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006.09.1 R1-19-5-101. Funds, Revenue Distribution, Transfers, and Loans

AR ADC 006.09.1 R1-19-5-101Arkansas Administrative Code

West's Arkansas Administrative Code
Title 006. Department of Finance and Administration
Division 09. Office of Accounting
Rule 1. Rules and Regulations of the Financial Management Guide
Ark. Admin. Code 006.09.1 R1-19-5-101
006.09.1 R1-19-5-101. Funds, Revenue Distribution, Transfers, and Loans
Currentness
FUNDS
Two definitions of fund exist within the State of Arkansas. The first type of fund is one established by Arkansas Law or the Chief Fiscal Officer of the State. The second type of fund is one established by governmental accounting standard for financial reporting.
There are two categories of funds per Arkansas Law: agency cash in bank funds and funds on deposit with the Treasurer of State.
Agency Cash in Bank Funds
These are moneys belonging to the State of Arkansas that are permitted to be kept in financial institutions other than the Treasurer of State. The funds may be either appropriated or non-appropriated The Chief Fiscal Officer of the State must approve the creation of non-appropriated funds. See Section R1-19-4-805 for information regarding management of cash funds.
Funds on Deposit with the Treasurer of State
Funds on deposit with the Treasurer of State are established primarily and individually in either the Revenue Stabilization Act (19-5-101 et seq.) or the Revenue Classification Acts (19-6-101 et seq.). The remaining funds on deposit with the Treasurer of State are established individually by general or appropriation acts or by the Chief Fiscal Officer of the State as a result of authority granted to him to accomplish the intent of legislative enactment. The types of funds on deposit with the Treasurer of State are as follows:
A. Moneys as outlined in ACA 19-6-201 and ACA 19-6-301 will be on deposit in one of the following funds until distributed to the various operating funds of agencies in accordance with ACA 19-5-201:
1. General Revenue Fund Account - Revenue holding fund account of the State Apportionment Fund is termed AGA0000. The fund consists of revenues derived from taxes, permits, royalties, leases, fees, licenses and the sale of confiscated goods for the common good and operation of the State government, as listed in ACA 19-6-201.
2. Special Revenue Fund Account - Revenue holding fund account of the State Apportionment Fund is termed ASA 0000. The fund consists of revenues derived from taxes, permits, fees and licenses for the operation of specific programs or purposes, as listed in the ACA 19-6-301.
3. Revenue Holding Fund Account -Fund account of the State Apportionment Fund is termed ARH0000. This fund consists of taxes, licenses, fees, penalties, interest or other income which at the time of being deposited with the Treasurer of State cannot be determined to be either Special or General revenues. The revenues deposited to ARH are specifically nominated or determined by DFA to be deposited and/or adjusted to or from that fund group. An example of this is certain Insurance Department deposits.
B. Fees deducted as outlined in ACA 19-5-202(b)(2)(B)(i) will be distributed to the following funds:
1. Constitutional Officers Fund and State Central Services Fund - The Constitutional Officers Fund is termed MCF0000, and the State Central Services Fund is termed HSC0000. These funds receive specific revenues and a proportionate share of certain fees calculated on General and Special Revenues. Additionally, the State Central Services Fund receives a service charge from agencies with cash funds.
C. After the deduction of the applicable fees, the remaining general and special revenues will be deposited into one of the following types of operating funds of the various State agencies:
1. General Revenue Operating Funds - Funds consist of revenue as set forth in the ACA 19-5-101 et seq. and the ACA 19-6-101 et seq.
a. State General Government Funds
b. Institutions of Higher Education Funds
c. Education Funds
d. Public School Fund
e. Department of Human Services
f. Public Health Fund
g. Technical College Funds
2. Special Revenue Funds - Funds consist of special revenues from taxes, permits, fees, and licenses for the operation of certain programs or for specific purposes as defined in the ACA 19-6-301.
D. Moneys collected that are not defined as general or special revenue in ACA 19-6-301 et seq. are deposited into one of the following types of funds for specific agencies:
1. Trust Funds - Funds consist of moneys received or collected and dedicated by law for specific purposes or certain bequests made to the State.
2. Federal Funds - Funds consist of moneys granted to the State or any of its agencies under the Acts of Congress or by any Federal agency.
3. Miscellaneous Revenue Funds - Funds consist of fines, penalties, interest or court costs for collection of any revenue, rental income, or non-revenue as defined in the ACA 19-6-101 et seq.
4. Paying Funds - Funds mix State, Federal and other moneys to pay for programs out of one fund with various match rates.
