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Revenue Classification Law  

Title 19 | Chapter 6 | Subchapter 1

TITLE 19 - PUBLIC FINANCE

CHAPTER 6 - REVENUE CLASSIFICATION LAW

SUBCHAPTER 1 - GENERAL PROVISIONS

19-6-101. Title.

This chapter shall be referred to and may be cited as the "Revenue Classification Law" of Arkansas.

History. Acts 1973, No. 808, § 1; A.S.A. 1947, § 13-503.

PLEASE NOTE: Every two years the Revenue Stabilization Law changes. Go to http://www.arkleg.state.ar.us/assembly/2011/2011R/Pages/Home.aspx under the heading "Arkansas Law" to view the Revenue Classification Law in the Arkansas Code of 1987 Annotated.

R1- 19-6-101 Revenue Classification

Revenue is classified by general ledger account number. All general ledger accounts are identified by a ten (10) digit account number and an appropriate account description. The ten (10) digit account number is designed to identify the revenue receipt(s) of a state entity. The revenue accounts may be used by any agency to record a receipt and, with only a few exceptions, may be used for any fund. The account number is broken down into four main parts: the financial statement type, the revenue type, the revenue source and a unique identifier.

All revenue accounts begin with "4." The type of revenue is identified by the third digit of the account number. The fourth digit of the account number indicates the revenue source. The remaining six digits are assigned by the Department of Finance and Administration-Office of Accounting (DFA-OA) in a systematic manner to uniquely identify the account.

Revenue Type

The revenue type (the third digit in the account number series) is established in accordance with the Revenue Classification Law to provide a basic breakdown of the revenues. The revenue types are General Revenues, Special Revenues, Non-revenue Receipts and Other Revenue, Grants and Reimbursements. (ACA §19-6-108) A description of each revenue type is listed below.

PLEASE NOTE: The revenue type directs the Treasurer of State’s distribution process. The use of an incorrect revenue type will cause incorrect distribution of the related funds.  Revenues deposited in revenue account types "1," "2" or "3" remain on deposit with the Treasurer of State until the end of the month. At that time a percentage as specified by law is deducted for the Constitutional Officers Fund and the State Central Services Fund. The remaining balance after deduction of fees is distributed to the designated fund. Revenue receipt deposits with account types "4" or "5" are credited to the designated fund at the time the receipt is processed in AASIS, and these revenues may be utilized as soon as posting is complete.

Series

Revenue Type

Description

(40)1

General Revenues

Used only when the revenue(s) is to be deposited into the General Revenue Fund Account of the State Apportionment Fund – AGA0000. A detailed list of these revenues is located in ACA §19-6-201.

(40)2

Special Revenues - 3%

As required by law, certain special revenues are held in the Special Revenue Fund Account of the State Apportionment Fund – ASA0000 prior to being credited to the special revenue fund as provided on the receipt document. The revenues recorded in this manner are usually collected by the DFA-Revenue Division or another Constitutional and Fiscal Agency Fund agency or an agency in the State Central Services Fund on behalf of another agency. A detailed list of these revenues is located in ACA §19-6-301. The fee deducted from these collections to support State Central Services Fund and Constitutional Officers Fund ranges from 3 to 4% by law.

(40)3

Special Revenues - 1½%

Same as type "2" except a smaller deduction is made at month end. Typically, the agency collecting the revenue(s) is usually an agency other than a Constitutional and Fiscal Agency Fund agency or an agency in the State Central Services Fund. The revenues recorded in this manner are usually funds of the collecting agency. A detailed list of these revenues can be found in ACA §19-6-401 et seq. The fee deducted from these collections to support State Central Services Fund and the Constitutional Officers Fund ranges from 1 ½% to 2%.

(40)4

Non-Revenue Receipts

Used to account for receipts received that are deemed non-revenue. A list of receipts that are statutorily required to be non-revenue is detailed in ACA §19-6-701.

