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Are there minimum mandatory
requirements for a financial record keeping system?
Yes. The minimum mandatory requirement
is to keep clear, accurate, and up-to-date records and
background documentation in an organized fashion.
This requires:
A system of recording in
detail daily money in and money out transactions;
A system for sorting and
summarizing this information;
A system for reporting this
information; and
A system for filing all of
the source documents and reports.
State law (AS
29.35.120 and 29.20.500)
requires that municipalities prepare monthly and annual reports
of income and expenditures and requires that these be available
to the public upon request. In addition, to receive State
Revenue Sharing an applicant must show that financial record
keeping practices are followed in the form of a budget and
an audit or certified financial statement (AS
29.60.290). In order to do this efficiently the
information listed above must be available and easy to access.
The financial record keeping system must provide a complete
record of financial transactions from the time the money is
received until it is spent or otherwise managed.
There are also certain standards
established by the U.S.
Comptroller General's General Accounting Office.
"The Yellow Book"
lays out procedures for government audits and identifies the
documents that will be audited under government grant and
program requirements.
What kind of records should
be kept?
Generally, the records that
must be kept are source documents and reports created from
source documents. These would include:
Cancelled checks.
Bank statements.
Check register.
General ledger.
General journal.
Paid invoices.
Bank accounts and their numbers.
Financial reports to the
governing body.
Budget and budget ordinance.
Any budget revisions.
Grant agreements and related
documentation.
Any previous audit
reports;
and
Personnel records.
How long do I have to keep
source documents?
How long you must keep source
documents varies depending on the type of document. Some only
have to be kept for a couple of years and some have to be
kept for a very long time. As an example, an employee's W-2
has to be kept for 4 years by the employer and must be made
available to the employee upon request during that 4-year
period. An employee's pay record has to be kept for 50 years
and must be available upon request during that 50-year period
to verify work history. The Alaska
Local Government General Records Retention Schedule,
published by Alaska State Archives, lists finance and accounting
records and how long they have to be kept. AS
29.20.380(a)(4) requires that the municipal clerk
manage municipal records and develop retention schedules and
procedures for inventory, storage, and destruction of records
as necessary.
The IRS provides information
in publication
583
on payroll tax record
retention requirements. The Department of Community and Economic
Development's (Commerce) "Model Financial Recordkeeping
System" provides information and samples of the documents required
for the various systems. The "Local Government Handbook" and
the "Payroll Handbook," also prepared by Commerce, provide information on financial
records.
Who is responsible for ensuring
financial records are kept as required?
The ultimate responsibility
lies with the governing
body. Staff responsibility is delegated to the
treasurer
or clerk
and in communities with the manager form of government this
responsibility lies with the manager.
In most small communities this responsibility is given to
the clerk-treasurer.
Records management duties of the municipal clerk
under state law also include:
Assure that public records are
available for public inspection as required by law (AS
29.20.380(3));
Manage all municipal records
and develop retention schedules and procedures for inventory,
storage, and destruction of records as necessary (AS 29.20.380(4));
Maintain an indexed file of
all permanent municipal records, provide for codification
of ordinances (AS 29.20.380(5)); and
Authenticate or certify records
as necessary (AS 29.20.380(5)).
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