5. Cash in Treasury Funds - Funds, commonly known as “N” funds, were formerly Cash in Bank Funds that are now held by the Treasurer of State and earn interest which is distributed in the Treasurer of State's system and posted by the Department of Finance and Administration-Office of Accounting (DFA-OA) Funds Group into AASIS at the end of each month.
Pursuant to § 19-4-801 and § 19-5-206 cash funds deposited in the State Treasury as cash in treasury funds (“N” funds) are not required to pay the 1 ½ % service charge.
Fund Structure
Fund structure follows a hierarchy that begins with the legally designated fund and includes all sub-funds. Funds are established by law and are set up by the DFA-OA-Funds Group. All funds have a specific coding structure comprised of seven characters and/or numbers. All funds on deposit with the Treasurer of State begin with three alpha characters and end with four numeric or alpha-numeric characters. All Cash in Bank funds begin with three numeric characters and end with four numeric characters.
Creation of Funds
All requests for the creation of a fund or fund account must be sent to DFA-OA-Funds Group Manager after approval from the agency's Budget Analyst in the Department of Finance and Administration - Office of Budget (DFA-OB). The “Create Fund” Form is located at P1-19-5-101 or http://www.state.ar.us/dfa/accounting/documents/request_form_and_instructions_for_revenue-receipt-The DFA-OA-Funds Group will review the fund type requested by the agency. The DFA-OA-CAFR Section Manager/Assistant Manager or their designee also must approve the fund type. The DFA-OA-Funds Group will notify the Treasurer of State and the Auditor of State when appropriated funds are established so that both offices may also establish the fund on their books of record.
PLEASE NOTE: Also refer to R1 19-5-104 (Establishment of other funds or accounts).
Financial Reporting Fund Types
The Governmental Accounting Standards Board (GASB), which replaced the National Council on Governmental Accounting (NCGA), prescribes the fund type structure to be used in financial reporting. Funds must be typed as defined in NCGA Statement I and GASB Statement 34. The financial reporting fund type should be listed on the “Create Fund” Form, link P-1-19-5-101. The types of financial reporting funds are as follows:
General - To account for all financial resources, except those required to be accounted for in another fund.
PLEASE NOTE: DFA-OA has the final decision regarding the fund type assigned to each fund. Funds that are material to the Comprehensive Annual Financial Report (CAFR) will be classified using the following fund types:
Special Revenue - To account for the proceeds of specific revenue sources that are legally restricted to expenditure for specified purpose. The most common example would be the federal grant funds that begin with a letter “F.”
Capital Projects - To account for financial resources to be used for the acquisition or construction of major capital facilities. The most common example would be major construction that is financed by bonded indebtedness such as road or real estate and its improvements. Routine type capital asset purchases should not be accounted for in the capital projects fund.
Debt Service - To account for the accumulation of resources for and the payment of general long term debt principal and interest. An example would be a fund of the Treasurer of the State that makes principal and interest payments for a bond issue of the Soil and Water Conservation Commission.
Permanent Funds - To account for resources that are legally restricted to the extent that only investment earnings and not principal may be used for purposes that support the reporting government's program, that is for the benefit of the government or its citizenry.
Agency - To account for situations where the government's role is purely custodial, such as the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations or other governments. An example would be child-support payments collected for custodial parents by DFA, or prisoner funds held by the Department of Correction.
Pension Trust - To report resources that are required to be held in trust for the members and beneficiaries of defined benefit pension plans, defined contributions plans and other post employment benefit plans. An example would be the Arkansas Public Employees Retirement System.
Investment Trust - To account for an investment pool or specific investments that belong to entities outside the government but are held by the government.
Private Purpose Trust - To report any trust arrangement not properly reported in a pension trust fund or an investment trust fund under which principal and income benefit individuals, private organizations or other governments.
Enterprise - To account for any activity for which a fee is charged to external users for goods or services. Also, to account for any activity whose principal revenue sources meet any of the following criteria: 1) Debt backed solely by fees and charges, 2) Legal requirement to recover costs and 3) Policy decision to recover costs. DFA-OA has adopted the policy that only agencies which as a whole meet the criteria will be called enterprise. An example would be a university, the Employment Security Department or the Workers Compensation Commission.
Internal Service - To report any activity that provides goods or services to other funds, departments or agencies of the primary government and its component units or to other governments on a cost-reimbursement basis. An example would be the Department of Information Systems.
A list can be generated in AASIS by using Transaction S_KI4_38000039 which will display the Index of Funds. The layout of the report can be changed to display the fund type.
See P2-19-5-101b.
