REPORTING CHANGES IN ACCRUALS – SUBSEQUENT EVENTS - 7981
Reporting changes in accruals enable the State Controller’s Office (SCO) to more accurately prepare an annual report as required by law.
After issuing its year-end financial reports, if a department determines there are material differences between amounts accrued as of June 30 and subsequent events (e.g., receipts and expenditures) relating to prior year funds, it will immediately contact the SCO, Bureau of State Government Reporting for instructions. The definition of material, for this purpose, is a net change in the total accrued income and the total accrued expenditures of $1,000,000 or more. Submit changes to the SCO as soon as possible.
To determine if material changes have occurred, departments will periodically review their expenditure and income accruals as follows:
- Expenditures
Prior year expenditures incurred and abatements received to the date of the review, plus an estimate of prior year expenditures yet to be made and abatements to be collected, will be compared with the amount anticipated when the expenditure accrual was determined.
- Income
The total of amounts billed as prior year income and amounts of prior year income received at the date of the review, plus an estimate of prior year income yet to be billed or received, will be compared with the total amount of income anticipated when the income accrual was determined.
If the net effect of (a) and (b) above is $1,000,000 or more, departments will contact the SCO for instructions.
Departments will not reopen its prior year accounts to record income changes because such subsequent events are recorded as prior year adjustments in the year they occur. However, if the SCO includes the adjustments in the annual report for expenditures, departments must reopen its accounts and post the adjustment in order for the expenditures in the following year to agree with the records of the SCO.