Title 19 | Chapter 4 | Subchapter 7
SUBCHAPTER 7 - EXPENDITURES GENERALLY
19-4-701. Fiscal periods of state.
(a) For the purpose of this chapter, relating to the appropriation and disbursement of funds, the fiscal year of the state shall commence on July 1 and shall end on June 30 of the following year; and the biennial period, or "biennium," shall commence on July 1 following the adjournment of the regular session of the General Assembly and end on June 30 two (2) years thereafter.
(b)(1) The definition of the fiscal year, for the purposes of this chapter, shall not be construed to affect special appropriations where no fiscal period is defined in the act making such special appropriation or affect the bond year for other fiscal transactions.
(2)(A) In the case of special appropriations where the emergency clause has been adopted by the General Assembly and where no period of time is mentioned in the act making the appropriation, the appropriation shall be construed to be available for a two-year period from and after the effective date of the act.
(B) In the case of special appropriations where the emergency clause has not been adopted and where no period of time is mentioned in the act making the appropriation, the appropriation shall be construed to become available ninety (90) days after the adjournment of the General Assembly. It shall be available for a two-year period from and after the date the appropriation became available.
History. Acts 1973, No. 876, § 13; A.S.A. 1947, § 13-339.
19-4-702. Time limits for presenting vouchers.
(a)(1)(A) A state agency may pay carryover obligations of the state that were incurred on or before June 30 of the current fiscal year up to forty-five (45) days after the end of the current fiscal year.
(B) The carryover obligations must be supported by purchase documents with corresponding receipts for the goods or services that have been recorded as received in the state's financial management system by June 30 of the fiscal year previous to the fiscal year in which the carryover obligations are requested to be paid.
(2) The payments of the carryover obligations shall be charged against appropriations and fund cash balances of the fiscal year in which the obligations were incurred.
(3) Any payments for carryover obligations that are not supported by the documents as required in this subsection, or which are requested to be paid after forty-five (45) days following June 30 of the fiscal year previous to the fiscal year in which the carryover obligations are requested to be paid, shall be charged to the appropriations and fund cash balances of the then-current fiscal year.
(b) In the event such voucher or vouchers are approved for payment, the Auditor of State shall issue his or her warrants in payment of them not later than two (2) weeks following the receipt of the vouchers from the Department of Finance and Administration.
(c)(1) In the event of a just claim against any state agency, when the claim is submitted too late for payment in the manner prescribed in this section and the state agency affected has an appropriation for the same purpose for the fiscal period following that period in which the claim was incurred, then the disbursing agent may draw his or her voucher in the payment of the claim against the new appropriation, but only in the event there were sufficient funds and appropriations for the prior year to cover the claim.
(2) Otherwise, the claim must be submitted to the Arkansas State Claims Commission for payment.
(d)(1)(A) In the event a biweekly pay period for personal services, as defined in §§ 19-4-521 and 19-4-1607, commences in the closing period of one (1) fiscal period and either ends in the following fiscal year or is paid in the following fiscal year, then the payment of the obligation may be made in whole from the appropriation for either fiscal period, as determined by the Chief Fiscal Officer of the State.
(B) However, in no event shall any obligation be incurred unless there are funds on hand or estimated to become available to meet the obligation when it becomes due.
(2)(A) For purposes of wages and compensation, the Chief Fiscal Officer of the State may determine the starting date of authorized job classifications and positions to coincide with the payment of the obligation under subdivision (d)(1) of this section.
(B) However, the determination under subdivision (d)(2)(A) of this section shall not cause any state fiscal year to be charged with fewer than twenty-six (26) or more than twenty-seven (27) biweekly pay periods.
(e)(1) All state agencies may carry over from the first fiscal year of any biennium to the second fiscal year of the biennium any unexpended appropriations and funds to the extent necessary to pay for items or commodities ordered at least ninety (90) days prior to the end of the first fiscal year but not received until after the end of the first fiscal year, if the purchase of such items and commodities is substantiated by a written contract resulting from the receipt of a formal bid.