(40)5

Other Revenue, Grants & Reimbursement

Other Revenue, Grants & Reimbursement include all other revenues not determined by legislation to be General or Special Revenues or Non-Revenue Receipts. This includes ad valorem taxes collected for the benefit of local governments and federal funds and receipts for federal grants, aid or reimbursements received directly from the federal government. (ACA §19-6-501)

 

Revenue Source

The revenue source number (the fourth digit in the account number series) is established to designate the basic source of the revenue. The types of sources with their related description follow:

Series

Description

(40X)0

Taxes

(40X)1

Fees

(40X)2

Fines and Penalties

(40X)3

Licenses and Permits

(40X)4

Rents, Royalties and Leases

(40X)5

Grants and Federal Reimbursements

(40X)6

Non-Revenue

(40X)7

Miscellaneous

(40X)8

Sale of Property (whether purchased or produced)

(40X)9

Interest on investments

 An updated listing of revenue account numbers can be obtained any time by running a Chart of Accounts Report in AASIS. To obtain only revenue account numbers enter "4*" in the GL Accounts field. Agencies that do not have direct access to AASIS may request a copy of the listing from the DFA-OA-Service Bureau at any time.

Additional accounts may be requested by completing the "General Ledger Account Request" Form located at http://www.dfa.arkansas.gov/offices/accounting/Pages/Forms.aspx. After completion, the form should be submitted to the DFA-OA-Reconciliation Section. DFA-OA reserves the right to limit the adding of new accounts.

R2-19-6-101 Revenue Receipts and Deposits

All cash, checks and legal tender received by a state agency, board, commission or institution must be immediately deposited with the Treasurer of State or one of the agency's bank or investment accounts. Additionally, all cash, checks and legal tender receipts must be immediately recorded in AASIS (through direct access, interface software, or by the Service Bureau).

Trust and agency funds must also be posted to a cash or investment account in AASIS using a fiduciary fund type. In creating journal entries, the offsetting debit or credit for agency funds will be the "Agency Fund Liability" account (general ledger #2114004000). Additions and deductions to trust-type funds must be recorded in the appropriate general ledger accounts.

Procedures for Posting Receipts in the AASIS

Cash Journals are used by AASIS for revenue receipts. The AASIS operation records revenue receipts in a Cash Journal. Each Cash Journal is assigned a specific general ledger account which is updated by cash journal receipts and deposits. Thus, the purpose of the Cash Journal is to keep track of revenue received in various forms and to post the revenue to the appropriate general ledger account.

A revenue code must be designated in AASIS for all cash receipt transactions. It is important to select the correct revenue code based on the type of revenue. Note that General Revenue codes begin with 401, and Special Revenue codes begin with 402 or 403. All General Revenue is deposited to fund AGA0000 using cost center 383359 and business area number 0610. Special Revenue funds are receipted to the agency's fund and subsequently transferred to fund ASA0000 daily by the Treasurer of State. At the end of each month, Special Revenues are distributed back to the agency's fund less the corresponding Treasury fee (3% for 402 and 1.5% for 403 revenue codes).

General ledger accounts that begin with 404 and 405 identify Other Revenue. Other Revenue must be deposited directly to the agency's fund. General ledger accounts that begin with 601 through 699 will be used for other financing sources (such as Refunds to Expenditure, Intra-Agency Transfers, and Inter-Agency Transfers).

Recording a revenue receipt requires selecting a business transaction in the Cash Journal corresponding to the appropriate revenue code. A cost center is required on the entry of a revenue receipt and will derive the fund assigned in AASIS. Check to be sure the desired fund is derived from the cost center. If the moneys are to be deposited to a different fund, the cost center must be modified. As appropriate, the revenue receipt will debit "Cash in Treasury-Incoming," "Cash in Bank-Incoming" or a "Non-AASIS House Bank" account and credit the selected revenue account.

Recording the receipt of a customer's payment requires information to be obtained from the customer's account in AASIS. The customer number, assignment number, fund and cost center must be entered. The cost center, fund and general ledger revenue account fields shall be the same as those recorded in AASIS for the original invoice which has now been paid.

Since the initial accounts receivable transaction debited the customer account and credited the appropriate revenue account, the receipt of a customer payment will credit the customer's account and debit the "Cash in Treasury – Incoming" or agency bank account.

