments of small amounts. The petty cash receipts or invoices showing disbursements plus the cash on hand must equal the amount reflected as "Imprest Cash."  At certain intervals, the imprest cash is reimbursed upon submission of an itemized voucher for the amount of disbursements made.
This account is:  DEBITED - with the amount set aside for imprest cash and  CREDITED - with the reduction of imprest cash
Example Entries      Dr 004.00 Imprest Cash          Cr 001.00 Cash      To reflect setting up imprest cash account
Dr 726.00 Supplies          Cr. 001.00 Cash      To reflect expenditures for replenishment of imprest cash
007.00	Cash/Payroll - This account reflects money set aside in a separate bank account for payroll purposes. This account may be used to keep payroll money separate from other operating money.
This account is:  DEBITED - when cash transfers are received from other accounts or other funds for reimbursements of payroll expenses and  CREDITED - when payroll is paid
Example Entries      Dr 007.00 Cash--Payroll          Cr 001.00 Cash      To reflect transfer of cash
Dr 702.00 Salary & Wages          Cr 007.00 Cash--Payroll      To reflect payroll expense
018.00	Accounts Receivable (Control) - (DETAILED LEDGER REQUIRED) This account reflects amounts owed to the health department by private persons or third party payors for goods or services furnished by the health department.  The local health department has the option to report these revenues on either the "cash" or "modified accrual" basis of accounting. This option is available due to the fact that the "current" portion of the receivable under the modified accrual basis is usually not material to the financial statements as a whole (due to the timing and collectability of subsequent payments).
This account is:  DEBITED - with amounts owed to health department and  CREDITED - with amounts received or written off when properly authorized
This account may be pointed off 018.01-018.99 by the local health department to designate the program to which it applies.
For Example:  018.01 Medicare A  018.02 Medicare B  018.03 Medicaid  018.04 Blue Cross/Blue Shield  018.05 Patient
Example Entries (Cash Basis)      Dr 018.00 Accounts Receivable (Control)          Cr 339.00 Deferred Revenue      To reflect amount due for home health services
Dr 001.00 Cash          Cr 626.00 Charges for Services      To reflect payment received on accounts receivable and to recognize revenue
Dr 339.00 Deferred Revenue          Cr 018.00 Account Receivable      To reverse original amount of accounts receivable after the above payments
Example Entries (Modified Accrual Basis)      Dr 018.00 Accounts Receivable (Control)          Cr 626.00 Charges for Services      To reflect amount due for home health services
Dr 001.00 Cash          Cr 018.00 Accounts Receivable (Control)      To reflect payment received on accounts receivable
Dr 626.00 Charges for Services          Cr 018.00 Account Receivable (Control)      To reflect write off of uncollectible receivable balances
Note: In the detailed subsidiary accounts, each patient will be debited with the amount actually billed for services rendered, and credited with payments received. The total on the detailed subsidiary/accounts must equal the total of the control 018.00 account.
040.00	Account Receivable (General) - This may be used in any fund of local units to reflect amounts due from individuals, firms, corporations, etc., for which a receivable account is not provided elsewhere in the manual.
This account is:  DEBITED - with amounts due the local unit from private sources and  CREDITED - with payments received from these sources
071.00	Due From Cities - This account may be used by any local unit of government and in any fund. Its balance reflects amounts due from cities for such purposes as grants, contributions, money collected for the local unit by cities, and for services rendered by the local unit for cities.
This account is:  DEBITED - with amounts due the local unit from cities and  CREDITED - with payments received from such cities
075.00	Due From Schools - This account may be used by any local unit of government and in any fund. Its balance reflects amounts due from schools for such purposes as grants, contributions, money collected for the local unit by schools, and for services rendered by the local unit for schools.
This account is:  DEBITED - with amounts due the local unit from schools and  CREDITED - with payments received from such schools
078.00	Due From State of Michigan - This account may be used in any fund of local units to reflect grants, charges for services, or other money due from the State of Michigan.
This account is:  DEBITED - with amounts due the local unit from the State and  CREDITED - with receipt of payments from the State
079.00	Due From Federal Government - This account may be used in any fund of local units to reflect grants, charges for services, or other money due from the Federal Government.
This account is: DEBITED - with amounts due the local unit from the Federal Government and  CREDITED - with the receipt of such payments
081.00	Due From Other Governmental Entities - This account may be used in any fund of local units to reflect amounts due from other units of government, such as boards, authorities, commissions, etc., for which an account is not provided elsewhere in this manual.
This account is:  DEBITED - with amounts due to the local unit from other governmental units and  CREDITED - with payments received from these units
083.00	Due From Employees - This account reflects amounts owed by employees (i.e., travel and expense advances, other, etc.).
This account is:  DEBITED - with amounts paid to employees that are owed back to the local health department and  CREDITED - with reimbursements received from the employees
084.00	Due From Other Funds - This account reflects amounts due to the health fund from other funds of the same local unit of government for amounts advanced to these funds, services rendered to these funds, amounts held in trust by these funds, etc. This account should not contain long-term loans.
This account is:  DEBITED - with amounts owing from other separate funds and  CREDITED - with amounts received from other funds
Example Entries      Dr 084.01 Due From Other Funds--General          Cr 699.01 Contributions From Other Funds--General      To reflect amount receivable from the local unit general fund
Dr 001.00 Cash          Cr 084.01 Due From Other Funds--General      To reflect receipt of cash applicable to above receivable
089.00	Cost Settlement Receivable - This balance sheet account reflects amounts owed by third party payors (Medicare, Medicaid, or Blue Cross) subject to audit. This account is used to transfer from regular receivables the difference between the agency full charge for services and the percentage of reimbursement.
This account is:  DEBITED - with the balance of charge for services owed to the health department and  CREDITED - with receipt of payment or adjustment of cost through audit
This account may be pointed off 089.01-089.99 by the local health department to designate the program to which it applies.
For Example:  089.01 Medicare A  089.02 Medicare B  089.03 Medicaid  089.04 Blue Cross/Blue Shield  089.05 Patient
Example Entries      Dr 089.00 Cost Settlement Receivable          Cr 018.00 Accounts Receivable      To transfer difference in full charge and interim rate from regular accounts receivable to cost      settlement receivable
Dr 001.00 Cash          Cr 626.00 Charges for Services      To reflect payment received and to recognize revenue
Dr 339.00 Deferred Revenue          Cr 089.00 Cost Settlement Receivable      To reflect payment of cost settlement by third party payor
108.00	Inventory--Materials and Supplies - This account is used to record the cost of materials and supplies on hand which will be charged to a job, project, department, etc. when used.
This account is:  DEBITED - with the cost of materials and supplies purchased and  CREDITED - with the cost of materials and supplies used
128.00	Prepaid Expenditures - This account reflects payment of expenditures in one accounting period which pertains to the operation and activities of one or more succeeding periods. It is used to record prepaid expenditures which cannot logically be charged to other asset accounts contained in this manual.
This account is:  DEBITED - with expenditures to be carried forward to a future accounting period and  CREDITED - with amounts charged to expenditures in the future period
Other Assets (180-199)
199.00	Long-Term Advances to Other Units of Government - This account reflects loans or advances made to a sub-agency or other unit of government for a period longer than one year.
This account is:  DEBITED - with amounts advanced to the other agency and  CREDITED - with the return of any portion of such advances
Example Entries      Dr 199.00 Long-Term Advances to Other Units of Government          Cr 001.00 Cash      To record loan made to a sub-agency
Dr 390.00 Fund Balance          Cr 351.00 Fund Balance Reserved for Advances Receivable      To reserve the amount loaned from fund balance because it is unavailable for current operating      expenditures
Dr 001.00 Cash          Cr 199.00 Long-Term Advances to Other Units of Government      To reflect repayment of loan or advance
Dr 351.00 Fund Balance Reserved for Advances Receivable          Cr 390.00 Fund Balance      To transfer from reserved fund balance to unreserved fund balance when all or portion of loan      has been repaid
The following is a balance sheet subheading covering capital assets which are considered to be long-term in nature. Included are such accounts as land, buildings, equipment, and accumulated depreciation. These accounts are utilized only for "general fixed asset account group" reporting and GASB Statement No. 34 government-wide reporting. Balance sheet accounts 130.00 through 179.00 are included in this category.
Capital Assets (130-179)
130.00-179.00				Capital Assets (Various) - These accounts reflect activity related to the purchase, disposal, and depreciation of capital assets. Capital assets are items considered to have a useful life of greater than one year. Usually the local health department will establish a per unit cost threshold to assist in making these determinations.
These accounts are:  DEBITED - with amounts paid for capital asset items, or disposals of capital assets and  CREDITED - with amounts of capital asset disposals, or recording annual depreciation
Example Entries      Dr 145.00 Equipment          Cr 399.00 Investment in Capital Assets      To reflect cost of capital assets purchased
Dr 399.00 Investment in Capital Assets      Dr 147.00 Accumulated Depreciation--Equipment          Cr 145.00 Equipment      To reflect disposal of capital assets
Dr 980.00 Depreciation          Cr 147.00 Accumulated Depreciation--Equipment      To reflect depreciation expenditure for current year
The following is a balance sheet subheading covering current liabilities. Included are such items as accounts or vouchers payable and short-term debt that will be paid within 12 months of the balance sheet date. Balance sheet accounts 200.00 through 299.00 are included in this category.
Current Liabilities (200-299)
201.00	Vouchers Payable - Liabilities for goods and services which have been received and approved for payment.
This account is:  CREDITED - with amounts approved for payment and  DEBITED - with amounts paid
202.00	Accounts (Voucher) Payable - This account reflects liabilities on open account owed to private persons, firms, or corporations for goods and services received by a governmental unit (not including amounts due to other funds of the same governmental unit or other governmental units).
This account is:  CREDITED - with amounts of accounts payable incurred and  DEBITED - upon payment of these accounts
207.00	Notes Payable (Short-Term) - This account reflects the amount of outstanding balances of notes payable that have a short-term maturity (i.e., less than 12 months).
This account is:  CREDITED - with proceeds of borrowing and  DEBITED - with payment of principal amounts outstanding
214.00		Due to Other Funds - This account reflects amounts due to other funds of the same governmental unit for the use of materials, supplies, equipment, or for services rendered. It may also reflect short-term loans from other funds. A detailed ledger should be maintained showing account activity of each fund. This account includes only short-term obligations.
This account is:  CREDITED - with amounts due to other funds of the unit and  DEBITED - with amounts paid on such debt
221.00		Due to Cities - This accounts reflects amounts owed to cities by the local unit for supplies, materials, services rendered, etc. A detailed ledger should be maintained showing account activity for each city.
This account is:  CREDITED - with amounts owed to any city and  DEBITED - with any payments on such debt
228.00		Due to State of Michigan - This account is usually found in the trust and agency fund of local units; however, it could be used in certain other funds. Its balance reflects amounts collected for or owed to the State of Michigan by a local unit of government. A detailed ledger must be maintained showing account activity for each separate sub-account. The following sub-account numbers must be used where applicable:  228.01 - Social Security  228.02 - State Income Tax Withheld  228.02 - Employees Retirement  228.23 - State Sales Tax  228.27 - Unemployment Compensation  Further sub-accounts may be added as needed.
