Advance Payments
Compensation and any other payments for goods and services must not be paid in advance of receipts of the goods or services unless specifically authorized by law. Payments made for goods or services which are not received may be the personal obligation of the responsible official or employee.
Annual Financial Report
The Annual Financial Report (AFR) required under IC 5-11-1-4(a) shall be filed with the state examiner not later than sixty (60) days after the close of each fiscal year.
Asset Ownership
Assets purchased must be titled in the name of the unit. In instances where multiple units are purchasing an asset jointly, the asset must be titled in accordance with an interlocal agreement between the units.
Audit Costs
Audit costs incurred because of poor records, nonexistent records, or any other inadequate bookkeeping practices, or because of theft or a shortage may be the personal obligation of the responsible official or employee.
Any audit costs paid without the prior approval of the SBOA when the SBOA has the statutory requirement to perform the audit of the unit may be considered a duplication of service and an unnecessary expense. These payments may be the personal obligation of the responsible official or employee.
Capital Assets
Every unit must have a capital assets policy that details the threshold at which an item is considered a capital asset. Every unit must have a complete detail listing of all capital assets owned which reflects their acquisition value. Capital Asset Ledger (Form 369) has been prescribed for this purpose. A complete physical inventory must be taken at least every two years, unless more stringent requirements exist, to verify account balances carried in the accounting records.
The list of capital assets should include the following categories:
Land
The records of each unit must include a description of land owned by the unit, its location, amount of acreage (if relevant), its acquisition date and the purchase price. If the purchase price is not available, appraised value may be used.
Infrastructure
A capital asset account for the cost of infrastructure must reflect the location and brief description identifying each road, bridge, tunnel, drainage system, storm water system, dam, or lighting system owned by the unit.
Buildings
A capital asset account for buildings must reflect the location of each building and the purchase price or construction cost and the cost of improvements, if applicable. If a building is acquired by gift, the account must reflect its appraised value at the time of acquisition.
Improvements Other than Buildings
A capital asset account must reflect the acquisition value of permanent improvements, other than buildings, which have been added to the land. Examples of such improvements are fences, retaining walls, sidewalks, and gutters. The improvements must be valued at the purchase or construction cost.
Equipment
Tangible property of a permanent nature (other than land, buildings, and improvements) must be inventoried. Examples include machinery, trucks, cars, furniture, office equipment including but not limited to computers and data processing equipment, and desks, safes, cabinets, books, cellphones, etc. The value of such items must be carried in the inventory at the purchase cost.
Construction Work in Progress
Where construction work has not been completed in the current reporting fiscal year, the cost of the project must be carried as “construction work in progress.” When the project is completed, it must be placed on the inventory applicable to the assigned asset account.
Cash Disbursements
Disbursements, other than properly authorized petty cash disbursements, shall be by check or warrant, not by cash or other methods unless specifically authorized by law.
Collections of Amounts Due
Units have a responsibility to collect amounts owed to the unit pursuant to procedures authorized by law.
Compensation
All compensation and benefits paid to officials and employees must be included in the labor contract, salary ordinance, resolution, or salary schedule adopted by the governing body unless otherwise authorized by law. Compensation must be paid in a manner that will facilitate compliance with state and federal reporting requirements.
Compensation – Non-Employees
Payments for services provided by an organization must go directly to the organization and not to an individual employee of the organization. All payments for services must be supported by a written contract. Compensation must be paid in a manner that will facilitate compliance with state and federal reporting requirements.
Condition of Records
At all times, the manual and/or computerized records, subsidiary ledgers, control ledger, and reconciled bank balance must agree. If the reconciled bank balance is less than the subsidiary or control ledgers, the amount needed to balance may be the personal obligation of the responsible official or employee.
Conflict of Interest
Conflict of interest disclosures must be completed on Gateway.
The attorney for the unit or a private attorney must be consulted in regard to whether a conflict of interest disclosure statement must be filed and whether the format of the disclosure is sufficient.
Contracts
Payments made or received for contractual services must be supported by a written contract. Each unit is responsible for complying with the provisions of its contracts.
Correction of Errors
When it is determined that an error has been posted in the financial records, the error must be corrected in a timely manner. The correction of the error should be dated as of the date that the correction occurred and should not be back dated to the date the error occurred. The adjustment should be labeled as a correcting entry. All documentation of the error and the adjustments must be maintained to support the correction.
