the municipal secretary desktop reference manual - Southwestern ...

Commentary
Responsibility for municipal purchasing should be delegated officially by the elected legislative body
to a specific public official or municipal employee. For that individual to be accountable for actions,
she/he must be allowed to implement the adopted municipal purchasing controls without
interference. An important part of this individual's assignment is providing personal assurance in
writing that purchased goods and services have been received, inspected and meet prescribed
standards. The duties, responsibility and authority of the municipal purchasing agent should be
written and be adopted by the governing body.
FACTOR:
MUNICIPAL ACCOUNTING
Standards
1. The municipality has a formalized accounting system based upon generally accepted
accounting principles. The responsibility for the accounting function rests with an
individual who has had training in accounting procedures and processes, and who
understands generally accepted accounting principles. Jurisdictions whose annual
expenditure programs are less than $300,000 may design an accounting system which
may not be as comprehensive as the one above, but one which permits jurisdictions to
ascertain their true fiscal positions on an annual basis.
Commentary
There are often complaints to the effect that a good, formal system of accounting is too expensive
and too difficult for a small municipality. However, Philip Dearborn, Consultant to the U.S.
Advisory Commission on Intergovernmental Relations, has noted, "Our work indicates that when a
municipality has a financial emergency, it usually does not have good accounting. If you're too small
to do decent accounting and reporting, you probably should consolidate, merge, or go out of
business." (The standards below reflect essential elements of responsible accounting.) When laws
or other contractual requirements and generally accepted accounting principles conflict,
governmental officials should prepare financial statements in conformity with generally accepted
accounting principles and use supporting schedules to demonstrate compliance with legal
requirements.
2. Regular monthly reports of actual revenues and expenditures, as compared to budgeted
amounts, are prepared and presented to the governing body each month, with
appropriate commentary from the preparer.
Commentary
The budget represents projected revenues and expenditures based on support data. As the fiscal year
unfolds, those projections need to be closely monitored in order for policy-makers to take corrective
actions to ensure that it always stays in balance.
3. An internal control system exists and provides for both administrative and accounting
controls. The benefits of the intended controls exceed the costs associated with
establishing and maintaining the system.
A-28