This account is:  CREDITED - with all amounts owed to the State of Michigan and  DEBITED - with all payments to the State or county treasurer, as applicable for the amounts owed
Example Entries      Dr 702.00 Salaries and Wages          Cr 228.01 Due to State of Michigan--Social Security          Cr 228.02 Due to State of Michigan--State Income Tax      To reflect payroll expense and set up liability for the amounts withheld from employees
Dr 228.01 Due to State of Michigan--Social Security      Dr 228.02 Due to State of Michigan--State Income Tax          Cr 002.00 Cash--Payroll Deductions      To reflect payment to the State or county treasurer, as applicable of the amounts withheld from      employees
229.00		Due to Federal Government - This account is usually used in a trust and agency fund of local units; however, it could also be used in certain other funds. Its balance reflects amounts collected for or otherwise due to the Federal Government by a local unit of government. A detailed ledger must be maintained showing account activity for each separate sub-account. The following sub-account numbers will be used:  229.01 - Federal Income Taxes Withheld  Further sub-accounts may be added by any local unit, as needed, to account separately for other amounts owed to the Federal Government.
This account is:  CREDITED - with all amounts owed to the Federal Government and  DEBITED - with all payments to the Federal Government of amounts owed
231.00		Payroll Deductions Payable - This account is usually found in a trust and agency fund or in a separate payroll fund of local units. Its balance reflects amounts, other than social security and income taxes, withheld from employees' salaries for payments to other agencies. This includes, but is not limited to, hospitalization insurance premiums, life insurance premiums, money withheld for credit unions, etc.  A detailed subsidiary ledger is required showing account activity for each separate deduction.
This account is:  CREDITED - with amounts withheld from employees' pay and  DEBITED - with any amounts paid to the proper agency
257.00		Accrued Wages Payable - This account may be used in any fund of local units from which salaries and wages are paid. Its balance represents wages earned by employees between the last date on which they were paid and the balance sheet date.
This account is:  CREDITED - at the end of the year, or monthly, with any and all salaries and wages accrued and  DEBITED - with salaries and wages paid or upon reversal of the above
Example Entries  CURRENT YEAR      Dr 702.00 Salaries & Wages--2001      Dr 715.00 Fringe Benefits--2002          Cr 257.01 Accrued Payroll & Fringe Benefits      To reflect payroll for 2001 that is payable to employees in 2002
NEXT YEAR  When the payment is made, the following entry will be made:      Dr 257.01 Accrued Payroll--2001      Dr 702.00 Salaries & Wages--2002      Dr 715.00 Fringe Benefits--2002          Cr 001.00 Cash      To reflect payment of payroll in 2002
258.00		Accrued Taxes Payable - This account reflects the liability for the employer share of payroll taxes on accrued wages (i.e., FICA, Medicare, unemployment, etc.).
This account is:  CREDITED - with the amount of the tax accrual and  DEBITED - with payment of the accrued taxes
260.00-261.00			Accrued Vacation and Sick Leave Payable (Short-Term) - These accounts reflect the current portion of the amount of outstanding vacation and sick leave due to employees of the local unit. The current portion is normally the amount paid within 12 months of year end.
These accounts are: CREDITED - with the current portion of vacation and sick leave earned by employees and  DEBITED - with the current portion of vacation and sick leave used by employees
264.00	Other Accrued Liabilities - This account may be used in any fund of local units from which expenses are paid. Its balance represents the accrued liabilities of the fund where such liabilities cannot be logically included in other accounts.
This account is:  CREDITED - at the end of the year, or monthly, with the amount of other accrued liabilities and  DEBITED - upon payment of the liabilities or upon reversal of the above
281.00	Advances Payable (Short-Term) - This account represents operating advances from agencies such as Medicare, Medicaid, Blue Cross, State of Michigan, Federal government, etc. that will be returned.
This account is:  CREDITED - with current financing advances and  DEBITED - upon repayment or other redemption of the advance
Example Entries      Dr 001.00 Cash          Cr 281.00 Advances Payable      To record an advance from a third party
Dr 281.00 Advance Payable          Cr 001.00 Cash      To reflect return of the advance to the third party
This account may be pointed off (.01-.99), at the option of the unit, for breakdown of individual operating advances.  The following is a balance sheet subheading covering long-term liabilities of a local unit. Included are such accounts as bonds and notes payable and accrued vacation and sick leave payable. These accounts are utilized only for "general long-term debt account group" reporting and GASB Statement No. 34 government-wide reporting. Balance sheet accounts 300.00 through 319.00 are included in this category.
Long-Term Liabilities (300-319)
300.00-307.00			Bonds and Notes Payable - These accounts reflect the amount of outstanding long-term bonds and notes payable for the local unit.
These accounts are:  CREDITED - with the proceeds of long-term bonds and notes issued and  DEBITED - with the principal payments on the bonds and notes payable
310.00-311.00			Accrued Vacation and Sick Leave Payable - These accounts reflect the long-term portion of the amount of outstanding vacation and sick leave due to employees of the local unit.
These accounts are:  CREDITED - with the amounts of long-term vacation and sick leave earned by employees and  DEBITED - with the amounts of long-term vacation and sick leave used by employees
The following is a balance sheet subheading covering other liabilities of a local unit. Included are such accounts as deferred revenue and long-term advances payable. Balance sheet accounts 320 through 344 are included in this category.
Other Liabilities (320-344)
328.00	Advances From State of Michigan (Long-Term) - This account may be used in any fund of local units. Its balance reflects amounts owed to the State of Michigan by a local unit, where such amounts are payable in years subsequent to the current year. Balances may represent a long-term advance by the State, payments for services to be rendered in the future, etc.
This account is:  CREDITED - with the amount of such long-term advances incurred and  DEBITED - upon payment or other redemption of the advance
Example Entries      Dr 001.00 Cash          Cr 328.01 Advances From State (LT)--Immunizations      To record receipt of the advance
Dr 328.01 Advances From State (LT)--Immunizations          Cr 001.00 Cash      To reflect return of the advance
Dr 328.04 Advances From State (LT)--WIC          Cr 556.00 State Grants--WIC      To record application of the advance for cost sharing
This account may be pointed off (.01-.99), at the option of the unit, as indicated above.
329.00	Advances From Federal Government (Long-Term) - This account may be used in any fund of local units. Its balance reflects amounts owed to the Federal Government by a local unit, where such amounts are payable in years subsequent to the current year. Balances may represent a long-term advance by the Federal Government, payments for services to be rendered in the future, etc.
This account is:  CREDITED - with the amount of long-term advance incurred and  DEBITED - upon payment or other redemption of the advance
330.00	Advances From Units of Government (Long-Term) - This account is used for the same purpose and in the same manner as accounts #328 paid and #329. It covers long-term advances owed by a local unit to units of government other than those for which a liability account has been provided.
331.00	Advances (Other) - This account represents operating advances from agencies such as Medicare, Medicaid, Blue Cross, etc., that will be paid after the current year. The balance reflects only amounts that are long-term.
This account is:  CREDITED - with the amount of the financing advance and  DEBITED - with repayment or other redemption of the advance
339.00	Deferred Revenues - This account may be used as the offsetting credit to an account receivable by a unit which recognizes its revenue only when received in cash. This procedure enables such a unit to formally record its accounts receivable each month. This account is used for first and third party fees receivable or other receivables that have high probability of write-off or uncollectability. This account is also used for grant payments received but not yet expended.
This account is:  CREDITED - with the offsetting amount recorded in a receivable account and  DEBITED - with collections of amounts originally credited to this account
Example Entries      Dr 018.00 Accounts Receivable          Cr 339.00 Deferred Revenue      To record receivables and offsetting deferred revenue
Dr 001.00 Cash          Cr 626.00 Charge for Services Rendered      To record receipt of money
Dr 339.00 Deferred Revenue          Cr 018.00 Accounts Receivable      To reverse original entry in amount of money received
Dr 001.00 Cash          Cr 339.00 Deferred Revenue      To record receipt of grant funds prior to expenditure
Dr 339.00 Deferred Revenue          Cr 555.00 Grant Revenue      To record recognition of grant fund revenue
The following is a balance sheet subheading that covers those accounts, which are considered reserves and equities of the local unit. This includes fund balance and other surplus or equity accounts. This also includes the investment in capital assets accounts, which are utilized only for "general fixed asset account group" reporting and GASB Statement No. 34 government-wide reporting. Balance sheet accounts 345 through 399 are included in this category.
Fund Reserves and Equities (345-399)
368.00	Fund Balance Reserved for Supplies Inventory - This account is used to segregate a portion of fund balance to indicate that, using the purchase method, inventories of supplies do not represent "available spendable resources" even though they are a component of net current assets. The balance in this account is usually based on the average amount of inventory carried each year.
This account is:  CREDITED - with the amount of fund balance determined to be tied up in inventory and  DEBITED - with authorized reductions of the amount reserved
371.00	Fund Balance Reserved for Advances to Other Units of Government - This account represents an offset to account #199 long-term advances to other units of government which may not be repaid to the payor or applied to revenue in the current year.  Use of this account prevents reflection of the long-term receivable in the fund balance. The reserve is established by debiting account #390 fund balance and crediting this account.
This account may be pointed off (371.01-371.99) to create sub-accounts where several advances are involved.  371.01 Sub-Agencies (Contractual)  371.01 Other Units of Government
This account is:  CREDITED - with long-term advances described above and  DEBITED - with the return of such advances or any portion thereof
Example Entries      Dr 199.00 Long-Term Advances to Other Units of Government          Cr 001.00 Cash      To record loan to sub-agency
Dr 390.00 Fund Balance          Cr 371.00 Fund Balance Reserved for Advances to Other Units of Government      To transfer amount of the advance to a reserve account
383.00	Fund Balance Reserved for Restricted Contributions - This account may be used in any fund of local units where contributions (not grants) are "earmarked" for a specific purpose and should not be included within the fund balance.
This account is:  CREDITED - with restricted contributions received and  DEBITED - when contributions are used for a specific purpose
Example Entries      Dr 001.00 Cash          Cr 383.00 Fund Balance Reserved for Restricted Contributions      To record receipt of a restricted contribution
Dr 383.00 Fund Balance Reserved for Restricted Contributions          Cr 675.00 Contributions From Private Sources      To transfer the contribution from the reserve account and to recognize revenue in the year of      expenditure for the specified purpose
390.00	Fund Balance - This account reflects that portion of the assets of a fund over its liabilities, which are not restricted or segregated for other purposes.
This account is:  CREDITED - at the end of the year, with any excess of revenues over expenditures and  DEBITED - at the end of the year, with any excess of expenditures over revenues
Example Entries      Dr 390.00 Fund Balance          Cr 701-999 Detailed Expenditures      To close the expenditures accounts
Dr 401-699 Detailed Revenues          Cr 390.00 Fund Balance      To close the revenue accounts
OPTIONAL: This account may be pointed off to reflect the amounts contributed by the various agencies, or by activity, or the activity (program) number can be used with the fund balance account.
399.00	Investment in Capital Assets - This account reflects the net equity in capital assets of the local unit.
This account is:  CREDITED - with capital purchases made during the year and  DEBITED - with the amount of disposals and depreciation reported for capital assets