Deposit of Accountable Items
Tickets, goods for sale, billings, and other collections, are considered accountable items for which a corresponding deposit must be made in the bank accounts of the unit. The deposit ticket or attached documentation must provide a detailed listing of the deposit, which includes at a minimum, check numbers and corresponding names of the payers.
Donations
Public funds cannot be donated or given to other organizations or individuals unless specifically authorized by law.
Electronic and Digital Signatures
The SBOA will not take exception to the use of electronic signatures. Each official is responsible for their own signature, so proper internal controls over the use of electronic signatures should be put into place by the unit.
Employee Benefits
All types of employee benefits must be detailed in a written policy. Payments for expenses not authorized in a written policy cannot be allowed.
The governing body must adopt policies governing sick leave, vacation leave, and any other types of paid leave.
Excessive or Unreasonable Costs
Every effort should be made by the unit to avoid unreasonable or excessive costs. Unreasonable or excessive costs may be the personal obligation of the responsible official or employee.
Expenditures by Holding Corporations
Property and equipment provided by holding corporations to a unit should only be in accordance with the original project as presented to the public and approved by the Department of Local Government Finance.
Federal and State Agencies - Compliance Requirements
Units are required to comply with all grant agreements, rules, regulations, bulletins, directives, letters, letter rulings, court decisions, and filing requirements concerning reports and other procedural matters of federal and state agencies. Units must file accurate reports required by federal and state agencies. Noncompliance may require corrective action.
Fees
Fees can only be collected as specifically authorized by law or properly authorized ordinance/resolution. When a fee is NOT specified by law, but instead through the use of an ordinance/resolution, sufficient authoritative reference should be maintained.
Fundraisers
Units which conduct fund raising events must have the express permission of the governing body for conducting the fund raiser as well as procedures in place concerning the internal controls and the responsibility of employees or officials. The Ghost Employment law [IC 35-44.1-1-3] should be considered when conducting a fundraiser.
Fund Sources and Uses
Sources and uses of funds must be limited to those authorized by the enabling law, ordinance/resolution, or grant agreement.
Indebtedness
A unit may not incur indebtedness unless specifically allowed by law.
Lucrative Office
Any person holding two offices which have been or may be deemed lucrative must obtain the written opinion of the attorney for the unit or units served to determine compliance with Article 2, Section 9 of the Constitution of Indiana.
Malfeasance, Misfeasance or Nonfeasance
Funds misappropriated, diverted or unaccounted for through malfeasance, misfeasance, or nonfeasance in office of any official or employee may be the personal obligation of the responsible official or employee.
Ordinances and Resolutions
Each unit is responsible for complying with the ordinances, resolutions, and policies it adopts.
Overdrawn Cash
The cash balance of any fund may not be reduced below zero. Routinely overdrawn funds could be an indicator of serious financial problems which should be investigated by the unit.
In an instance in which a unit receives a reimbursement grant, the unit must be claiming reimbursement in a timely manner. In this case, it would be possible for a fund to be overdrawn for a short period of time.
Overpayment Collections
Units must collect any overpayments made.
Penalties, Interest, and Other Charges
Officials and employees have the duty to pay claims and remit taxes in a timely fashion. Failure to pay claims or remit taxes in a timely manner could be an indicator of serious financial problems which should be investigated by the unit. Additionally, officials and employees have a responsibility to perform duties in a manner which would not result in any unreasonable fees being assessed against the unit. Any penalties, interest, or other charges paid by the unit may be the personal obligation of the responsible official or employee.
Personal Expenses
Public funds may not be used to pay for personal items or for expenses which do not relate to the functions and purposes of the unit. Any personal expenses paid by the unit may be the personal obligation of the responsible official or employee.
Personal Property Use
Assets of the unit may not be used in a manner unrelated to the functions and purposes of the unit.
Political Expenditures
Expenditures for political purposes, contributions to political campaigns, directly or indirectly, which are not authorized by law may be the personal obligation of the responsible official or employee.
Private Property
Public funds may not be used to make improvements to property not owned by the unit, unless permitted by law.
Proceeds
Proceeds generated by the sale or rental of property must be receipted into the fund which originally purchased the property unless otherwise provided by law.
Public Records go with the Office
When an official assumes custody of an office, many of the forms and records are continuous. Each official's acts are a matter of record. An official is not responsible for the acts of his successor and a successor is not responsible for the acts of his predecessor.
Regardless of the capacity served by an official, upon completion of his service, all records and forms are to be immediately delivered to his successor.