(2)(A) All state agencies may carry over from the first fiscal year of any biennium to the second fiscal year of the biennium any unexpended maintenance and operation appropriations and funds, as defined under § 19-4-522, to the extent necessary to pay for renovation and minor and major repairs under the jurisdiction of the Arkansas Building Authority which were under contract at least ninety (90) days prior to the end of the first fiscal year but which will not be completed until after the end of the first fiscal year and are substantiated by written contracts.
(B) This carryover provision shall apply only to appropriations and funds involving maintenance and operations.
(3) This subsection shall be supplemental to any other authority granted any state agency by law to carry forward unexpended fund balances from one (1) fiscal year to another.
History. Acts 1973, No. 876, § 13; 1977, No. 486, § 3; 1979, No. 833, § 4; 1985, No. 365, § 4; A.S.A. 1947, § 13-339; Acts 2001, No. 71, § 1; 2001, No. 1453, § 15; 2005, No. 645, § 1.
R1-19-4-702 Payment of Prior Year Obligations
The processing of prior year obligations in the current fiscal year is allowable if the obligations do not exceed funds center (appropriation) or funds available for that fiscal year at the close of business June 30, XXXX, and sufficient funds center (appropriation) and fund is available in the current year. (ACA 19-4-702) Funds center availability is determined at the funds center commitment item level. Sub-funds centers should be certified at the authorizing funds center commitment item level. Available funds should be determined at the appropriate fund for disbursement level or the agency’s legal or "high level" fund. The "high level" fund will be the fund designated by three alpha characters followed by four zeros if a Treasury fund, and three numeric characters followed by four zeros if a cash fund. However, the first three digits of the fund must be the same on the invoice and the certification. Business areas that share a legal (high level) fund must certify only their portion of the total fund balance as of June 30, XXXX.
A "Prior Year Obligation" is one for which goods/services were received and accepted prior to June 30, XXXX, for which no remittance had been made. These payments must be identified and recorded as an Accounts Payable for the prior year. When entering the transaction into the State’s accounting system a prior year obligation must be identified by adding a preceding "Y" reference to the vendor’s invoice number in the reference field. For example, if the invoice number is ABC123, you should put YABC123 in the reference field. Those obligations that are created when goods or services are received over a period of time which spans June 30, XXXX, are not considered a "Prior Year Obligation."
Goods and services purchased with a P-Card should be expensed in the year they are received. To ensure proper recording of expenditures, it is recommended that the P-Card not be used for purchases during the dates of June 10 – June 30 of each year. Any P-Card purchases not paid by warrant prior to the last day of the Fiscal Year must be handled as "Y Vouchers" when paid the following Fiscal Year. For more information on P-Cards, go to http://www.arkansas.gov/dfa/procurement/pro_purchcard.html
Prior year obligations must be certified by the disbursing officer with a certification letter. With the certification letter, the disbursing officer is stating that the expenditures have been reviewed, the cumulative amount of all "Y" invoices processed have been monitored and the invoices have not exceeded the available appropriation and fund balances as of June 30 of the prior year. A certification letter must be retained by each agency listing the invoice(s) to be paid. The letter will designate the appropriate business area (agency), funds center (appropriation), commitment item (character code) and fund (cash in Treasury or cash in bank). Each certification letter will state the funds center and fund codes and that the balance of each for the previous year was sufficient to pay the invoice. The certification letter will be retained at the agency for review by the Division of Legislative Audit of the Legislative Joint Auditing Committee and other interested parties.
Exempt from Certification
There are several circumstances when the certification process is not necessary. However, the invoices must still be coded as a "Y" invoice when the payment is made in the next fiscal year. Items paid from carry-forward appropriations, grant payments, construction appropriations and employee matching payments (insurance, social security, retirement, etc.) do not require certification. Items that, because of the billing methods, contain charges for both fiscal years such as: gas card purchases, utility bills, and travel expenses do not require certification. Payroll that commences in the closing period of one fiscal year and ends in the following fiscal year does not require certification.
Expenditures Limited to Budget
If there were insufficient funds or appropriation available as of June 30 of the prior year, the invoice cannot be paid and must be submitted to the Arkansas State Claims Commission for payment. The Arkansas State Claims Commission will pay the invoice from the Claims Commission’s revolving Claims Payment fund and then request a transfer of funds from the agency. The vendor must file a claim for payment of the invoice, and the agency has the chance to deny or accept liability. If the agency accepts liability, the claim is paid from the Claims Commission’s revolving Claims Payment fund.