This term is a nominal account heading which represents the gross receipts and receivables of a fund derived from taxes, fees, service charges, and other sources. Accounts 401 through 699 are included in this category.

Revenue accounts include MANDATORY accounts and OPTIONAL accounts. All units must use accounts listed as mandatory, if the unit receives such revenue. The MANDATORY accounts are the revenue sources required for financial reporting. Optional account numbers are provided within the MANDATORY revenue source categories to provide greater detail of the revenue for use by units desiring to further classify their revenues.

The mandatory revenue accounts are listed below:

	GASB No. 34 Revenue Type
Taxes	General
Licenses and Permits	Charges for Services
Federal Grants	Operating Grants
State Grants	General/Operating Grants
Grants/Contributions From Local Units	General
Charges for Services	Charges for Services
Fines and Forfeits	Charges for Services
Interest and Rents	General
Other Revenue	General
Operating Transfers In	General

These are considered revenues by source for budgeting purposes. These accounts are the revenue categories that must be reported in the local health/district health financial reports. The GASB No. 34 revenue type descriptions provide general guidance related to categorization of revenues on the statement of activities.

Optional possibilities are indicated in the Uniform Chart of Accounts and offer the local health/district health more detail. If the reporting of revenue is expanded to optional accounts, the optional account numbers as listed must be used.

For financial reporting purposes, GASB Statement No. 34, paragraph 47, states that programs are financed from essentially four sources:

a. Those who purchase, use, or directly benefit from goods or services of the program;
b. Parties outside the reporting government's citizenry;
c. The reporting government's taxpayers; and
d. The governmental institution itself (for example, through investing).

For the purposes of the statement of activities reporting under GASB Statement No. 34, the following guidance should be utilized:

• Type a is always program revenue;
• Type b is program revenue, if restricted to a specific program or programs. If unrestricted, type b is general revenue;
• Type c is always general revenue, even if restricted to a specific program; and
• Type d is usually general revenue.

This term is a nominal account heading which represents the gross expenditures incurred by a local unit, or fund thereof, for acquiring services, acquiring assets, performing certain functions, discharge of debts, and similar items. Accounts 701 through 999 are included in this category.

Expenditure accounts include MANDATORY accounts and OPTIONAL accounts. All units must use accounts listed as mandatory for each of its various activities having such expenditure. Optional numbers are provided within most major categories for use by units desiring to further classify expenditures for various activities. Units may assign their own names or titles to these optional account numbers but must observe major category headings in making such assignments.

In the disbursement journal, expenditures are grouped by activity or department. Each activity would use as many or as few of the expenditure accounts as necessary to provide the required budgetary control and financial reporting data. There are six mandatory accounts for expenditures. They are:
 

The term "administrative overhead costs" as used herein, applies to costs of this type originating in the health department, as well as those incurred by other departments (such as, treasurer, electronic data processing, payroll, procurement, etc.) in supplying goods, services and facilities, to the grantee (health) department.

The various types of distributive costs can be pointed off at follows:

954.01	Distributive Cost--Agency Support
954.02-954.49	Distributive Cost--Other Support Services
954.51	Distributive Cost--Agency Support (Contra)
954.52-954.99	Distributive Cost--Other Support Services (Contra)

To facilitate equitable distribution of administrative overhead expenditures to the programs serviced, we have established pools of supporting costs within the health department. For example, such supporting cost programs are agency support, nursing supervision, environmental health supervision, laboratory, x-ray, pharmacy, and health education.

The total costs are accumulated as direct costs in these programs and then distributed to all the other benefiting programs on an equitable basis. For example, agency support administrative overhead costs are allocated through use of a percentage applied to current salaries and wages and fringe benefits of each program. The percentage is calculated based on the pro rata share of actual salary and wage and fringe benefit costs related to each program.

Allocations of Nursing and Environmental Health Supervision and other supporting costs re based upon similar reasonable methods applied on a current basis.

Examples:

Accumulations and Distribution of Agency Support Program Costs:

	TOTAL COST
702 Salaries & Wages	$125,313
715 Fringe Benefits	21,593
726 Supplies	6,418
859 Travel	2,216
939 County Building Space
953 County Overhead Allocation	108,400
955 Other Expenditures	4,531
970 Equipment
Total Direct Expense	$268,471

These costs are accumulated in the "Agency Support Program." A portion will be distributed to other benefiting programs (all other health department programs) based on the method described above.

