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Financial Management

Record Keeping

 

Contents

Introduction
Frequently Asked Questions
Narrative
Additional Resources
Applicable Laws

 

Introduction    Back to Top

Part of the basic foundation of an organization is its record keeping system and its ability to organize and retrieve information efficiently. Without this ability local governments cannot organize, plan, or make decisions in an informed manner. Since local governments manage public funds and resources for the benefit of the public, it is especially important that accountability is a focus of the record keeping system. A good record keeping system ensures information is available to the governing body and public upon request.

There are a variety of financial record keeping systems. Generally they are referred to as manual or computerized systems. With a manual system, the records consist of hand-written journals. Other systems may use a computerized financial record keeping software program and others may use a combination of a manual system and some type of computerized system. The type of system chosen should take into consideration the skills and needs of the organization and ease of use. What is important about the system is that it is organized and the information is easily retrieved.

 

Frequently Asked Questions    Back to Top

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)).

 

Narrative    Back to Top

In addition to meeting the needs of the organization, a good financial record system helps establish reliability. Grants play a large role in building infrastructure in rural Alaska and having a good financial record keeping system in place helps to establish management capability to granting agencies. Granting agencies expect local governments will take their trust (fiduciary) responsibility over public funds very seriously. A good financial record keeping system provides assurance to grant agencies that public funds are safeguarded.

 

Additional Resources   Back to Top

Publications

Internet links

Alaska Statutes and Regulations

Training

    The Alaska Department of Community and Economic Development, Division of Community and Regional Affairs, provides training on-site in local communities and, upon request, through regional workshops.

 

Applicable Laws    Back to Top

Constitution of the State of Alaska, Article X, Local Government , Section 14

Alaska Statutes

  • AS 29.20.380 - duties of municipal clerk, public access to records, records management, records retention schedule, procedure for inventory, storage, and destruction of records
  • AS 29.20.390 - duties of the treasurer, custody of municipal funds, itemized account
  • AS 29.20.500 (4)(5) - duties of municipal manager, reports, custody of municipal property AS 29.20.640 - reports required to be filed with Commerce
  • AS 29.35.120 - annual report of accounts and financial transactions
  • AS 29.60.290 - revenue sharing requirement of budget and audit or certified financial statement AS 40.21.030 - duties of state archivist, review and approval of agency records retention schedules (See Current Alaska Statutes) AS 40.21.070 - requires state political subdivision to promote efficient records management using program established for state records, state archival assistance AS 40.21.080 - disposal of public records, list of records being disposed, written authorization for disposal AS 40.21.080 - public record inspection, copying, fees AS 40.25.220 - definitions

Revised 10/8/02

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