Agency’s Responsibility to Relieve the Liability Once the Transfer Has Been Made
If the liability of the invoice was originally recorded on the agency’s books in the GRIR (Goods receipt/ Invoice receipt) account, the agency will have to relieve the GRIR account once the funds have been transferred to the Claim Commission. To relieve the GRIR account, the agency would reverse the GR in the current year and record a journal entry debiting a non-budget relevant expense account and crediting the claims transfer out account.
If the invoice was originally recorded by another process other than the PO process (FB60), the liability would be recorded on the agency’s books in the accounts payable account. The agency would relive the accounts payable account by:
- Reversing the FB60 invoice.
- Recording a journal entry debiting a budget relevant expense account and crediting the claims transfer out account.
- If the invoice was originally recorded using the PO process and the GR and IR was processed, the liability would be recorded on the agency’s books in the accounts payable account. The agency would relieve the accounts payable account by:
- Reversing the MIRO document and clearing it using transaction F-44 (manual vendor clearing).
- Reversing the GR in the current year once the MIRO document has been cleared.
- Recording a journal entry debiting a non-budget relevant expense account and crediting the claims transfer out account.
After the agency has made the necessary steps to relieve the liability, the agency must notify the Claims Commission so the appropriate journal entry can be made on the Claims Commission’s books.
Claims Commission’s Responsibility Once the Agency Has Relieved the Liability
After the agency has notified the Claims Commission that they have relieved the liability on the agency’s books, the Claims Commission must record a journal entry debiting the claims transfer in account and crediting a non-budget relevant expense account.
19-4-703. Redemption of warrants.
No warrant issued by the Auditor of State shall be payable by the Treasurer of State unless it shall have been presented for payment within the twelve (12) months immediately following the close of the fiscal year or other appropriate fiscal period against which appropriation the warrant was charged.
History. Acts 1973, No. 876, § 13; A.S.A. 1947, § 13-339.
R1-19-4-703 Outlawed Warrant Policy
Arkansas Code 19-4-703, Redemption of Warrants, states: "No warrant issued by the Auditor of State shall be payable by the Treasurer of State unless it shall have been presented for payment within the twelve (12) months immediately following the close of the fiscal year or other appropriated fiscal period against which appropriation the warrant was charged."
Warrants that are outstanding at the end of the State Fiscal Year on June 30 and have been issued more than 12 months will be considered to be "outlawed." (i.e. Warrants issued in FY 2009 and still outstanding the first day of FY 2011).
The Treasurer of State-Warrant Division cannot redeem an outlawed warrant. The Auditor of State-Warrant Division cannot reissue an outlawed warrant.
The payee of the outlawed warrant must file a claim with the Arkansas State Claims Commission in order to be compensated.
The fund of original disbursement of the outlawed warrant will receive a restoration of the cash balance as a result of the warrant being "outlawed." If the fund of issue or its components are inactive, then the fund/components will be reactivated temporarily for the initial posting followed immediately with a transfer of funds to a current active fund/component.
If the fund is supported by general revenue, the moneys will be reclaimed in part or whole and transferred to the General Revenue Allotment Reserve Fund or other designated fund as dictated by State Law.
The outlawed warrant process begins with the production of a report from the Treasurer of State-Treasury Management System on or about July 10th of each year. This allows for the processing of any warrants that may be in transit through the commercial banking system as of June 30. Federal banking requirements dictate that, if a warrant is presented for payment to a financial institution by close of business on June 30th, the warrant must be redeemed by the State of Arkansas and cannot be outlawed.
The Auditor of State-Warrant Division and Treasurer of State-Warrant Division reconcile outlawed warrant differences between their respective systems. An adjusted report is provided to the DFA-OA for validation and further reconciliation to outstanding warrants in AASIS.
Journal entries are created with document type "ZO" for the initial outlawed warrant posting for funds and components that are currently active. The following entry is made as of current date:
DR 1100001000 (Cash in State Treasury)
CR 6990001000 (Prior Year Warrants Outlawed)
The outlawed warrant general ledger account is a non-budget relevant posting that does not adjust appropriation.
