Uniform Chart of Account - Michigan

MICHIGAN DEPARTMENT OF TREASURY

UNIFORM CHART OF ACCOUNTS FOR LOCAL UNITS OF GOVERNMENT

Version 202011 - November 2020

SECTION 1 INTRODUCTION ............................................................................................ 1

SECTION 2 CREATING AN ACCOUNT NUMBER .......................................................... 3 What an Account Number should look like:.......................................................................... 3 First Set of Three Digits: Funds............................................................................................ 4 Third Set of Three Digits: Account Numbers........................................................................ 7 1) Balance Sheet /Statement of Net Position Accounts ...................................................... 7 2) Revenue and Other Financing Resource Accounts......................................................... 8 3) Expenditure/Expense and Other Financing Use Accounts.............................................. 9 Examples of Creating an Account....................................................................................... 10

SECTION 3 TABLE OF FUNDS, ACTIVITIES, AND ACCOUNT NUMBERS............... 13 Table of Funds................................................................................................................... 13 Governmental Funds...................................................................................................... 13 Proprietary Funds........................................................................................................... 16 Fiduciary Funds............................................................................................................. 18 Capital Assets Set of Accounts....................................................................................... 18 Long-Term Obligations Set of Accounts......................................................................... 18 Table of Activities ............................................................................................................. 19 Table of Balance Sheet/Statement of Net Position Accounts................................................ 24 Table of Revenue and Other Financing Sources Accounts................................................... 28 Table of Expenditure/Expense and Other Financing Use Accounts...................................... 32

SECTION 4 DESCRIPTIONS FOR FUNDS, ACTIVITIES, & ACCOUNT NUMBERS.. 33 Funds................................................................................................................................ 33 Governmental Funds...................................................................................................... 33 Proprietary Funds........................................................................................................... 92 Fiduciary Funds........................................................................................................... 112 Year-End Governmental Full Accrual........................................................................... 119 Activities......................................................................................................................... 121 Account Numbers............................................................................................................ 142 Balance Sheet/Statement of Net Position Accounts ....................................................... 142 Revenue and Other Financing Resource Accounts......................................................... 180 Expenditure/Expense and Other Financing Use Accounts.............................................. 187

Version 202011 - November 2020

INTRODUCTION

SECTION 1

This version of the Uniform Chart of Accounts is a full revision of the entire chart of accounts. All previous versions are now obsolete and should be destroyed.

The Uniform Chart of Accounts for Local Units of Government (Counties, Cities, Villages and Townships; and Authorities and Commissions established by counties, cities, villages and townships) has been developed by the Community Engagement and Finance Division of the Michigan Department of Treasury with the assistance of the Michigan Committee on Governmental Accounting and Auditing.

All local units of government in Michigan must use the Uniform Chart of Accounts. However, some governments may choose to implement a chart of accounts that is more complex than this chart (use of additional digits, etc.). This is acceptable as long as the chart used is consistent with this Chart of Accounts.

The Community Engagement and Finance Division is responsible for general oversight of the financial administration and related audits of local units of government. The Division issues guidance to assist local units in implementing new legislation that affects the accounting and auditing responsibilities of the units and provides instruction on the appropriate methods and procedures to be used when filingstatutorily mandated financial reports. These responsibilities are established primarily by the Uniform Budgeting and Accounting Act, 1968 Public Act (PA) 2 and 1919 PA 71.

1968 PA 2, Michigan Compiled Laws (MCL) 141.421 states:

(1) The state treasurer shall prescribe uniform charts of accounts for all local units of similar size, function, or service designed to fulfill the requirements of good accounting practices relating to general government. Such chart of accounts shall conform as nearly as practicable to the uniform standards as set forth by the governmental accounting standards board or by a successor organization that establishes national generally accepted accounting standards and is determined acceptable to the state treasurer. The official who by law or charter is charged with the responsibility for the financial affairs of the local unit shall insure that the local unit accounts are maintained and kept in accordance with the chart of accounts. The state treasurer may also publish standard operating procedures and forms for the guidance of local units in establishing and maintaining uniform accounting.

To access the full text of any Michigan Public Act or MCL section, go to the Michigan Legislature Web site at legislature..

The Uniform Chart of Accounts provides a systematic arrangement and means for the uniform accumulation, recording, and reporting of financial information and transactions for all local units of government in Michigan. This system follows Generally Accepted Accounting Principles (GAAP) and Michigan law. If used consistently and properly, it will facilitate the preparation of prescribed reports and will assure responsible local officials and the general public that similar transactions are recorded in the same manner, not only within a local unit but also among local units.