These accounts are used to reflect a deduction (credit) from the total direct expenditures of the Agency Support Program to reflect an addition (debit) as a distributed cost to the total direct expenses of each of the other programs benefited.

Example Entries:

Dr 954.01 Distributive Cost--Environmental Health Program	42,038
954.01 Distributive Cost--Air pollution Program	16,697
954.01 Distributive Cost--Substance Abuse Program	8,901
954.01 Distributive Cost--Nursing Supervision Program	12,250
954.01 Distributive Cost--All Other Programs	188,585
Cr 954.51 Distributive Cost--Agency Support (Contra)	268,471

Accumulation and Distribution of Nursing Supervision Costs:

The accumulation and distribution of the costs for the "Nursing Supervision Program" is made in basically the same manner as the "Agency Support Program," except the costs are applied only to programs which are benefited from the Nursing Supervision Program.

	TOTAL COST
702 Salaries & Wages  715 Fringe Benefits  726 Supplies  859 Travel  970 Equipment	$43,000  6,000  1,000  500  2,000
Total Direct Expense	52,500
954.01 Distributive Cost--Agency Support  Administrative Overhead	12,250
Total Direct and Administrative Overhead Expenditure	$64,750

Nursing Supervision Cost is distributed to benefiting programs (nursing related programs) based on the method described above and/or FTE's in each program.

Similar entries may be made for other pools of support costs accumulated for allocation to multiple programs (i.e., laboratory and pharmacy costs), providing the basis is both reasonable and current.

These accounts are used to reflect a deduction (credit) from the total direct and administrative overhead cost of the Nursing Support Program to reflect an addition (debit) as a distributed cost to the total direct expenses of each of the other programs benefited.

Example Entries

Dr 954.02 General Nursing Program--Distributive Costs			38,850
Dr 954.02 Family Planning Program--Distributive Costs			12,303
Dr 954.02 Immunizations Program--Distributive Costs			13,597
Cr 954.52 Nursing Supervision--Distributive Costs (Contra)			64,750
955.00-962.00		Miscellaneous Expenditures - These accounts are used to record expenditures for which another account has not been provided, such as education and training, licenses, etc. This account is to be used only when the expenditure cannot be logically classified elsewhere.
Each type of miscellaneous expenditure may be reflected in separate accounts or by pointing off one account number from .01 through .99.
These accounts are:  DEBITED - with miscellaneous expenditures and  CREDITED - with any adjustments, and at year-end when closing this account to the fund balance account
970.00-979.00		Capital Outlay - These accounts are used to record expenditures by the health fund for acquisition of fixed assets which include the following:  Buildings  Building Improvements (or Additions)  Office Equipment and Furniture  Vehicles  Other Equipment
Each type of capital outlay expense may be reflected in a separate account or by pointing off one account number from .01 through .99.
These accounts are:  DEBITED - with expenditure for capital outlay and  CREDITED - with any adjustments and at year-end when closing this account to the investment in capital assets equity or fund balance account
980.00	Depreciation - This account is used only for GASB Statement No. 34 government-wide reporting purposes and is used to record the annual depreciation on the capital assets of the local unit.
This account is:  DEBITED - with the annual depreciation expense and  CREDITED - with any adjustments, and at year end when closing this account to the investment in capital assets equity account
990.00	Debt Service - This account is used to record the annual principal and interest payments made related to long-term debt.
This account is:  DEBITED - with the annual principal and interest payments and  CREDITED - with any adjustments, and at year end when closing this account to the fund balance account
999.00	Operating Transfers (Out) (Appropriations to Other Funds) - This account is used to reflect the amount of appropriations to other local funds from the health fund. The account may be pointed off to reflect contributions to different funds.
This account is:  DEBITED - with the transfers described above and  CREDITED - with any adjustments and at year end to close this account to the fund balance account

The following section discusses methods of accounting for revenues and expenditures, as well as, procedures to be used for cash receipts, cash disbursements, accounts receivable, payroll, fixed assets, and inventory. While some of these procedures require the use of journals, typical of a manual accounting system, it is important to keep in mind that a majority of agencies now use computerized systems, of which, procedures will vary from agency to agency. In any case, management is responsible for establishing and maintaining a system of internal controls over the accounting procedures as well as over all assets belonging to the governmental unit. Internal controls are policies and procedures designed to provide reasonable assurance that assets are safeguarded against unauthorized use and disposition. Throughout this section, internal controls will be referenced in each accounting cycle. The internal controls mentioned will be general in nature but will provide basic guidelines for developing specific controls or procedures, ensuring any accounting system, whether it be manual or automated, will satisfy management's objectives.

As indicated in Chapter I, the modified accrual basis of accounting is to be used for the health fund. With one exception, the cash basis may be used for certain transactions involving 3rd party insurance, medicare and medicaid reimbursements. The following describes the two methods of accounting.

1. Modified Accrual Basis - This method recognizes revenue as received in cash except for material resources that are both measurable and available. "Measurable" means that the amount of the transaction can be determined, and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period.

2. Cash Basis - This method recognizes revenue when cash is received.

There are two methods for recognizing expenditures.

1. Modified Accrual Basis - This method recognizes expenditures when the related fund liability is incurred except for: a) inventories of materials and supplies which may be considered an expenditure when purchased or used; b) prepaid insurance and similar items; and c) principal and interest on long-term debt which are generally recognized when due.

2. Cash Basis - This method recognizes expenditures when cash is disbursed.

1. All collections are properly identified, control totals developed, and collections promptly deposited intact.

Risks - Failure to record cash receipts; withholding or delaying the recording of cash receipts; diverting cash receipts after recording non-compliance with the Cash Management Act.

2. All bank accounts and cash on hand are subject to effective custodial accountability procedures and physical safeguards.

Risks - Misappropriated cash or petty cash funds; diverted cash receipts; unauthorized cash disbursements; loss of funds.

3. All transactions are promptly and accurately recorded in adequate detail records and appropriate reports are issued.

Risks - Covering unauthorized transactions by substituting unsupported credits or fictitious expenditures to cover misappropriated collections; underfooting or overfooting cash or receivables.

4. All transactions are properly accumulated, correctly classified and summarized in the general ledger balances are properly and timely reconciled with bank statement balances.

Risks - Misstating cash balances; covering unauthorized transactions by falsifying bank reconciliation.

A regular receipt must be issued in any and all instances where money is received for credit to the health fund.

This form must be:

(1) Approved in writing by the Local Audit and Finance Division, Department of Treasury
(2) Pre-numbered in sequential order
(3) Imprinted with the name of the health department
(4) Prepared at least in duplicate

This form must provide space for inclusion of:

(1) Date money was received
(2) Name of Payor
(3) Amount received
(4) Method of payment (i.e., cash, check, etc.)
(5) Purpose and individual account or reference number
(6) Numerical account coding
(7) Numbers of any special receipts covered by the regular receipt
(8) Signature of the person receiving the money

A special receipt must be used when money is collected in the field by the health department personnel, or at various branch offices of district health departments.

The special receipt form must be:

(1) Approved in writing by the Local Audit and Finance Division, Department of Treasury
(2) Pre-numbered in sequential order
(3) Imprinted with the name of the health department
(4) Prepared in triplicate:
        (a) Original to the payor
        (b) First copy to health department cashier, or accounting clerk, together with the money collected
        (c) Second copy remains in the receipt book for future reference

The form must provide space for inclusion of:

(1) Date money was received
(2) Name of payor
(3) Amount received
(4) Method of payment (i.e., cash, check, etc.)
(5) Purpose and individual account, case or reference number
(6) Numerical account coding
(7) Signature of person receiving the money

All special receipts must be accounted for in the health department headquarters or accounting office. All issues of receipt books must be signed for by receiving individuals, and all returned receipts must be checked to ensure that all numbers are accounted for.

Reminder: A receipt shall be prepared for all monies received by the health department for any purpose whatsoever. This action is mandatory.

Each time special receipts and collections are turned in at the health department's main office, a regular receipt must be issued for the amount received, showing the inclusive numbers of the special receipts. The regular receipt shall be issued at the time money is turned over. It is improper to count the money and prepare the receipt at a later time.

This journal (i.e., spreadsheet) is designed to record all regular receipts in numerical sequence and to provide a convenient and uniform source for posting all money received by the health department in the general ledger. Form columns that should be included on the register are explained as follows:

Date - This is the date shown on the regular receipt.

Custodian of Funds

(M.C.L. 1970; 48.40)... "It shall be the duty of the county treasurer to receive all moneys belonging to the county, from whatever source they may be derived; and all moneys received by him for the use of the county, shall be paid by him only on the order of the board of commissioners, signed by their clerk, and countersigned by their chairman, except when special provision for the payment thereof is or shall be otherwise made by law."

The county treasurer shall be the custodian of all funds received and expended for the purpose of conducting health department programs. In the case of district health departments, the county treasurer of the county in which the headquarters is situated should be the custodian of such funds.

