REPORTING CHANGES IN ACCRUALS – SUBSEQUENT EVENTS - 7981
Reporting changes in accruals enables the State Controller’s Office (SCO) to prepare the annual reports required by law more accurately.
If, after issuing the year-end financial reports, an agency/department determines that there are material differences between amounts accrued as of June 30 and subsequent events (e.g., receipts and expenditures) relating to prior year funds, the agency/department will immediately contact the SCO, Bureau of State Government Reporting for instructions. The definition of material, for this purpose, means a net change in the total accrued income and the total accrued expenditures of $1,000,000 or more at the fund level. An agency/department must submit such changes to the SCO as soon as possible.
Agencies/Departments will periodically review their expenditure and income accruals to determine if material changes have occurred.
- Expenditures
Compare reported expenditure accrual against the prior year expenditures incurred and abatements received to the date of the review, plus an estimate of remaining prior year expenditures not yet incurred and abatements not yet collected.
- Income
Compare reported income accrual against 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 remaining prior year income not yet billed or received.
Agencies/Departments will contact the SCO for instructions if the net effect of (a) and (b) above is $1,000,000 or more at the fund level.
An agency/department 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, the agency/department must reopen its prior year accounts and post the adjustment in order for the expenditures in the following year to agree with the records of the SCO.