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INTRODUCTION

The Uniform Chart of Accounts is presented as a "Table of Funds, Activities, and Account Numbers and Names". See the table of contents for the location. The table provides funds, activities, account numbers, and the designated descriptive name to be used for all FUNDS, ACTIVITIES, BALANCE SHEET ACCOUNTS, REVENUE ACCOUNTS, and EXPENDITURE/EXPENSE ACCOUNTS.

The Uniform Chart of Accounts is designed to serve basic legislative, budgetary, and accounting objectives. In addition, it provides a means for local units to meet additional legal requirements of the unit for budgeting and uniform accounting and reporting, regardless of the size of the unit.

BUDGETS AND THE UNIFORM CHART OF ACCOUNTS

1968 PA 2 established budgeting requirements and prohibits deficit spending by local units of government in Michigan. Further, legislation concerning the requirement of local units to adopt a budget resulted in the enactment of 1978 PA 621, an amendment to 1968 PA 2.

The Budget Act requires all local units of government in Michigan to adopt balanced budgets, to establish responsibilities and define the procedure for the preparation, adoption, and maintenance of the budget, and to require certain information for the budget process.

Proper accounting and auditing in accordance with the Uniform Chart of Accounts greatly enhances the ability of the local unit to prepare and approve a budget that accurately reflects the financial condition of the unit to ensure that services are provided within available means.

For specific legal requirements pertaining to budgets, please refer to the Uniform Budget Manual for Local Units of Government. This manual is available on Treasury's Web site at under Manuals for Accounting Guidance .

FINANCIAL REPORTING AND THE UNIFORM CHART OF ACCOUNTS

In addition to budget requirements, local governments are required to prepare annual (biennial for certain local units) financial statements in accordance with Generally Accepted Accounting Principles and obtain an audit of these financial statements. Local units of government will find that adhering to the Uniform Chart of Accounts will facilitate the preparation and audit of the required financial statements.

The Governmental Accounting Standards Board (GASB) is the primary standard-setting body for acceptable accounting principles for state and local government entities.

The American Institute of Certified Public Accountants (AICPA) has formally recognized the GASB (See GASB Statement No. 75) in this capacity and established a hierarchy for applying other sources of guidance. Local governments must follow the GASB standards and consider the applicability of the other accounting guidance to receive an unmodified opinion on the audited financial statements. Detailed information concerning basic financial records, documents, and procedures applicable to all local units of government in Michigan may be found in the "Michigan "which was developed under the authority of 1968 PA 2 and 1919 PA 71.

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CREATING AN ACCOUNT NUMBER

SECTION 2

In the section, the concept of three sets of three digits is introduced. The definitions of fund, activities, and account numbers and how to create an account are provided. Several examples demonstrating how to create an account number are provided. A local unit of government should seek the counsel of their certified public accountant or the Community Engagement and Finance Division of the Michigan Department of Treasury if assistance with the Uniform Chart of Accounts is needed.

What an Account Number should look like:

1) The major structure of an account number is comprised of three sets of three digits, which are a three-digit fund number, a three-digit activity number, and a three-digit account number. Please see below: 3 digits 3 digits 3 digits XXX ? XXX - XXX Fund Activity Account

2) For funds that do not need detailed activity information, the activity number can be replaced with three zeros as the second set of three digits. Please see below: 3 digits 3 digits 3 digits XXX ? 000 - XXX Fund Activity Account

3) For local units that do have needs for tracking detailed information on activities and accounts, they could use the POINT OFF1 option (explained in the following paragraphs). They may choose to POINT OFF activity and/or account numbers. Please see below: 3 digits 3 digits 3 digits XXX XXX.X XXX.X Fund Activity Account

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CREATING AN ACCOUNT NUMBER

First Set of Three Digits: Funds

A summary table of the fund numbers is provided as follows:

Fund Type

FUND AND CATEGORIES Category

General Funds

Permanent Funds

Governmental Fund Types Special Revenue Funds

Debt Service Funds

Capital Projects Funds

Proprietary Fund Types

Enterprise Funds Internal Service Funds

Custodial Funds

Fiduciary Fund Types

Pension (and other employee benefit) Trust Funds

Investment Trust Funds

Private Purpose Trust Funds

Year-End Government-Wide Full Accrual

Fund Number 101-149 151-199 201-299

301-399, 851-899 401-499, 801-850

501-599 600-699 701-725

726-750

751-755 756-799 900-975

A fund is an independent accounting entity with a self-balancing set of accounts, created for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. A fund number must be used in an account number.