REVENUE DISTRIBUTION
Distribution of General and Special Revenues
Moneys collected that are deposited with the Treasurer of State and are defined as general and special revenue in ACA 19-6-201 and 19-6-301 are credited to the State Apportionment Fund and are deemed to be Gross Revenue. The following distributions are made on the last working day of the month in accordance with ACA 19-5-401 through 19-5-406. The Treasurer of State determines the distributions, and the DFA-OA posts the transactions in AASIS.
1. General Revenues
a. Claims, taxes erroneously paid and returned checks are deducted from the Gross General Revenues to arrive at the “Net General Revenue.”
b. Various deductions are made from “Net General Revenue” as specified in the Revenue Stabilization Act to arrive at “General Revenues Available for Distribution.”
(1) Certifications that adjust the General Revenues
(2) Pursuant to ACA 19-5-202, the Treasurer of State shall deduct one percent (1%) which is transferred to the Constitutional Officers Fund. An appropriate percentage of not less than two percent (2%) and not to exceed three percent (3%), as determined from time to time by the Chief Fiscal Officer of the State as being the amount required to support the estimated commitments and expenditures of the State Central Services Fund for the current fiscal year, will be transferred to the State Central Services Fund.
c. The “General Revenues Available for Distribution” are allocated to the funds on deposit with the Treasurer of State in accordance with the allocations authorized by 19-5-101 through 19-5-107 after deducting any advances given during the month. Advances may be made on the agency's estimated monthly allotment of General Revenue when funds are available. The amount advanced shall never exceed 80% of the estimated monthly allotment.
d. Pursuant to ACA 19-5-1004, the balances remaining in certain General Revenue funds at the end of a fiscal year will be reclaimed on or before August 15 of the fiscal year next following the fiscal year during which balances accrued.
2. Special Revenues (generally funded back to the specific State agencies; however, certain fees are withheld to fund the State Central Services Fund and the Constitutional Officers Fund as outlined below):
a. Claims, taxes erroneously paid and returned checks are deducted from the Gross Special Revenues to arrive at the “Net Special Revenue.”
b. Pursuant to ACA§ 19-5-203, the Treasurer of State shall then deduct the same percentage as determined to be deducted from the net general revenues in ACA§ 19-5-202 and to be transferred under the same procedures as set forth in ACA§ 19-5-202 from each net special revenue collected by any of those agencies enumerated in ACA§ 19-5-205(b) and one-half ( ½ ) of the percentage deductions as set out in ACA§ 19-5-202 and transferred in the same proportion to the State Central Services Fund and the Constitutional Officers Fund from each net special revenue collected by any other department, board, agency or commission.
c. The funds to which the special revenues were originally deposited receive the balance of the revenues collected after said deduction.
TRANSFERS
Fund Transfers
The ACA 19-5-101 et seq. (ACA 19-5-106(a)) provides for transfers to be made under certain circumstances. Transfers may be made for one of the following reasons:
1. To correct accounting errors;
2. To make loans to authorized funds, fund accounts, and for repayment of such loans as they become due and payable as authorized by law as outlined in the Temporary Loan Section;
3. To reimburse the Miscellaneous Revolving Fund or successor fund(s) or fund account(s) for the payment of any claims, refunds or any other disbursements authorized by law;
4. For the Chief Fiscal Officer to certify to the State Auditor and State Treasurer the transfer of funds from any fund(s) on deposit in the State Treasury containing operating moneys of any of the following delinquent political entities to the fund that is owed said funds:
a. Any political entity, including any State agency, board, commission, department, institution, State supported community college or college or university of State government that fails, neglects or refuses to make proper and timely settlements of moneys due or fails to submit on a timely basis required reports to the State agency responsible for administering Federal Social Security and State retirement programs for public employees, public school teachers, highway employees or State Police employees.
b. Any political sub-division of the State, including a regional, county, or municipal government that fails, neglects or refuses to make proper and timely settlements of moneys due or fails to submit on a timely basis required reports to the State agency responsible for administering Federal Social Security and State retirement programs for public employees, public school teachers, highway employees or State Police employees.
c. Any school district that fails, neglects or refuses to make proper and timely settlements of moneys due or fails to submit on a timely basis required reports to the State agency responsible for administering Federal Social Security and State retirement programs for public employees or public school teachers.
5. To transfer funds between State agencies and within State agencies in order to eliminate the double accounting of receipts and expenditures which occurs under the method of issuing vouchers;
6. For any other purposes as may be specifically authorized by law.
DFA-OA also permits transfers between each agency's legal Treasury fund group for the purpose of moving cash to the fund where obligations will be expended.