Note: A depository bank account may be opened only with the consent of the county treasurer, and shall be in the name of the health department and the county treasurer. Withdrawals shall be by check requiring the signatures of the designated person(s) from the health department and the county treasurer or his deputy. Since the county treasurer is the custodian of all county funds the county treasurer must reconcile the depository account. The county treasurer shall file the bank statements and canceled checks in the office of the treasurer.

The responsibility for selecting a depository for public money belongs exclusively to the legislative body of each unit (county, city, township). This board or council may select a single depository or multiple depositories, and may also determine the proportion of deposits to be allocated to each of the depositories (Sec. 129.11 M.C.L. 1970).

If a depository account is used, bank deposits should be made daily if possible. Deposits must be intact. (The exact money received for the period should total the specific receipts written and must equal the amount deposited.)

All money should be kept in a locked place, preferably in a burglar and fireproof safe until date of deposit. Deposits must be made with the county treasurer no less than once per month. When substantial sums of money are on hand, it may be necessary, or advisable, to deposit with the county treasurer more frequently.

Field or Branch Office Collections

As indicated under " Special Receipts," all collections made "in the field" or in branch offices of district health departments must be receipted for, using the special receipts. Periodically, and at least monthly, such collections must be turned over to the designated cashier or accounting clerk in the health department's main office. A copy of each receipt written must accompany each deposit. If several revenue accounts (401 to 699) are involved in such deposits, a transmittal advice, setting forth the total amount for each revenue account, may be required.

Upon receipt of the collections, receipt copies, and the transmittal advice (if used), the cashier (or accounting clerk) at the main office will prepare the regular receipt in duplicate. The original will be given to the individual making the deposit and the duplicate will remain in the book. Inclusive special receipt numbers will be shown on the regular receipt. Only the regular receipts will be posted to the cash receipts journal.

Deposits with the County Treasurer

At least once each month, money received at the health department's main office must be remitted to the county treasurer for credit to the health fund. There are two (2) acceptable procedures for making these deposits:

1. Direct Deposits (No Depository Bank Account) - A transmittal advice is prepared in duplicate from footings shown in the cash receipts journal. The total shown on the transmittal advice shall equal the total of all money on hand. The original copy of the advice, together with the money, shall be turned over to the county treasurer. The duplicate copy of the advice will be retained and filed for future reference. A receipt shall be obtained from the county treasurer and should be filed with the retained copy of the transmittal advice.

2. Deposits to a Depository Bank Account - A bank deposit slip will be prepared in at least duplicate which shall equal the exact total of all money collected for the day (or period), covered by specific receipts. The original copy of the deposit slip and money will be deposited with the bank for credit to the depository account. The duplicate will be retained and filed for future reference and proof of deposit. (If desired, a triplicate copy may be used for internal control purposes in the larger units.) At the end of the month, a check will be prepared, payable to the county treasurer for the total collections for the month as recorded in the cash receipts journal. This amount should agree with the total of the bank slips for the period. A transmittal advice is prepared and submitted to the county treasurer with the check. Duplicate bank deposit slips for the period should be attached.

Note: The depository bank account may be opened only with the consent of the county treasurer, and shall be in the name of the health department and the county treasurer. Withdrawals shall be by check requiring the signature of a designated person from the health department and the signature of the county treasurer or his (her) deputy.

Since the county treasurer is the custodian of all county funds, the treasurer, who shall then file the bank statements and canceled checks in the county treasurer's office, must reconcile the depository account.

Forms to be Used for Making Bank Deposits

A deposit slip must be prepared for each bank deposit according to the rules of the particular bank. A separate list of all cash and checks deposited should be prepared for submission to the county treasurer if bank deposit ticket is not detailed. The deposit slip must reflect the exact total collected for the day (deposited intact). The bank must verify each copy of the deposit slip.

Transmittal Advice

The transmittal advice is prepared in duplicate to reflect the total amount deposited with the county treasurer at least once a month by the health department fund. The original is for the county treasurer and the duplicate is retained by the health department.

Form columns are explained as follows:

Deposit Advice

A deposit advice must be used when making two or more deposits with the county treasurer during any one month. The advice is prepared in duplicate for each deposit. A separate listing of all cash and checks making up each deposit should be attached to the deposit advice. The original is for the county treasurer and the duplicate is retained by the health department.

At the end of the month, one transmittal advice would be prepared and must equal the total of all deposit advices for the month. The deposit advice numbers and the amount of each deposit should be shown on the transmittal advice and reconciled to the monthly cash receipt register total. The policy of the governing entity should be followed regarding deposit advice forms.

Endorsement Stamps

All checks received should be endorsed by the cashier immediately upon receipt to protect the agency in case of robbery or loss.

The following endorsements are recommended:

1. PAY TO THE ORDER OF TREASURER OF WXYZ COUNTY, WXYZ COUNTY HEALTH DEPARTMENT

No. 1 would be used on checks, which would be deposited with the county treasurer.

2. PAY TO THE ORDER OF X BANK, FOR DEPOSIT ONLY, WXYZ COUNTY HEALTH DEPARTMENT

No. 2 would be used when deposits are made to a bank account.

1. All requests for goods and services are initiated and approved by authorized individuals, and are in accordance with budget and appropriation guidelines.

Risks - Purchases from unauthorized vendors, purchases are in violation of a conflict of interest policy, purchases are not timely, purchases not in accordance with budget and/or appropriations provisions.

2. All purchase orders are based on valid, approved requests and are properly executed as to price, quantity and vendor. All materials and services received agree with the original orders.

Risks - Payment in excess of optimum price, quantities not adequate or in excess of need, quality of materials or services received are substandard.

3. All materials and services received agree with the original orders.

Risks - Payment for materials or services not received, damaged or missing goods not reported, inferior quality of materials or services received.

4. All invoices processed for payment represent goods and services received and are accurate as to terms, quantities, prices and extensions; account distributions are accurate and agree with established account classifications.

Risks - Payment based on improper price or terms, accounting distribution of cost is inaccurate.

5. All checks are prepared on the basis of adequate and approved documentation, compared with supporting data and properly approved, signed and mailed.

Risks - Incorrect or duplicate payments, alteration of checks, disbursement for materials or services not properly documented or approved.

6. All disbursement, accounts payable, encumbrance transactions are promptly and accurately recorded as to payee and amount.

Risks - Improper cash, accounts payable, and encumbrance balances.

7. All entries to accounts payable, reserve for encumbrances, asset and expense accounts and cash disbursements are properly accumulated, classified and summarized in the accounts.

Risks - Misstated financial statements, misstated internal financial data, inoperable budgetary control.

All disbursement vouchers, together with supporting data, shall be presented to the district health board for approval. If the district health board meets less often than once each month, the director and one member of the board may approve the disbursements with their action reported to the board at its next meeting. In health departments consisting of only one county, the board of county commissioners or board of auditors will approve the bills before payment.

Upon receiving an approved and authorized disbursement voucher, a vendor check is prepared, either in duplicate or triplicate. The original is the negotiable check which is for the vendor and must provide space for:

(1) Date of Payment
(2) Vendor Name
(3) Amount of Check
(4) Necessary Signatures
(5) Check Number (preprinted)
(6) Account Codes
(7) Other data to insure a proper credit on the vendor's records

County policy should be followed when the county clerk (or controller) prepares checks to the vendors. Usually, the disbursement voucher is prepared in duplicate, with one copy to the clerk or controller and one copy filed by the local health department. The health department disbursements journal would be posted from the voucher.

Upon receipt of the approved master voucher, the county clerk (or controller) issues the local health department a county warrant, also known as a blanket check, for the total on the payment authorization list or total of vendor check copies.

The county warrant shall not exceed the total amount of the approved master voucher. Upon receipt by the health department, the blanket check shall be immediately deposited in the cash-operating account after which checks may be forwarded to vendors.

The vendor checks cannot be released until the blanket check has been received from the county and deposited in the bank.

Note: Where the county clerk (or controller) prepares checks, the master voucher is not necessary. It is only used to transfer money from the county treasurer's combined bank account to the agency operating account.

The cash disbursements journal is a spreadsheet type of journal designed to record all vouchers and/or checks in numerical sequence and to provide a convenient and uniform source for posting cash disbursements to the general ledger.

Form columns are explained as follows:

1. Ensure that appropriate records are maintained for all businesses, users of government services, and individuals or entities against whom fees are assessed.

Risks - Government loss of revenue as a result of billing errors, employees afforded the opportunity to divert revenue to personal use.

2. Billing of services performed promptly and in proper amounts; exemptions are only provided to those authorized.

Risks - Billings inaccurately or incompletely prepared, with knowledge that there is no effective audit or review function, revenue lost due to inadequate procedures or improper employee accounts.

3. All collections are properly identified, control totals developed, and collections promptly deposited intact and applied to the proper accounts.

