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1997-1 Accrual of State Shared Revenues

May 15, 1997

TO:   County, City, Township, Village Treasurers and Finance Directors

FROM:    Richard L. Baldermann, CPA
                Local Audit and Finance Division

RE:     State Revenue Sharing--Revenue Recognition

Recent legislation has changed the distribution dates for state shared revenues for local units of government. Local units now receive regular bimonthly distributions of revenue sharing. Payments are to be made as follows: October 31, December 31, February 28, April 30, June 30, and August 31.

Revenue in governmental funds is recognized in the accounting period in which it is susceptible to accrual--that is when it becomes both measurable and available to finance expenditures of the fiscal period. "Available" means collectable in the current period or soon enough thereafter to pay liabilities of the current period.

Listed below are the scheduled state revenue sharing collection and distribution dates:

State Collection Period     Month of Distribution
July/August   October 31
September/October  December 31
November/December  February 28
January/February  April 30
March/April    June 30
May/June   August 31

Revenue Recognition policy in accordance with generally accepted accounting principles is as follows:

February 28 year ends--accrue revenue sharing payments distributed April 30 to the prior fiscal year.
March 31 year ends--accrue revenue sharing payments distributed April 30 to the prior fiscal year.
June 30 year ends--accrue revenue sharing payments distributed August 31 to the prior fiscal year.
December 31 year ends--accrue revenue sharing payments distributed February 28 to the prior fiscal year.

Year ends dictated by charter--accrue payments distributed to prior fiscal year which are both measurable and available within sixty days of the end of the fiscal year.

Accrual of these revenues should be guided by an established policy of each local unit. The method chosen should be applied on a consistent basis from one fiscal year to the next. Within this bimonthly payment schedule all units would recognize 6 revenue sharing payments for each and every fiscal year.

If you need further assistance please call (517) 373-3227 or write our office: Michigan Department of Treasury, Local Audit and Finance Division, P.O. Box 30728, Lansing, Michigan 48909-8228.