COUNTY FINANCE MANUAL 2008 REVISION Revised June 2008 Page 1 FOREWARD The 2008 revision of the County Finance Manual is the product of a joint effort between the Office of Examiners of Public Accounts, the Association of County Commissions of Alabama (ACCA) and the Association of County Administrators of Alabama (ACAA). Contributors to this project have worked for almost a year to produce a new and improved manual that includes important financial updates and revisions, and expands the manual to include outlines on many of the legal issues that confront the county administrator on a daily basis. Many people contributed greatly of their valuable time and resources to make this revision possible. Many thanks to all project participants, and in particular, the following: Chief Examiner Ron Jones and his staff, especially Mike Scroggins, Matt Richards and Teresa Durrett; County Administrators Ken Joiner, Calhoun County; Sherrie Kelley, Coosa County; Brenda Petty, Covington County; Jeanette Medders, Elmore County; and John Gordon, Fayette County; and ACCA staff members Executive Director Buddy Sharpless; Assistant Executive Director Sonny Brasfield; Staff Attorney Mary Pons; and Director of Public Relations Lori Quiller. A special thank you is extended to 2007-2008 ACAA President Matt Sharp for not only his valuable input into the manual, but his diligent efforts in steering the project to timely completion. The 2008 version of the County Finance Manual is redesigned in a user-friendly CD format, with tables and guidelines covering all aspects of county financial management. This new manual should provide all counties with an important and useful tool to assist in managing the county’s finances. Revised June 2008 Page 2 COUNTY FINANCE MANUAL 2008 REVISION TABLE OF CONTENTS Section One Introduction............................................................................................................Pages 5-6 Section Two Overview of Governmental Accounting and Reporting Standards ......................Pages 7-13 Section Three Budget Preparation and Schedule ......................................................................Pages 14-18 Other Financial Legal Matters ...........................................................................Pages 19-20 Section Four Chart of Accounts .............................................................................................Pages 21-132 Section Five Financial Reporting.........................................................................................Pages 133-134 Section Six Audit Requirements ........................................................................................Pages 135-139 Section Seven Internal Controls .............................................................................................Pages 140-145 Federal Single Audits......................................................................................Pages 146-147 Section Eight Compensation for County Officials................................................................Pages 148-153 Section Nine Ad Valorem Taxes ..........................................................................................Pages 154-156 Special Ad Valorem Taxes .............................................................................Pages 157-161 Classification of Taxable Property..................................................................Pages 162-165 Exemptions .....................................................................................................Pages 166-167 Revised June 2008 Page 3 Section Ten Competitive Bid Law......................................................................................Pages 168-180 Public Works Law...........................................................................................Pages 183-195 Section Eleven Open Meetings Law........................................................................................Pages 197-210 Section Twelve SAFE Program................................................................................................Pages 213-214 Section Thirteen Miscellaneous Legal Issues.............................................................................Pages 215-220 County Commission Meeting Procedures ......................................................Pages 215-216 General Administrative Functions ..................................................................Pages 217-218 Duties of County Commission Chair and Chief Administrative Officer................................................................Pages 219-220 Section Fourteen Notes to the Financial Statements...................................................................Pages 221-244 Alabama’s Constitution........................................................................ Pages 245-255 Code of Alabama Sections Title 1 – General Provisions ...........................................................................Pages 256-257 Title 11 – Counties and Municipal Corporations............................................Pages 258-277 Title 12 – Courts .............................................................................................Pages 278-279 Title 16 – Education........................................................................................Pages 280-285 Title 22 – Health, Mental Health and Environmental Control........................Pages 286-287 Title 31 – Military Affairs and Civil Defense.................................................Pages 287-289 Title 36 – Public Officers and Employees ......................................................Pages 290-301 Title 39 – Public Works ..................................................................................Pages 302-315 Title 40 – Revenue and Taxation....................................................................Pages 316-333 Title 41 – State Government...........................................................................Pages 334-360 Table of Contents for Alabama’s Constitution .................................................Page 361 Table of Contents for Code of Alabama Sections ...................................Pages 363-363 Revised June 2008 Page 4 SECTION 1 – INTRODUCTION The 2008 version of the County Finance Manual has been developed with the objective of providing the county commissions with a comprehensive accounting and financial reporting model to include the latest accounting standards as well as concise examples and even legal compliance guidelines. The County Finance Manual has been divided into fourteen sections, each with different, yet beneficial information to assist the county commissions in the accurate recording and reporting of financial information and compliance with laws and regulations. Section 2, Overview of Governmental Accounting and Reporting Standards, provides a general description of governmental accounting and discusses the various fund types and funds that exist in governmental accounting. This is not an in-depth discussion into governmental accounting, but instead is an overview of the basic governmental accounting principles. The information in this section was obtained from the 2006 Miller Governmental GAAP Guide. For a more comprehensive study or review into governmental accounting, one of the above documents or other similar textbooks relating to governmental accounting should be obtained. Section 3 is divided into two parts: (1) Budgets Preparation and Schedules and (2) Other Financial Legal Matters. The Budget Preparation and Schedules section provides in-depth information relating to the budgeting process and provides sample worksheets which should prove useful to the counties in their budgeting process. The Other Financial Legal Matters section provides a summary of some of the legal compliance matters affecting finances. Section 4, the Chart of Accounts, is a very important part of the Finance Manual. This section contains a chart of accounts that has been updated to include account codes that will enable the counties to record and report information in accordance with the latest standards. A major revision of the Chart of Accounts was necessary to enable counties to report in compliance with the GASB 34 reporting model. Section 5, Financial Reporting (Sample Financial Statements) provides a visual sample of a county commission's financial statements. Section 6, Audit Requirements discusses the various parts of an audit and provides the commission with information related to documents needed for an audit. It includes a sample checklist of items typically needed for an audit to aid the county commissions in being prepared for an audit. Section 7, Internal Controls and Federal Single Audits provides a detailed discussion of internal controls, which should help each county identify potential internal control weaknesses in their operations. A discussion is also provided pertaining to the Single Audit Act requirements. Section 8, Compensation for County Officials provides a discussion of laws affecting the compensation for County Officials including the Omnibus Pay Act. Sections 9 through 13 provide discussions on a wide variety of legal compliance and procedural issues including Ad Valorem Taxes, Section 9, Competitive Bid Law and Public Works Law, Section 10, Open Meetings Law, Section 11, and the SAFE Program, Section 12. Section 13 is divided into four parts to include discussions on Miscellaneous Legal Issues, County Commission Meeting Procedures, General Administrative Functions and Duties of County Commission