Included in CFR Manual Only - New York State Office of Mental Health

New York State
Consolidated
Budget and Claiming
Manual
Subject: Methods of Accounting Section/Page: 3.1
For the Periods:
January 1, 2010 to December 31, 2010
July 1, 2010 to June 30, 2011
Issued: February 15, 2010
The Department of Mental Hygiene (DMH) State Agencies recognize three (3) methods of
accounting service providers and Local Government Units (LGUs) can use to maintain fiscal
records and provide the required reports.
The three methods of accounting recognized by the DMH State Agencies are:
• Accrual Accounting
Accrual accounting records revenues when earned or when levies are made and records
expenditures as soon as they result in liabilities for benefits received, notwithstanding
that the receipt of the revenue or the payment of the expenditure will take place, in whole
or in part, in another accounting period.
Accrual accounting is the preferred method of accounting for non-governmental service
provider agencies.
• Modified Accrual Accounting
Modified accrual accounting treats revenues and expenditures as follows:
Revenues are recorded when received except:
♦
♦
Those revenues which are susceptible to accrual. Revenues are susceptible
to accrual if they are measurable and available to finance the operations of
the current year. "Available" means collectible within the current accounting
period or soon enough thereafter to be used to pay liabilities of the current
period. Generally, such time "thereafter" should not exceed 60 days.
Those revenues of a material amount that have not been received at the
normal time of receipt. Revenues of a material amount ordinarily recorded on
a cash basis will be accrued if receipt is delayed beyond the normal time of
receipt.
Expenditures are recorded when incurred. Compensation due to employees and
related fringe benefits at the end of the year will be accrued. Personal services
expenses must be reasonable and necessary for providing services and fringe
benefit expenses are an allowable expense to the extent they are reasonable and
available to all employees. Liabilities for retirement costs of public retirement
systems will be recorded as an expenditure when due to that retirement system.
County governments are required to use modified accrual accounting by the Office of the
State Comptroller.