Purchasing Bonuses
Any compensation, premium, bonus, or product earned as a result of the purchase of goods or services by the unit becomes the property of the unit. Any amounts received by an official or employee may be the personal obligation of the responsible official or employee.
Receipt Issuance
Receipts shall be issued and recorded at the time of the transaction.
Record of Hours Worked
The federal Fair Labor Standards Act (FLSA) requires that records of wages paid, daily and weekly hours of work, and the time of day and day of week on which the employee's work week begins be kept for all employees. These requirements can be met by use of the following prescribed general forms:
- General Form 99A, Employee’s Service Record
- General Form 99B, Employee’s Earnings Record
- General Form 99C, Employee’s Weekly Earnings Record
- General Form 99C is required only for employees who are not exempt from FLSA, are not on a fixed work schedule, and are not paid weekly.
Additional information regarding FLSA rules and regulations may be obtained from the Department of Labor.
Risk of Loss
The unit must ensure it is adequately protected for all risks of loss.
Separate Bank Accounts
When two or more units are authorized by statute to have the same fiscal officer, there must be separate bank accounts and accounting records for each unit unless authorized by law.
Severance Pay
Unless specifically authorized by law, severance pay, or other payments to employees upon separation from employment, must be supported by the written opinion of the attorney for the unit stating that the payments are in accordance with all laws, including IC 35-44.1-1-3, and a properly enacted Home Rule ordinance/resolution.
Signature Stamps
The decision on whether the number of items to be signed justifies the use of a rubber stamp or other device, including computer image signatures, for affixing a signature must be made by each official responsible for signing warrants, claims, and other official documents. A rubber stamp or other signing device should be used only under the direction of the official and should be properly safeguarded when not in use. Each official is responsible for their own signature.
Supporting Documentation
Supporting documentation such as receipts, canceled checks, tickets, invoices, bills, contracts, and other public records must be available for examination to provide supporting information for the validity and accountability of monies disbursed. Payments without supporting documentation may be the personal obligation of the responsible official or employee.
Suspension with Pay
Suspension with pay must be supported by the written opinion of the attorney for the unit stating that the suspension is in accordance with all laws, including IC 35-44.1-1-3, and a properly enacted Home Rule ordinance/resolution.
Timely Recordkeeping
All documents and entries to records must be made in a timely manner to ensure that accurate financial information is available to allow the unit to make informed management decisions and to help ensure compliance with IC 5-15-1-1.
Transaction Recording
All financial transactions pertaining to the unit must be recorded in the records of the unit at the time of the transaction.
Trusts and Endowments
Each unit is responsible for complying with any requirements of trust agreements or endowments received which are not contrary to state law.
Unemployment Compensation
Legislation was passed in 1977 amending the Indiana Employment Security Act, IC 22‑4, to include the State and all its units as employers under the act, effective January 1, 1978.
Employers may elect payment of a percentage rate on a quarterly basis or to make "payments in lieu of contributions" on a monthly basis for benefits paid out during the month. If the employer chooses the first option, it pays an unemployment insurance tax on a fixed sum of wages paid to each employee during a calendar year. The political subdivision's rate will be determined by the size of its credit reserve in relation to past claims. Employers wishing to change their elected option of payment may do so upon giving proper notification to the Department of Workforce Development. Employers under each option are required to file quarterly reports on their payroll and contributions. Each employer must display posters (available from the Department of Workforce Development) where all employees can see them.
Vending Machine Commissions and/or Profits
There must be a clearly defined procedure adopted by the unit concerning placement, use, maintenance, commissions, and profits of vending machines on their property.
All revenues generated and costs incurred in operating vending machines located on the units premises must be accounted for through the unit's records.
If vending machines are located in restricted areas (areas other than those available to the public) and if the governing body and fiscal officer wish for those revenues to be restricted for the use and benefit of those employees who use the machines and generate the revenues, the SBOA takes no exception to such action in an engagement. The decisions must be authorized by proper resolution/ordinance of the governing body.
If vending machines are located in areas where the public makes use of the machines and generates the resulting revenues, we advise officials to place the revenues in the general fund. Any alternative procedure must be authorized by resolution/ordinance of the governing body.
In the event personnel other than the unit’s personnel maintain, stock, and clean up around vending machines, we take no exception when such persons are paid for these services. A written agreement must be entered into listing the services to be rendered, the amount to be paid for such services, timing of payments, and any other areas deemed necessary by the unit.