The warrant number is used in the reference field for the posting of the outlawed warrants.
The warrant number may also be found in the text column of the document.
If the creation of a warrant affects multiple funds, an individual document with a debit and offsetting credit is posted for each fund.
DFA–OA-Funds Group will be responsible for the "General Revenue Reclaim" (the restoration of cash balance) that is returned during the outlaw process if the original expenditure was from a fund that is supported by general revenue. DFA–OA-Funds Group will create and park a document to reclaim these funds, and they will immediately be posted following the initial posting of outlawed warrants. The document type used for these reclaims is "ZL."
PLEASE NOTE: If a warrant is outlawed, the vendor must request a refund of their moneys by completing and submitting a claim to the Arkansas State Claims Commission. The form can be found at http://www.claimscommission.ar.gov/claim_forms.asp
19-4-704. No obligations without appropriations.
(a) No obligations will be paid from appropriated funds until the General Assembly shall have made an appropriation for that purpose; nor shall any state agency enter into any contract which would contemplate that payments under the contracts would be made beyond the expiration of the biennial period unless the General Assembly, prior to the expiration of the biennial period, makes an appropriation for that purpose, or in the case of multiyear contracts for commodities or services, a determination in writing has been made prior to use that:
(1) Estimated requirements cover the period of the contract and are reasonably firm and continuing; and
(2) Such a contract would serve the best interests of the state by encouraging effective competition or otherwise promoting economies in state procurement.
(b) In no event shall any obligations be incurred unless there are sufficient funds or an approved federal grant on hand, or estimated to become available, to meet the obligations when they become due.
History. Acts 1973, No. 876, § 13; 1985, No. 365, § 6; A.S.A. 1947, § 13-339.
19-4-705. Obligations limited to funds available.
(a) No state agency for which regular operating appropriations are made on a fiscal-year basis shall incur any obligations under the appropriations unless there are funds on hand or an approved federal grant, or estimated to become available, during the fiscal year for the payment of the obligation; nor shall any agency create any obligation in one (1) fiscal year which will make it necessary to use the revenues of the following fiscal year in order to meet the obligation except in the case of multiyear contracts for commodities or services and as provided for in § 19-4-707. (b) In the event an agency had bank funds which are not required by law to be deposited in the State Treasury, the agency shall have the authority to create additional obligations to the extent of the bank funds on hand, or which are estimated to become available during the fiscal period. However, the agency shall not create any obligations, in the aggregate, which would make the total of such obligations exceed the total of all funds available to the agency during the fiscal period, except in the case of multiyear contracts for commodities or services and as provided for in § 19-4-707.
History. Acts 1973, No. 876, § 13; 1985, No. 365, § 6; A.S.A. 1947, § 13-339.
19-4-706. Interest and carrying charges.
State agencies, including exempt agencies, may enter into contracts which contemplate the payment of interest, late charges, but only when such late charges are incurred sixty (60) days after payment is due or carrying charges under such regulations as may be promulgated by the State Procurement Director.
History. Acts 1973, No. 876, § 25; 1985, No. 365, § 13; A.S.A. 1947, § 13-351; Acts 1997, No. 1066, § 1.
19-4-707. Obligations for improvements.
Notwithstanding the fact that no disbursements may be made during any fiscal period in excess of the appropriations made available by the General Assembly for the fiscal period, it is provided that contracts for improvements including major repairs, alterations, and construction of new buildings and facilities may be let to the extent of the appropriations made available for those purposes for the biennial period. However, no such contracts may be let in amounts exceeding the probable funds available or which are estimated to become available during the period.
History. Acts 1973, No. 876, § 13; A.S.A. 1947, § 13-339.
19-4-708. Depletion of agency funds.
In the event any state agency shall incur obligations in such manner that the funds allocated or belonging to the agency are depleted and the agency is unable to pay all of its outstanding commitments without incurring a deficit, then the Chief Fiscal Officer of the State may suspend all exemptions under the Arkansas Purchasing Law, § 19-11-201 et seq., with respect to the agency. Under these circumstances, the Chief Fiscal Officer of the State may notify the agency that all future obligations of any kind whatsoever must be approved by the Chief Fiscal Officer of the State before they become valid obligations against the funds of the agency.