Risks - Withholding or delaying the recording of cash receipts and application of funds to the proper accounts, employee diversion of receipts to personal use, amounts improperly written-off and collections diverted to personal use.

4. Billings, adjustments and collections are properly recorded.

Risks - Account balances reduced by unauthorized transactions in individuals receivable accounts, cash flow from payments retarded by delayed billing or deposits.

5. Revenues, collections and receivables are properly accumulated, classified and summarized in the accounts.

Risks - Errors in transaction postings to detail or control accounts not detected in a timely manner, tampering with account balances encouraged by knowledge that controls are ineffective, problem accounts do not receive prompt attention resulting in revenue or cash flow loss.

It is essential that individual and control accounts be maintained for accounts receivable of any type. For services which are billed to Medicare, Medicaid, insurance or private pay, the following procedures should be used. Services and billing forms and documentation, which meet the minimum requirements shown herein, are acceptable.

Services and Billing Documentation

A services and billing form should be prepared in triplicate for each service provided. Copies of this documentation should be distributed as follows.

As the nurse or other individual turns in special receipts, the regular receipt is prepared. The inclusive numbers of the forms must be entered on the regular receipt and the total amount collected. The original copy of the regular receipt is given to the nurse or other individual and the duplicate remains in the receipt book.

The services and billing information must be compiled in a journal or billing register which will reflect the total amount charged and the amounts charged to Medicare, Medicaid, insurance and private pay. This information is used to prepare the monthly journal voucher from which accounts receivable charges are posted to the general ledger.

Individual Accounts Receivable

An individual sheet or card must be prepared for each person from whom, or on behalf of whom, collections for services will be made at a later date.

Individual ledger cards must be used by all health departments having accounts receivable. The card must contain the following information:

1. Name of Patient
2. Address of Patient
3. Phone Number
4. Birth Date
5. Social Security Number
6. Health Insurance Benefit Number
7. Date of Service
8. Receipt/Service Number
9. Total Charge
10. Payment Sources--Medicare, insurance, private pay, etc.

Charges are posted to the individual ledger card from billings and payments are recorded from the receipts and from the insurance lists, which accompany the payments covering groups of individuals.

The total of the individual accounts must be balanced to the control account #018.00 in the general ledger at least monthly.

1. Additions, separations, wage rates, salaries and deductions are authorized and documented. Payroll and personnel policies are in compliance with grant agreements and federal and state laws.

Risks - Unauthorized or fictitious names are added to the payroll, payments continue to terminated employees, wage rates and salaries used are at a higher rate than authorized, payroll reimbursement through grant funding denied, penalty for noncompliance with federal and state laws.

2. Employees' time and attendance data are properly reviewed and approved.

Risks - Employees are paid for time which they did not work, employees are paid for time which was unnecessary or unauthorized.

3. Employees' time and attendance data are properly processed and documented and accurately coded for account distribution.

Risks - Employees are paid for time which they were absent from work, coding of accounting distribution for payroll costs in error.

4. Computations for gross pay, deductions and net pay are accurate and based on authorized time and rates; the recording and summarization of payments to be made and cost to be distributed are accurate and agree with established account classifications.

Risks - Employee compensation and payroll deductions are computed erroneously, payroll and related costs are not distributed in accordance with established account classification, reimbursable payroll costs are not recovered under grant or shared cost classification programs, amounts paid at rates different than those authorized.

5. Payments for employee compensation and benefits are made to or on behalf of only bona fide employees for services performed as authorized.

Risks - Payments made to unauthorized individuals, employees paid for unauthorized benefits.

6. Employee compensation and benefit costs are properly accumulated, classified and summarized in the accounts.

Risks - The accounting distribution of payroll and related costs are classified improperly, accrued liabilities or disclosures for employee benefits are misstated.

Deduction Authorizations

Each employee shall complete and sign all applicable deduction authorizations on date of hire. The authorizations must be filed for future reference. Any subsequent revisions in deduction authorizations are handled the same as for new employees.

Time Records

Time cards, sign-in sheets or other suitable time reports should be used to provide a proper basis for payroll preparation and program distribution. It may be desirable to use a preliminary work sheet for these purposes. Such a worksheet should be filed for future reference.

Payroll Journal (Register)

This form is usually a spreadsheet designed to record all financial information applicable to a payroll. This form may be prepared at the time of writing the payroll checks.

This form should provide space for:

(1)	Payroll Date
(2)	Check Number (recorded in numerical sequence)
(3)	Period Covered
(4)	Employee Name
(5)	Hours or Days Worked
(6)	Rate of Compensation
(7)	Gross Earnings  Regular Hours  Overtime Hours  Vacation Time  Sick Leave Time
(8)	Various Deductions Withheld  FICA I  FICA II  Federal Income Tax  State Income Tax  City Income Tax  Credit Union  Retirement  Other Deductions (i.e., IRS Sec. 125/Cafeteria Plans,      Deferred Compensation)
(9)	Net Earnings

This form shall be totaled and balanced after each payroll and posted to the applicable expenditure accounts. This may be done by posting from this journal to a single payroll entry in the cash disbursements journal and spreading the total to the proper expenditure accounts.

Social Security and Other Deductions

It is essential that each payroll be balanced. Net payroll checks, deductions remitted to payees and applicable liability accounts must equal the gross amount for each payroll. Checks for various deductions are appropriately drawn to those entitled to such deductions in accordance with federal, state and local regulations or contractual arrangements.

Checks should be made payable to the county treasurer for such items as:

Federal Income Tax
State Income Tax
Social Security
Other Local Income Taxes
Other deductions not immediately paid to the organization entitled to the same

Note: Where the health department draws a master voucher check from the county and writes its own payroll checks, it is necessary that the county clerk (or controller) receive a copy of the payroll journal or register.

Payroll Check

This form is used to make individual payments to employees and to disburse deductions withheld.

This form should provide space for:

(1) Check Number (preprinted)
(2) Period Covered
(3) Name of Employee
(4) Gross Earnings (may be detailed by regular, overtime, etc.)
(5) Various deductions withheld (in detail)
(6) Necessary Signatures
(7) Date of Payroll
(8) Net Earnings

The county treasurer or the board in charge of the unit for which the payroll is prepared should require that all checks be pre-numbered and accounted for.

1. All fixed asset transactions are initiated by authorized individuals in accordance with established criteria.

Risks - Fictitious purchases or payments to contractors or suppliers, with or without kickbacks to employees, purchases from vendors whose interests are in conflict with the organization, purchases of unnecessary assets, disposal or scrapping of serviceable assets, purchases of assets which do not meet established quality standards.

2. Advance approval is obtained for all significant fixed asset transactions.

Risks - Unauthorized purchases, construction contracts or leases with companies or individuals related to executive or legislative representatives, purchases from related parties without the knowledge of senior officials, delay or cancellation of a project due, expenditures in excess of originally approved amounts without review and approval.

3. Adequate project cost records are maintained, and in progress and completed project reports are issued.

Risks - Actual costs that exceed budgeted amounts, overpayments to contractors, misclassification of costs between capital and operating budgets.

4. All fixed assets are accurately recorded in detail records which are compared with existing assets at reasonable intervals. All fixed assets are adequately safeguarded.

Risks - Use of equipment or other assets other than for the unit of government's benefit, theft of tools and equipment, maintenance or supply parts, payment of insurance on assets no longer owned, unauthorized disposals of assets or diverted proceeds from sales of assets, physical loss of assets through inadequate security or insurance coverage, continue ownership of obsolete or otherwise nonproductive assets, preparation of financial statements which do not accurately reflect existing assets.

5. All fixed assets transactions are properly accumulated, classified and summarized in the general ledger accounts.

Risks - A misstatement of reported financial position and results of operations, violations of loan covenants and/or rules and regulations of various grantor agencies, financial or operational decisions based upon erroneous information.

Capital Assets

GASB Statement No. 34 defines capital assets as including land, improvements to land, easements, buildings, building improvements, vehicles, machinery, equipment, works of art and historical treasures, infrastructure and all other tangible or intangible assets that are used in operations and that have initial useful lives extending beyond a single reporting period.

Infrastructure Assets

Infrastructure assets are long-lived capital assets that normally are stationary in nature and normally can be preserved for a significantly greater number of years than most capital assets. Examples of infrastructure assets include roads, bridges, tunnels, drainage systems, water and sewer systems, dams, and lighting systems. Buildings, except those that are an ancillary part of a network of infrastructure assets, should not be considered infrastructure assets.

General Fixed Assets

General fixed assets are those capital assets of a governmental unit which are necessary for the unit to perform its governmental function. These are capital assets normally acquired through funds other than enterprise and internal service funds. Examples of general fixed assets include the general government buildings, vehicles, office machines and equipment (computers, typewriters, adding machines, etc.), and office furniture.

Recording Process

It is essential that capital assets be recorded within the local unit general ledger. The amount in the general ledger must be supported by detail subsidiary ledgers. Infrastructure assets that are associated with a specific enterprise or internal services fund are recorded in the appropriate fund.

