Michigan Department of Treasury Uniform Chart of Accounts

The Uniform Chart of Accounts for Local Units of Government (Counties, Cities, Villages and Townships; and Authorities and Commissions established by counties, cities, villages, and townships) has been developed by the Local Audit and Finance Division of the Michigan Department of Treasury with the assistance of the Michigan Committee on Governmental Accounting and Auditing.

All local units of government in Michigan must use the Uniform Chart of Accounts. However, some governments may choose to implement a chart of accounts that is more complex than this chart (use of additional digits, etc.). This is acceptable as long as the chart used is consistent with this Chart of Accounts.

The Local Audit and Finance Division is responsible for general oversight of the financial administration and related audits of local units of government. The Division issues guidance to assist local units in implementing new legislation that affects the accounting and auditing responsibilities of the units and provides instruction on the appropriate methods and procedures to be used when filing statutorily mandated financial reports. These responsibilities are established primarily by the Uniform Budgeting and Accounting Act, 1968 Public Act (PA) 2 and 1919 PA 71.

1968 PA 2, Michigan Compiled Laws (MCL) 141.421 states:

(1) The state treasurer shall prescribe uniform charts of accounts for all local units of similar size, function, or service designed to fulfill the requirements of good accounting practices relating to general government. Such chart of accounts shall conform as nearly as practicable to the uniform standards as set forth by the governmental accounting standards board or by a successor organization that establishes national generally accepted accounting standards and is determined acceptable to the state treasurer. The official who by law or charter is charged with the responsibility for the financial affairs of the local unit shall insure that the local unit accounts are maintained and kept in accordance with the chart of accounts. The state treasurer may also publish standard operating procedures and forms for the guidance of local units in establishing and maintaining uniform accounting.

To access the full text of any Michigan Public Act or MCL section, go to the Michigan Legislature Web site at legislature.mi.gov.

The Uniform Chart of Accounts provides a systematic arrangement and means for the uniform accumulation, recording, and reporting of financial information and transactions for all local units of government in Michigan. This system follows Generally Accepted Accounting Principles (GAAP) and Michigan law. If used consistently and properly, it will facilitate the preparation of prescribed reports and will assure responsible local officials and the general public that similar transactions are recorded in the same manner, not only within a local unit but also among local units.

The Uniform Chart of Accounts is designed to serve basic legislative, budgetary, and accounting objectives. In addition, it provides a means for local units to meet additional legal requirements of the unit for budgeting and uniform accounting and reporting, regardless of the size of the unit.

Budgets And the Uniform Chart of Accounts

1968 PA 2 established budgeting requirements and prohibits deficit spending by local units of government in Michigan. Further, legislation concerning the requirement of local units to adopt a budget resulted in the enactment of 1978 PA 621, an amendment to 1968 PA 2.

The Budget Act requires all local units of government in Michigan to adopt balanced budgets, to establish responsibilities and define the procedure for the preparation, adoption, and maintenance of the budget, and to require certain information for the budget process.

Proper accounting and auditing in accordance with the Uniform Chart of Accounts greatly enhances the ability of the local unit to prepare and approve a budget that accurately reflects the financial condition of the unit to ensure that services are provided within available means.

For specific legal requirements pertaining to budgets, please refer to the Budget Manual for Local Units of Government. The manual is available on the Local Audit and Finance Division website.

Financial Reporting and the Uniform Chart of Accounts

In addition to budget requirements, local governments are required to prepare annual (biennial for certain local units) financial statements in accordance with Generally Accepted Accounting Principles and obtain an audit of these financial statements. Local units of government will find that adhering to the Uniform Chart of Accounts will facilitate the preparation and audit of the required financial statements.

The Governmental Accounting Standards Board (GASB) is the primary standard-setting body for acceptable accounting principles for state and local government entities. 

Local governments must follow the GASB standards and consider the applicability of the other accounting guidance to receive an unmodified opinion on the audited financial statements. Detailed information concerning basic financial records, documents, and procedures applicable to all local units of government in Michigan may be found in the Accounting Procedures Manual which was developed under the authority of 1968 PA 2 and 1919 PA 71. The manual is available on the Local Audit and Finance Division website.