History. Acts 1973, No. 876, § 13; A.S.A. 1947, § 13-339.
19-4-709. Statement of financial condition.
(a) The Chief Fiscal Officer of the State may require, from time to time as he shall deem necessary, a statement from any state agency setting out the prospective funds which are estimated to become available and a statement of the outstanding obligations and of the proposed expenditures of that agency for the remainder of the fiscal period.
(b) If, in the Chief Fiscal Officer of the State’s judgment, any agency has incurred or is about to incur a deficit, the Chief Fiscal Officer of the State shall call upon the agency to stop incurring obligations, under penalty of its disbursing bond.
History. Acts 1973, No. 876, § 13; A.S.A. 1947, § 13-339.
19-4-710. Interagency transfers.
(a) To prevent the duplication of recording expenditures and revenues resulting from interagency transactions, the Chief Fiscal Officer of the State, after securing the approval of the proposed procedures by the Legislative Auditor, may provide for an interagency transfer of moneys or recognize a journal entry to charge the expenditure to the disbursing agency without creating a warrant and to identify the cash receipt by the receiving agency.
(b) Budget manuals prepared for the General Assembly for the biennial state budget shall identify the original revenue source of interagency transfers of funds.
(c) As used in this section, "interagency transfer" means:
(1) The purchase of services or commodities by one (1) state agency from another state agency, or within a state agency; or
(2) Other transfers of funds under § 19-5-106 or other provision of law.
History. Acts 1973, No. 876, § 13; 1977, No. 486, § 3; 1979, No. 833, § 4; 1985, No. 365, § 5; A.S.A. 1947, § 13-339; 2001, No. 1453, § 16; 2005, No. 1172, § 1.
PLEASE NOTE: Refer to P1-19-5-101 for instructions and forms.
R1-19-4-710 Interagency/Interfund Transfers
Generally Accepted Accounting Principles (GAAP) defines transfers as flow of assets such as cash or goods without equivalent flows of assets in return and without a requirement for repayment. GAAP also directs that interfund loans that are not expected to be repaid within a reasonable period be reclassified as transfers.
The initial inflow of cash to the State is recorded as revenue by the receiving agency. Subsequent movements of cash, such as a transfer of grant funds being passed to another agency, distributions of general revenue to agencies, etc. are recorded as transfers out by the transferring agency. The agency receiving the cash records the receipt of funds as a transfer in. Subsequent payments to employees and vendors would be coded to the appropriate budget relevant general ledger account code. Transfers of cash between divisions of an agency or between agencies should not be done by warrant. Exception to this process must be approved in writing by DFA-OA.
Legal fund transfers must be approved and posted by the DFA – Office of Accounting- Funds Group. The procedure for recording these transfers is explained in R1-19-5-101 - TRANSFERS – Fund Transfer Procedures.
Interfund Services or Commodities Provided and Used
GAAP defines interfund services or commodities provided and used as when one fund provides services or goods to another fund which is then charged for these services/goods received. GAAP further directs using this classification when the amount of an interfund charge equals or approximates the external exchange value of the services rendered.
Questions that should be asked to determine if a transaction meets the definition of interfund services provided and used are as follows:
1. Would I purchase this same item/service from an outside source if I was not purchasing it from another state agency? If yes, continue to question 2.
2. Am I paying the other state agency approximately what I would be required to pay an outside vendor? If yes, then this likely meets the definition of an interfund service provided/used.
3. It also may be helpful to consider whether the sale of the goods or services is a normal operating activity of the agency that makes the charge. This step will help separate reimbursements or allocation of costs versus true services provided and used.
To process payments for interfund services or commodities provided using fund transfers, contact your CAFR liaison for assistance. The liaison will provide you with a template and instructions on how to enter the information. The completed template should then be submitted to the DFA-Office of Accounting –Funds Group for posting.
For additional information on interagency transfers, please refer to the Frequently Asked Questions (FAQ’s) at http://www.dfa.arkansas.gov/offices/accounting/financialManagementGuide/Pages/default.aspx
19-4-711. Transfer of responsibilities.