Fund Transfer Procedures
If it is determined that a proposed transfer qualifies under one or more of the reasons listed above, the following procedure should be followed:
A. If the transfer is from one account in the agency's legal Treasury fund group to another account in that agency's same legal fund group, the agency is allowed to post the transfer on a ZT document type. An example of this type of transfer is a transfer from BAA0000 to BAA0100. The nonuser agencies should send an “Intra-agency Transfer” Form located at P2-19-5-101 or http://www.state.ar.us/dfa/accounting/documents/request_form_and_instructions_for_intra-agency-transfer.xls.
B. If the transfer is from one legal fund to another legal fund such as from BAA0100 to DBA0000, then the agency, if an AASIS user agency, must park the document and request that DFA-OA-Funds Group Manager post that document. The nonuser agencies should send an “Intra-agency Transfer” Form (transfer within one State agency) or an “Inter-agency Transfer” Form (transfer between two State agencies) located at P3-19-5-101 orhttp://www.state.ar.us/dfa/accounting/acc_forms.html to DFA-OA.
1. When an agency parks a document, the transfer form must be e-mailed as support. Do not send duplicates unless it is requested. For instance, do not e-mail a request and then fax or mail the same request.
2. DFA-OA will post the transfer after approving it and will notify the agency upon completion of the transfer with the document number.
3. DFA-OA will notify the agency if the transfer is rejected.
4. Emergencies: A transfer may be requested by telephone but must be followed by a written confirmation that includes the request form and that the information is a follow up on a phone request made by whom and on what date and time.
5. DFA-OA-Funds Group and the agency shall both maintain supporting documentation.
PLEASE NOTE: There are certain fund groups in which the first three letters are the same but more than one agency has a fund account in that group. The agency should not park or post those transfers. Examples of this type of fund groups are the HSC, HUA, MCF and MTA funds. The funding comes from the DFA fund, and DFA must make the transfer after logging it into its tracking spreadsheets.
Please review P1-19-5-101 & P2-19-5-101 or http://www.state.ar.us/dfa/accounting/acc_forms.html - funds which outlines the proper procedures for recording certain items as transfers versus an expenditure.
LOANS
Interfund Loans
Generally Accepted Accounting Principles (GAAP) defines interfund loans as a flow of assets such as cash or goods for which repayment is expected within a reasonable amount of time.
Loans are properly recorded as increases and decreases in assets and liabilities with no effect on revenue, expense or other financing sources/uses.
Temporary Loans
The ACA 19-5-101 et seq. provides for temporary loans to be made to certain funds from the Budget Stabilization Trust Fund. Generally, those funds that are eligible to receive such loans under certain circumstances are:
(1) Those funds that receive General Revenue as outlined in ACA 19-5-401. Provided that loans may be made to the Institutions of Higher Education for operational purposes only after meeting the requirements of ACA 19-5-501.
(2) The Department of Correction Farm Fund for farm production purposes.
(3) The Department of Correction Industry Fund
(4) The Tax Refund Funds
(5) The various federal accounts of State agencies upon certification of the pending availability of federal funding by the director of the State agency making the request. However, the requests shall be limited to those occasions whereby the continued operations of the State agency programs would be seriously impaired and unnecessary hardships would be created due to either administrative oversight, delays by the federal government in forwarding the moneys or by problems created by the federal fiscal year conversion.
(6) Funds specifically cited in legislative acts.
PLEASE NOTE: State agencies supported solely from special revenues are not eligible to apply for or receive loans from the Budget Stabilization Trust Fund.
Temporary Loan Procedures
If it is determined that the loan requests qualify under one or more of the reasons listed above, the procedure should be as follows:
1. Send a written request via e-mail, fax or letter to the DFA-OA-Funds Group Manager.
2. The loan request should be completed on either the “Loan Request” Form located at P4-19-5-101 or http://www.state.ar.us/dfa/accounting/acc_forms.html - funds or the “General Revenue Advance Request” Form located at P5-19-5-101 or http://www.state.ar.us/dfa/accounting/acc_forms.html - funds and included with the written communication.
3. If funds are available, DFA-OA will post the loan and notify the agency of the completion with the document number if approved or that the loan was not approved.
4. Emergencies: A loan may be requested by telephone but must be followed by a written communication that includes the request form. The written confirmation should also include the information that this is a follow up on a phone request made by whom and on what date and time.
5. Loan documents are never parked by agencies.
6. DFA-OA and the agency shall both maintain supporting documentation.
Current with amendments received through February 15, 2024. Some sections may be more current, see credit for details.
Ark. Admin. Code 006.09.1 R1-19-5-101, AR ADC 006.09.1 R1-19-5-101
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