The recording of capital assets makes it possible to provide for protective custody and to fix responsibility for proper use and custody of such assets. It also permits proper disclosure on financial statements, for no financial report is complete without reflecting the capital assets of a local unit.

The first step in recording general fixed assets is a complete inventory, at least by the following classes:

1) Land and improvements
2) Buildings and improvements
3) Machinery and equipment
4) Construction in progress

If desired, land and land improvements may be recorded separately, as may buildings and building improvements. Machinery and equipment may be further classified as office machines, office furniture, automobile, etc. Construction in progress is used until a construction project is completed, at which time the proper asset classification is increased and construction in progress eliminated.

Valuation of capital assets is at cost. Donations are recorded at their fair value at the time of receipt.

Once the capital assets are inventoried and valued by various classifications or groupings, they are ready for recording in the general ledger.

Subsidiary Records

Once general fixed assets are recorded in the general ledger, subsidiary records must be maintained for each item that details the following information.

1) Classification (land, building, equipment, etc.)
2) Payment voucher number
3) Date acquired
4) Vendor
5) Description (abbreviated)
6) Cost
7) Location (clerk, treasurer, etc.)
8) Fund from which purchased
9) Method of acquisition (purchase, gift, etc.)
10) Estimated life
11) Depreciation method
12) Date, method, and authorization of disposition

At any time, the total of the individual costs must equal the amount recorded in the general ledger. Such a test must be made periodically (at least annually).

A periodic inventory (at least annually) must be made to ensure that all recorded items are on hand, and that all items on hand have been properly recorded.

GASB Statement No. 34 requires capital assets be recorded at the government wide level. The health department should work with the county or city to make sure there is a record of capital assets in order to record them in the basic financial statements.

1. All transactions are approved by authorized individuals.

Risks - Purchase unauthorized materials acquired in excess of need, at appropriate prices, or at unfavorable terms.

2. All inventory items are subject to effective custodial accountability procedures and physical safeguards.

Risks - Theft by employees or outsiders; inadequate insurance coverage.

3. All receipts and withdrawals of inventory are properly recorded and the records reflect actual quantities on hand.

Risks - No basis for comparing actual usage with expected usage; inability to determine material reorder points.

4. All transactions are properly accumulated, classified and summarized in the accounts.

Risks - Misstated financial statements; concealment of shortages.

Inventory can be defined as assets held for sale in the normal course of business. Because Health funds are driven more by the delivery of services than sales, this section is directed more towards accounting for prepaid expenditures that are held in inventory accounts such as; medical supplies, office supplies, uniforms, vaccines etc. As indicated in Section III under Methods of Accounting For Expenditures, inventories of materials and supplies may be considered an expenditure when purchased or used. However, items that may be significant or material in cost to the organization may require additional accounting records to be kept for year end reporting purposes.

There are two methods of accounting for inventories.

1. Periodic - a method in which inventory is adjusted to the proper balance at the end of the accounting period not when inventoriable merchandise is bought or sold. Throughout the period, all purchases of inventoriable merchandise are recorded in the purchases account, and ending inventory is determined by a physical count of merchandise on hand.

2. Perpetual - a method in which inventory is recorded in detail for each purchase and sale are maintained. This system provides a current record of inventory on hand and cost of goods sold to date.

Most of the financial transactions of the local health departments involve the receipt or disbursement of cash and are properly recorded in the cash receipts journal and the cash disbursements journal. There are, however, a few transactions during the fiscal year that do not involve the receipt or disbursement of cash and thus should not be recorded in the cash receipts journal or the cash disbursements journal. The general journal is therefore necessary to complete the set of journals required in the accounting system of a local health department.

Other entries that would require use of the journal voucher are:

(1) Recording health fund revenues received by the county treasurer from the state, other counties, etc., based on written notification from the county treasurer
(2) Transfers from one ledger account to another
(3) Closing revenue, expenditure and budgetary accounts at year end
(4) Other required general ledger entries not typically posted in the cash receipts or disbursements journal

The Michigan Uniform Accounting System requires the use of a cash receipts journal, a cash disbursements journal, general journal and general ledger. Each financial transaction is recorded first in the appropriate journal and then in the general ledger by means of summary entries or general journal entry.

The general ledger contains the self-balancing group of accounts of the health fund consisting of assets, liabilities, fund equities and reserves, revenues (control and detail), expenditures (control and detail), and budgetary accounts as required by the Uniform Chart of Accounts.

A monthly trial balance should be prepared from the general ledger account balances and submitted to the county/district health board for its use and approval. A copy should be retained in the accounting office and other copies distributed as deemed necessary by the board or health director.

It will be necessary to maintain a record of revenue and expenditures, by program, in all health departments. Such program records will be maintained as subsidiaries to the appropriate general ledger control accounts. For example, the general ledger must reflect the total expended for personal services - the total may be further sub-divided to programs where necessary.

The reporting formats recommended for local units of the State are those pronounced by the National Council on Governmental Accounting (NCGA) and the Governmental Accounting Standards Board (GASB). In June 1999, GASB issued Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments. This statement applies to all state and local governments and established new reporting requirements, created new information and restructured much of the information that has been presented in the past. NCGA Statement No. 1 can be obtained from the Municipal Finance Officers Association, and GASB statements can be obtained from the Governmental Accounting Standards Board (GASB).

The comprehensive annual financial statement reporting formats presented here is in accordance with NCGA and GASB pronouncements, and provide examples of reporting formats to utilize both prior to and after implementation of GASB Statement No. 34. The following sections provide further explanation of the content of these reporting formats.

The funds and account groups reported in the local/district health department financial statements are categorized and described as follows.

Governmental Fund

1. Special Revenue Fund - This fund is used to account for all financial resources of the local/district health department, which are restricted to expenditures for specified health related purposes.

Account Groups

1. General Fixed Assets Account Group - The general fixed assets account group is used to maintain control and cost information for all fixed assets of the local/district health department.

2. General Long-Term Debt Account Group - The general long-term debt account group is used to record the outstanding long-term obligations of the local/district health department such as compensated absences.

The financial statements for funds for which the detailed records are maintained by the various boards, commissions or other agencies must be prepared by those boards, commissions or agencies. These include, but are not limited to special revenue funds such as the county road fund, social services and child care funds, county library fund, public health and mental health funds.

The two basic fund financial statements are as follows:

1. Balance Sheet

2. Statement of Revenue, Expenditures and Changes in Fund Balance--Budget and Actual

A further explanation of the content of these statements is contained in the following pages of this reporting format.

Current Assets -- Include all balances recorded in account numbers 001 - 129

Capital Assets -- Include all balances recorded in account numbers 130 - 179

Other Assets -- Include all balances recorded in account numbers 180 - 199

Current Liabilities -- Include all balances recorded in account numbers 200 - 299

Long-Term Liabilities -- Include all balances recorded in account numbers 300 - 319

Other Liabilities -- Include all balances recorded in account numbers 320 - 344

Fund Balances -- Include all balances recorded in account numbers 345 - 399

The following pages provide a sample balance sheet financial statement.

Budget	This column should reflect the amounts shown in the budget, as amended, and approved by the legislative body.
Actual	This column must reflect:
Revenues	Those revenues are recorded in accounts numbered 400 through 693 of the general ledger.
Expenditures	Those expenditures as recorded in the general ledger for accounts numbered 700 through 990. Any large amounts classified as miscellaneous or other expense should be listed in detail on the statement or a separate supporting statement may be attached. Capital outlay expenditures will be included in the appropriate function and activity totals.
Variance, Favorable (Unfavorable)	This column reflects the difference between the actual and budget columns. The favorable and (unfavorable) are described as follows.
Revenue Favorable	When the actual revenue reported on the statement exceeds the budget amount.
(Unfavorable)	When the actual revenue is less than the budget amount.
Expenditures Favorable	When the actual expenditures reported on the statement is less than the budget amount.
(Unfavorable)	When the actual expenditures reported on the statement is greater than the budget amount.
Excess of Revenue Over (Under) Expenditures	This is the amount the fiscal year's actual revenue differs from the actual expenditures, as recorded in the general ledger.
Other Financing Sources	Proceeds of general long-term debt, transfers from other funds or component units, and other financing activities. Those revenues are recorded in accounts numbered 695 - 699 in the general ledger.
Other Financing Uses	This includes appropriations to another fund or component unit. Those expenditures are recorded in accounts numbered 995 - 999 in the general ledger.
Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses	Net of excess (deficiency) of revenue and other financing sources over (under) expenditures and other financing uses.
Fund Balance--Beginning of Year	This is the amount recorded in the fund balance account of the general ledger. It should also be the same amount recorded as the December 31 fund balance on the prior year's financial statements.
Residual Equity Transfers	Nonrecurring or non-routine transfers of equity between funds, e.g., transfers of residual balances of discontinued funds to the general fund.
Fund Balance--End of Year	Fund balance at beginning of year plus or minus excess of revenue and other financing sources over (under) expenditures and other financing uses, plus or minus equity transfers.

