SUBSECTION 2.1.2.1
GENERAL

2.1.2.1.1

General Accounting Policies of the State

Effective Date:

Sept. 1, 1998

2.1.2.1.1.a

The basic principles governing the accounting activities of the state are required by RCW 43.88.037 to be in conformance with generally accepted accounting principles (GAAP).

2.1.2.1.1.b

RCW 43.88.160(1) provides:

The governor, through the director of financial management, shall devise and supervise a modern and complete accounting system for each agency to the end that all revenues, expenditures, receipts, disbursements, resources, and obligations of the state shall be properly and systematically accounted for. The accounting system shall include the development of accurate, timely records and reports of all financial affairs of the state. The system shall also provide for central accounts in the office of financial management at the level of detail deemed necessary by the director to perform central financial management.

In accordance with the aforementioned statute, OFM operates the centralized statewide accounting and reporting systems for the state of Washington.

2.1.2.1.1.c

Statute also requires OFM to adopt and periodically update an accounting procedures manual. This manual, the State of Washington Financial and Administrative Policies, Regulations, and Procedures manual, prescribes GAAP accounting policies and procedures and is required for use by all state agencies.

Any agency maintaining its own accounting and/or reporting system must comply with the provisions of this manual and the rules prescribed by OFM. Financial data generated by agency systems must be compatible with the requirements of the centralized statewide systems operated by OFM.

2.1.2.1.1.d

Any changes to existing and all new agency accounting and/or reporting systems that materially impact the accounting methods or practices of an agency are to have the approval of OFM prior to implementation. Requests for approval are to be made to the Accounting Division of OFM. Requests will be reviewed to determine if they comply with the provisions of this manual and the rules adopted by OFM. New automated accounting and/or reporting systems will generally require the approval of both OFM and the Department of Information Services (DIS).

2.1.2.1.2

Internal Control

Effective Date:

Sept. 1, 1998

RCW 43.88.160(4) directs OFM to develop and maintain a system of internal controls and internal audits comprising methods and procedures to be adopted by each agency that will safeguard its assets, check the accuracy and reliability of its accounting data, promote operational efficiency, and encourage adherence to prescribed managerial policies for accounting and financial controls. Part 6 of this manual presents the internal control policies to be followed by all agencies.

2.1.2.1.3

Agencies - Organization

Effective Date:

Sept. 1, 1998

Agency fiscal activities are to be organized in such a manner as to provide the maximum degree of internal control in the most efficient and effective manner. Specific organization arrangements are left to the discretion of the agency; due to the diverse nature of state agency operations, examples will not be illustrated in this manual. However, in establishing the organizational structure of the agency, the internal control requirements prescribed in Part 6 of this manual are to be assured.

2.1.2.1.4

Establishing Accounts

Effective Date:

Sept.. 1, 1998

Accounts required by law to be maintained within the state treasury (Treasury Accounts) are established by legislative action. Treasury accounts are subject to appropriation unless specifically exempted. The following is an example of the statutory language necessary to establish an account in the state treasury:

"The _____(title)_____ account is created in the state treasury. All receipts from _____(source)_____ shall be deposited into the account. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only for _____(purpose)_____."

Accounts located outside the state treasury are also generally created in statute. Accounts located outside the state treasury are not subject to appropriation, but may be placed in the custody of the State Treasurer (Treasurer's Trust Accounts). The following is suggested statutory language for creating a non-appropriated account in the custody of the State Treasurer:

"The _____(title)_____ account is created in the custody of the state treasurer. All receipts from _____(source)_____ shall be deposited into the account. Expenditures from the account may be used only for _____(purpose)_____ . Only the director of _____(agency)_____ or the director's designee may authorize expenditures from the account. The account is subject to allotment procedures under Chapter 43.88 RCW, but no appropriation is required for expenditures."

Accounts outside the state treasury can also be established by OFM, pursuant to RCW 43.88.195, when an agency presents compelling reasons of economy and efficiency which could not be achieved by placing such accounts in the state treasury. However, as a matter of convenience to an agency or statutory requirement, the State Treasurer may take custody of such accounts and place them in a Treasurer's Trust account when conditions exist as prescribed in RCW 43.79A.020.

2.1.2.1.5

Uniform Chart of Accounts

Effective Date:

Sept. 1, 1998

OFM has adopted a standard system of classifying agency financial information to fulfill the need for uniform, consistent terminology and classifications to be used for budgeting, accounting and reporting the financial activities of the state. Financial transactions are described by means of alpha numeric indicators which are assigned to descriptive titles. Part 7 of this manual presents the state's uniform chart of accounts.

For management purposes, agencies may maintain a more detailed level of accounting data. Optional agency designated codes include revenue sub-source, sub-program, and sub-sub-object. Refer to Section 7.1.1.2.

The state's uniform account code structure incorporates the following codes:

2.1.2.1.5.a

Agency Code - The four character numeric code assigned by OFM to designate distinct operational units of the state government.

2.1.2.1.5.b

Fund/Account Code - The three character alpha/numeric code assigned by OFM to identify each specific accounting entity against which a transaction is charged.

2.1.2.1.5.c

General Ledger Code - The four character numeric code assigned by OFM to identify the titles which classify, in summary form, all financial transactions of the state.

2.1.2.1.5.d

Revenue Source Code - The four character numeric code assigned by OFM to identify the origin, or originating categories, from which revenues/receipts are derived.

2.1.2.1.5.e

Appropriation Code - The three character code assigned by OFM to identify each legislative authorization to incur expenditures. The assigned codes are valid only for the biennium for which they are established.

2.1.2.1.5.f

Program Code - The three character alpha numeric code used to identify the agency functional area and the various major activities within an agency. Generally program codes are assigned by an agency with the concurrence of OFM, however there are a limited number of mandatory statewide codes used to identify special functions.

2.1.2.1.5.g

Object/Sub-Object Code - The two character alpha code assigned by OFM to identify expenditures/expenses according to the character of the goods or services involved.

The following diagrams illustrate the uniform statewide account code structure format for general ledger, revenue and expenditure/expense accounting:

General Ledger Accounts PDF File
Revenue Accounts PDF File
Expenditure Expense Accounts PDF File