Authorized Individuals

Agencies determine role needs and request roles from the AASIS Security Department. Roles available for Cash Receipting are the Agency Cash Receipt Specialist and the Agency Cash Deposit Specialist. Security roles determine the transactions that a user can perform. Features within permissible transactions can be further configured for security purposes. Transactions for Cash Journals have two security roles -- one for recording and saving entries and one for posting and preparing deposits.

To maintain internal control, receipts are to be entered and saved by the role of Cash Receipt Specialist and then posted by the role of Cash Deposit Specialist. Smaller agencies with limited personnel, which are unable to provide for an adequate segregation of duties, may be granted an exception to this requirement by obtaining an approval of their applicable mitigating controls from the Department of Finance and Administration-Office of Accounting (DFA-OA).

Procedure for Treasury Deposits

The AASIS transaction ZBCJ is used to print a deposit ticket for Treasury deposits. Printing of deposit tickets in ZBCJ will trigger the posting of Special Revenue to Fund ASA0000. PLEASE NOTE: Caution must be taken when reprinting a deposit ticket not to make a duplicate posting of Special Revenue. Deposit tickets must have an AASIS document number in order for the Treasurer of State to accept the deposit.

Refer to the AASIS web site at: http://www.dfa.arkansas.gov/offices/informationServices/aasis/Pages/default.aspx for transaction training tutorials for and detailed instructions regarding the preparation and printing of a deposit ticket.

PLEASE NOTE: Once a deposit has been processed by the Treasurer of State, that deposit transaction may only be corrected with a journal entry by the Department of Finance and Administration-Office of Accounting (DFA-OA).

Deposit tickets relative to funds on deposit with the Treasurer of State must only contain Treasury fund related transactions. Refer to AASIS web site at: http://www.dfa.arkansas.gov/offices/informationServices/aasis/Pages/default.aspx and their transaction training tutorials for detailed instructions regarding the proper procedures to omit cash fund related deposits from Treasury fund deposit tickets.

Procedure for Cash Fund Deposits

Procedures for cash fund deposits are identical to those for Treasury deposits except for the fact that the funds are not transferred to the Treasurer of State. Additionally, the agency has the option to print a deposit ticket using AASIS as supplemental supporting documentation to its pre-printed bank deposit tickets.

Refund to Expenditures

Arkansas Code 19-6-701 (b) (1) – (10) states that refunds to expenditures "shall consist of:

(1) Proceeds received from insurance policies for casualty losses by state agencies, departments, or institutions;

(2) Proceeds received from vendors on account of overpayment of obligations remitted by state agencies, departments, or institutions;

(3) Refunds to state agencies for cash advances or over allocations made to other state and local agencies for subgrants;

(4) Refunds to state agencies for the erroneous payment or overpayment of salaries to state employees;

(5) Proceeds derived from the maturity or redemption of investments;

(6) Reimbursements to institutions of higher learning for cash fund expenditures for salaries which are properly chargeable to funds in the State Treasury;

(7) Deposits by the counties in the State Aid Road Fund and in the County Supplement Fund Account in the State Treasury for matching funds available in the state aid road construction program.

(8) Reimbursements to state agencies for cost-sharing purposes;

(9) Federal reimbursements of expenses paid in advance by the state on behalf of the federal government; and

(10) Reimbursements by vendors or their agents for warranties, product rebates, and service adjustments."

Act 716 of 2007 amends Arkansas Code 19-6-701 (b) by adding two additional items, (9) and (10) that are eligible for refund to expenditure processing. A.C.A. §19-6-701 (b)(9), "Federal reimbursements of expenses paid in advance by the state on behalf of the federal government" would apply to expenses such as those encountered during the Hurricane Katrina crisis. If reimbursement is received by the agency during the fiscal year of the disbursement, then the receipt will be processed as a Current_Year_Refund_to_Expenditure and the appropriation for that disbursement will be restored. If the reimbursement is received for disbursements made in a prior fiscal year, then the receipt will be processed as a Prior Year Refund to Expenditure with no restoration of appropriation. A.C.A. §19-6-701 (b)(10), "Reimbursements by vendors or their agents for warranties, product rebates, and service adjustments" must be received in the year of the original disbursement to restore appropriation.