Note: All of the foregoing statements are to be prepared from the accounting records as they are maintained. If your local health department has more or less detail than that shown on our sample statements, the statements may be prepared accordingly as long as the basic reporting format is followed. No supplementary financial data is required for most special revenue funds.

The following pages provide a sample Statement of Revenues, Expenditures and Changes in Fund Balance--Budget and Actual.

GASB Statement No. 34 requires that governments present certain financial statements as well as a management's discussion and analysis (MD&A) and certain other required supplementary information (RSI).

The basic financial statements are broken down into the following components.

Government-Wide Financial Statements

The governmental-wide financial statements report information for the government as a whole, except for its fiduciary activities. These financial statements use the economic resources/accrual measurement focus and basis of accounting and include transactions and balances relating to all assets and liabilities, including long-term capital assets (including infrastructure) and liabilities.

Fund Financial Statements

The fund financial statements report information for the government's governmental, proprietary and fiduciary funds. These financial statements use different measurement focus and basis of accounting depending upon the fund category (i.e., governmental funds use the current financial resources/modified accrual measurement focus and basis of accounting, proprietary and fiduciary funds use the economic resources/accrual measurement focus and basis of accounting).

The reporting format of the fund financial statements is similar to the reporting format prior to implementation of GASB Statement No. 34.

GASB Statement No. 34 is effective in three (3) phases for the following dates based on the total annual revenues (excluding other financing sources) of the primary government. For local/district health departments that are considered either "funds" or "component units" of a county or city, the effective date would be the same as the county or city.
 

Phase	Total Annual Revenues in The First Fiscal Year Ending After June 15, 1999	Implementation for Periods Beginning After June 15,
1	$100 million	2001
2	$10 million<$100 million	2002
3	$10 million	2003

The following provides a description of each component of the required reporting information including sample financial statements.

Management Discussion and Analysis (MD&A)

The MD&A gives an objective and easily readable analysis of a government's financial activities based on currently known facts, decisions, or conditions. It presents short and long-term analyses of the government's activities, compares current-year results with those of the prior year, and discusses the positive and negative aspects of that comparison. Some of the minimum requirements for the MD&A are as follows.

1. A brief discussion of the basic financial statements, including how they relate to each other and the significant differences in the information they provide.

2. Condensed current and prior year financial information from the government-wide financial statements with a comparative analysis that discusses reasons for significant interperiod changes and economic factors that significantly affected current year operations.

3. An analysis of individual fund financial information, including the reasons for significant changes in fund balances (or net assets) and whether limitations significantly affect the future use of fund resources.

4. An analysis of significant variations between original and final budget amounts and between final budget amounts and actual results for the general fund.

Government-Wide Financial Statements

The two (2) basic government-wide financial statements are described as follows.

The statement of net assets presents the government's financial position at a point of time (like a balance sheet does). This statement reports all capital assets (including related accumulated depreciation) and all current and long-term liabilities as this financial statement is presented on the economic resources/accrual measurement focus and basis of accounting. Net assets are broken down between amounts related to capital assets (net of related debt) and restricted and unrestricted amounts. A separate statement of net assets is presented for the total of "governmental" and "business-type" activities. Business-type activities generally represent activities that have been reported as proprietary fund activities.

The following pages provide a sample statement of net assets.

	Governmental Activities	Business Activities	Total
ASSETS	$xxxxx	$xxxxx	$xxxxx
Cash	xxxxx	xxxxx	xxxxx
Accounts Receivable	xxxxx	xxxxx	xxxxx
Due From Other Governmental Units
Federal/State	xxxxx	xxxxx	xxxxx
Local	xxxxx	xxxxx	xxxxx
Inventory	xxxxx	xxxxx	xxxxx
Prepaid Expenses	xxxxx	xxxxx	xxxxx
Capital Assets (Net of Accumulated Depreciation)	xxxxx	xxxxx	xxxxx
Total Assets	xxxxx	xxxxx	xxxxx
LIABILITIES
Accounts Payable	xxxxx	xxxxx	xxxxx
Accrued Wages Payable	xxxxx	xxxxx	xxxxx
Other Accrued Liabilities	xxxxx	xxxxx	xxxxx
Due to Other Governmental Units
Federal/State	xxxxx	xxxxx	xxxxx
Local	xxxxx	xxxxx	xxxxx
Deferred Revenue	xxxxx	xxxxx	xxxxx
Advances From State	xxxxx	xxxxx	xxxxx
Long-Term Liabilities Payable Within One Year
Compensated Absences	xxxxx	-	xxxxx
Notes, Capital Leases and Contracts	xxxxx	-	xxxxx
Long-Term Liabilities Payable After One Year
Compensated Absences	xxxxx	-	xxxxx
Notes, Capital Leases and Contracts	xxxxx	-	xxxxx
Total Liabilities	xxxxx	xxxxx	xxxxx
NET ASSETS
Invested in Capital Assets (Net of Related Debt)	xxxxx	xxxxx	xxxxx
Restricted for Grant Activities	xxxxx	-	xxxxx
Unrestricted	xxxxx	xxxxx	xxxxx
Total Net Assets	$xxxxx	$xxxxx	$xxxxx

The statement of activities presents the government's activities during a period (like an operating statement does). This statement reports all expenses related to program operations (including depreciation expense allocated to the various program activities) as this financial statement is presented on the economic resources/accrual measurement focus and basis of accounting. Expenses are broken down between the "governmental activities" and the "business-type activities" and into program components within these activities along with reporting the revenues related to each of the program components.

The following pages provide a sample statement of activities.

The fund financial statements are presented similar to the formats required prior to implementation of GASB Statement No. 34. Only "major" funds are required to be reported in a separate column (i.e., assets, liabilities, revenues or expenditures for the fund are greater than 10% of the governmental or proprietary fund type totals). There must also be a schedule included in the financial statements that reconcile both the balance sheet to the statement of net assets, and also the statement of revenues, expenditures and changes in fund balances/retained earnings to the statement of activities.

Financial Reporting--GASB Statement No. 34

Major Funds - GASB No. 34, paragraph 75 and 76, states that the focus of governmental and proprietary fund financial statements is on major funds. Fund statements should present the financial information of each major fund in a separate column. Non-major funds should be aggregated and displayed in a separate column.

The reporting government's main operating fund (the general fund or its equivalent) should always be reported as a major fund. Other individual governmental and proprietary should be reported in separate columns as major funds based on these criteria:

a) Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10 percent of the corresponding total (assets, liabilities and so forth) for all funds of that category or type (that is, total governmental or total enterprise funds); and

b) Total assets, liabilities, revenues or expenditures/expenses of that individual governmental or enterprise fund are at least 5 percent of the corresponding total for all total governmental and enterprise funds combined.

In addition to funds that meet the major fund criteria, any other governmental or enterprise fund that the government's officials believe is particularly important to financial statement users (for example, because of public interest or consistency) may be reported as a major fund.

In Michigan, the health fund will always be reported as a major fund whether or not they meet the above criteria.

Separate Authority--Use of Funds - When a unit of government (or two or more units of government) establishes a separate authority (district health) and that authority maintains its own accounting records, the special revenue fund presented in this manual will be reported in a separate financial report of the authority as the general operating fund of the authority.

While it is common for the above to occur, it is also common for the authority (in agreement between the units or otherwise) to agree that one of the participating units handle the treasury and accounting functions for the authority. When this occurs, the Department of Treasury recommends that the largest participating unit be selected. The unit maintaining the accounting for the authority would use the appropriate fund(s) in the appropriate fund type.

The authority's fund(s) would be reported by the unit maintaining the accounting for the authority as a discretely presented component unit in their financial report as would single unit authorities.

Single Audit Requirements

If the local/district health department expends more than $300,000 in federal financial assistance in its fiscal year, then the local/district health department is required to have a Single Audit conducted in accordance with the federal audit requirements outlined in Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments and Non-Profit Organizations.

The local/district health department's programs are funded with both federal and state grant funds, and as a result the local/district health department needs to ascertain the amount of federal funding related to each of their grant programs. Even though much of the funds are passed through either a local or state department, many times these funds include federal pass-through monies and are subject to the requirements of the Single Audit Act. The local/district health department should contact their funding sources to obtain the determination as to whether each grant includes federal funds. The local/district health department should also review grant agreements and other federal rules and regulations (i.e., cost principles such as OMB Circular A-87, administrative requirements listed in the Common Rule, etc.) to assure that federal programs are administered in accordance with requirements and to prepare for audit.

The Single Audit is required to be completed and submitted within nine (9) months of the end of the local/district health department's fiscal year or within 30 days after completion of the audit whichever comes first. The required "reporting package" that must be submitted to the funding sources and the federal audit clearinghouse includes the audited financial statements, Single Audit reports, corrective action plan related to any Single Audit findings, and the completed and signed Data Collection Form.

State of Michigan Filing Requirements