In the event that a state agency or its responsibilities, or a part of its responsibilities, is transferred by law within a biennium to another agency, the Chief Fiscal Officer of the State shall transfer all or part of the line-item appropriations, personnel positions, and moneys necessary to accomplish the transfer of responsibilities, subject to the same restrictions and procedures applicable to the original appropriations and funds from which transferred.
History. Acts 1973, No. 876, § 13; 1977, No. 486, § 3; 1979, No. 833, § 4; 1985 No. 365, § 5; A.S.A. 1947, § 13-339.
R1-19-4-711 AGENCY CLOSE OUT
The administrative head of any State agency, board, commission or institution planning to cease operations shall notify the Chief Fiscal Officer of the State in writing of such intent.
The notice shall indicate whether:
The agency is being transferred to another agency as specified in ACA 25-2-104 through 25-2-107.
The agency is being abolished, and the operations will cease.
The Chief Fiscal Officer of the State will review related legislation and/or executive orders to determine what action should be taken to satisfy obligations, protect the interests of the State and preserve the records of the agency.
Instructions will be issued from the Chief Fiscal Officer of the State to the administrative head of the agency in question and letters of instruction to any department/institution that may be receiving the employees, authority, assets, liabilities and/or records of the closing agency. The instruction will designate the Department of Finance and Administration (DFA) personnel assigned (contact people) who will work with the closing and/or receiving agency and specify what general actions must be taken and lay out a timetable for completion.
Assignments may include:
1. DFA-Office of Personnel Management for proper referral and placement efforts for employees, as well as final payment;
2. DFA-Office of State Procurement for equipment disposal, contract termination and lease closeouts;
3. DFA-Office of Accounting (DFA-OA) for all financial reporting, accountability and records retention;
4. Other DFA offices as deemed appropriate by the Chief Fiscal Officer of the State.
The DFA contacts will work with the closing and/or receiving agency on all transactions/actions to be accomplished. A "check list" of action, indicating date accomplished will be maintained and submitted by each DFA Office assigned to the DFA-OA upon completion of assignment.
The DFA-OA will prepare a final report for the Chief Fiscal Officer of the State and obtain signatures of administrative heads of agency being closed/receiving agency for all legal documents to ensure the interests of the State are protected. See P1-19-4-711 for a sample checklist.
R2-19-4-711 NEW AGENCY
State agencies newly created by Acts of the State Legislature and signed by the Governor of Arkansas will be created on the books and records of the State of Arkansas, Treasurer of State and Auditor of State by the Department of Finance and Administration-Office of Accounting (DFA-OA).
The Department of Finance and Administration-Office of Accounting-Funds Group (DFA-OA-FG) will review the appropriation which created the agency, determine their sources of funding and grants their authority for spending levels.
The DFA-OA -Funds Group staff will assign the following items within AASIS to conduct and record the agency’s financial transactions: business area number, funds center, funds and cost centers.
The DFA-OA-FG staff will also notify the DFA–Office of Budget, DFA-OA-CAFR Section and the AASIS Support Center of the agency’s creation.
The DFA-OA will also notify the Treasurer of State and the Auditor of State’s office that a new State agency has been created. Details of their fund and appropriation structures will be provided as necessary to each entity.
The DFA–Office of Budget will assign a Budget Analyst to work with the agency in the design and implementation of an operating budget for the current and future fiscal years.
The DFA-OA-CAFR Section will assign a liaison to the newly created agency.
The AASIS Support Center will assign professional security roles to each AASIS user upon request of the Security Liaison. Each user will also be assigned an ESS security role for employee self service functions.
At the direction of the Chief Fiscal Officer of the State the new agency is set up as an online agency commonly referred to as a user agency, a service bureau agency or a reporting agency based upon the agency’s resources.
Human resource issues/actions can be found at http://www.state.ar.us/dfa/opm/index.html. The following sample "check lists" for accounting and non-human resource issues are available online:
(a) New online agency.
(b) New service bureau agency
(c) New reporting agency
See P2-19-4-711 for checklist for new agency creation