Please note that Arkansas Code 19-6-701 (b) (8) "reimbursements to state agencies for cost-sharing purposes" is in reference to cost-sharing between agencies and not with public entities. Also, refunds to expenditures generally do not apply to cost-sharing within an agency. This would need to be treated as an expense error correction.

There are two types of refunds to expenditure: current year and prior year. Current year refunds to expenditures are used to reduce expense and restore the appropriation on the books of an agency where covered by Arkansas Code 19-6-701 (b) (1) – (10) or special language contained in individual agency current year Acts. Prior year refunds to expenditures do not reduce expenses nor restore appropriation except in specific circumstances.

Current Year Refund to Expenditure

If monies are received by an agency in current fiscal year for payment(s) made in the same fiscal year and the monies are covered as a refund to expenditure under any of the criteria set out in Arkansas Code 19-6-701 (b) (1) – (10) or by special language in individual Agency current Acts, then the agency must record the deposit into the agency’s fund as a current year refund to expenditure using general ledger code 6080001000.

Record Deposit as Current Year Refund to Expenditure

Debit 1100001002

Credit 6080001000

The agency must then complete and submit a "Request for Refund to Expenditure Form" along with a photocopy of the check/warrant processed as a receipt of funds to support the "refund to expenditure" to the Department of Finance and Administration – Office of Accounting – Reconciliation Manager (DFA-OA-Reconciliation Manager).

The request will be reviewed and, if approved, will be processed reducing the agency expense and restoring appropriation.

Debit 6080001000

Credit 5XXXXXXXXX

A photocopy of the original request will be returned to the agency with the document number for documentation. The original will be maintained by DFA-OA.

Prior Year Refund to Expenditure

If monies are received by an agency in current fiscal year for payment(s) made in the prior fiscal year and the monies are covered as a refund to expenditure under any of the criteria set out in Arkansas Code 19-6-701 (b) (1) – (10) or by special language in individual agency current Acts, then the agency must record the deposit into the agency’s fund as a prior year refund to expenditure using general ledger code 6990003000.

Record Deposit as Prior Year Refund to Expenditure

Debit 1100001002

Credit 6990003000

If the refund to expenditure is for a prior year transaction, a "Prior Year Non-Reclaimable Certification Form", P1-19-6-101, must be completed and submitted to DFA-OA. The appropriation shall not be restored unless it involves a carry-forward appropriation item.

 

If a warrant from a prior year is cancelled or refund to expenditure from a prior year is deposited into a reclaimable fund, it is reclaimed based upon the appropriate procedures.

The Certification of Non Reclaimable PY Warrant Cancellations and Refunds to Expenditures Form and instructions can be found at http://www.dfa.arkansas.gov/offices/accounting/Pages/Forms.aspx or P1-19-5-1004.

R3-19-6-101 Sales and Use Tax

It is the responsibility of the agency to accurately accrue and pay to the Department of Finance and Administration-Office of Accounting (DFA-OA) sales and use tax by the 15th of each month. It is the responsibility of DFA-OA to accurately report and remit sales and use tax for State agencies to the Department of Finance and Administration-Revenue Division (DFA-RD).

Sales Tax, also referred to as Gross Receipts Tax, is a tax levied against the sale of tangible personal property and various services. Sales tax is the responsibility of the seller to collect and remit to the State.

Use Tax, also referred to as Consumer Use Tax, is a tax levied against the purchase of tangible personal property from out-of-state vendors who are not registered with the State to remit sales and use tax. Use tax is the responsibility of the buyer to accrue and remit to the State.

DFA-OA must report and remit sales and use tax by the 20th of each month to DFA-RD. Therefore, it is imperative that agencies remit the payment of their sales and use tax to DFA-OA no later than the 15th of each month.

Refer to P2-19-6-101 for further information.