THE STATE’S GOVERNMENTAL FISCAL CYCLE - 7220
(Revised and Renumbered from section 7200)
The state’s fiscal cycle consists of Budgeting, Accounting, Reporting, and Auditing.
Budgeting
Budgeting involves the planning, development, adoption, and execution phase of the state’s budget, a plan of operation for a specified period expressed in financial terms. The budget process for the State of California consists of the Governor’s Budget, the Legislatures enactment of a budget (the Budget Act), and the executive branch’s administration of the budget. See SAM section 6000 for budgeting policy.
Accounting
Accounting is the process of assembling, analyzing, classifying, and recording data for the state’s finances. The accounting records consist of source documents, journals, ledgers, transaction records, and budget-related transactions.
Reporting
Agencies/departments prepare reports from accounting records and provide the executive branch of government, the legislature, and the public with information concerning the agencies/department’s financial operations and the relation of such operations to the budget.
Auditing
Auditing is an examination and verification of the accounting records and reports to determine whether:
- All transactions are properly recorded and reflected in the accounting records and reports are in compliance with Generally Accepted Accounting Principles.
- There is proper oversight and handling of money and property.
- There is adherence and compliance with fiscal policies and procedures.
Accounting and reporting are the responsibility of management. Those who oversee public resources must give an accounting of their stewardship.