What is Governmental Fund Accounting?
Montana BARS System: Fund Accounting and Budget Compliance for Local Governments
The Montana Budgetary, Accounting and Reporting System (BARS) implements governmental fund accounting for local governments in conformance with generally accepted accounting practices, or GAAP. (See Montana Code Annotated Title 7, Chapter 6, Part 40 for the Local Government Budget Act.) Unlike private business, a unit of local government must be able to demonstrate that an expenditure of public funds was for the purpose intended by the law that enabled the government to collect its revenue from taxpayers and rate payers. Also, the government must be able to document that the expenditure was within the limits of the lawful spending authority (appropriation) that must have been approved annually by the governing
body. For example, a municipal government must be able to show that property tax dollars derived from a mill levy for the library were spent only for the library and no other purpose and that the annual expenditures for the library did not exceed the municipal appropriation for the library, which can only be made by the city or town council. Similarly, a municipal government must operate its water and wastewater systems on the fee for services received from its rate paying customers and it should do so without relying upon its general fund tax dollars.
Each stream of revenue and the associated expenditures must be accounted for within a specific governmental fund. In Montana municipal government, there are some required governmental funds, always the property tax supported general fund, if applicable, the enterprise funds used to account for the rate-based utilities (such as water and wastewater), and perhaps a bond debt service fund. Each of these different funds requires its own annual budget. In Montana, all of these budgets must be approved and adopted by the later of the first
Thursday after the first Tuesday in September, or within 30 calendar days of receipt of the municipality’s taxable value from the Department of Revenue, even though the state and local fiscal year commences on July 1.
body. For example, a municipal government must be able to show that property tax dollars derived from a mill levy for the library were spent only for the library and no other purpose and that the annual expenditures for the library did not exceed the municipal appropriation for the library, which can only be made by the city or town council. Similarly, a municipal government must operate its water and wastewater systems on the fee for services received from its rate paying customers and it should do so without relying upon its general fund tax dollars.
Each stream of revenue and the associated expenditures must be accounted for within a specific governmental fund. In Montana municipal government, there are some required governmental funds, always the property tax supported general fund, if applicable, the enterprise funds used to account for the rate-based utilities (such as water and wastewater), and perhaps a bond debt service fund. Each of these different funds requires its own annual budget. In Montana, all of these budgets must be approved and adopted by the later of the first
Thursday after the first Tuesday in September, or within 30 calendar days of receipt of the municipality’s taxable value from the Department of Revenue, even though the state and local fiscal year commences on July 1.