OPEN Fund Numbers: Certain fund numbers are not designatedwith a specific fund name. Instead, they are marked as OPEN in the Uniform Chart of Accounts and are available for local units to use if a local unit's accounting system requires certain funds and the Uniform Chart of Accounts does not contain a designated fund number that is suitable. They should be used under the proper fund types that the Uniform Chart of Accounts indicates.

RESERVED Fund Numbers: Certain fund numbers are not available for local units and are for Michigan Department of Treasury use only.They are markedas RESERVED in the Uniform Chart of Accounts. The department will use these for future state-wide accounts funds.

Please refer to the table of fund numbers in Section 3 and the descriptions of fund numbers in Section 4 for detailed information.

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CREATING AN ACCOUNT NUMBER

Second Set of Three Digits: Activity Numbers

A summary table of functions/activities is provided as follows:

FUNCTIONS AND ACTIVITIES

Function

Control Activity Number

General Government

100

Judicial

275

Public Safety

300

Public Works

440

Health and Welfare

600

Community and Economic Development

700

Recreation and Culture

750

Capital Outlay

900

Debt Service

905

Transfers in and Other Financing Sources

930

Transfers (Out) and Other Financing Uses

965

Detailed Activity Number 101-128, 171-274 276-299 301-439

441-599 601-699 701-749 751-849 901-904 906-929 931-964 966-999

An ACTIVITY is an office or department to which specific revenues and expenditures/expenses are to be allocated.

A group of related activities intended to accomplish a major service or regulatory program is a FUNCTION, such as general government function and public safety function. The activities listed in this manual are grouped into eleven functions.

There are two levels of activity numbers in the Uniform Chart of Accounts. They are control activity numbers and detailed activity numbers.

CONTROL Activity Numbers: They are the higher-level activity numbers. The balance of each control activity number must at all times equal the total balance of the detailed activities numbers under that control activity number.

DETAILED Activity Numbers: They are the lower-level activity numbers. Using them would provide local units with more detailed accounting information.

OPEN Activity Numbers: Within the detailed activity numbers, certain activities numbers are not designated with a specific activity name. Instead, they are marked as OPEN activity number in the Uniform Chart of Accounts and are available for local units to use if a local unit's accounting system requires detailed classification and the Uniform Chart of Accounts does not contain a designated number that is suitable. They should be used under the proper control activity numbers or function classification that the Uniform Chart of Accounts indicates.

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CREATING AN ACCOUNT NUMBER

RESERVED Account Numbers: Within the detailed activity numbers, certain numbers are not available for local units and are for Michigan Department of Treasury use only. They are marked as RESERVED in the Uniform Chart of Accounts. The department will use these for future statewide accounts. POINT OFF: Local units are encouraged to point off for activity numbers to record detailed accounting information if needed. Please see Example 4 under the Examples of Creating an Account Number in this section. WHEN TO USE An Activity Number: It is not necessary to use an activity number (the second set of three digits) for balance sheet accounts. An activity number must be used for expenditure/expense accounts and may be used for revenue accounts. A unit would use as many or as few of the revenue/expenditure or expense accounts as necessary to provide the required budgetary control and financial reporting data. When an activity number does not apply or is not used, three zeros (000) are used as the second set of three digits in the 9-digit account number. Revenue defined by GASB Statement 34 as program revenue may use an activity number or may use another method of accumulatingthe information for the government-wide financial statements. The purpose of aggregating costs by activities is to better understand the cost of providing the various functions of government. The intent is to assign costs to the function or activity that benefits from those costs - not to the individuals who control them. For instance, consider the cost of health care for police officers. The benefit package may have been chosen by the governing body, but since this represents part of the costs of providing police services, these costs should be assigned to the police activity or public safety function (not to the governing body that made the decision to incur those costs). In general, all costs should be assigned to the functions or activities that benefit from the costs. However, in order to be cost-beneficial, it is acceptable to allocate small dollar costs to a general government function. An example would be a telephone bill that is not separated by individual departments might be assigned to the building and grounds activity. Please refer to the table of activity numbers in Section 3 and descriptions of the activity numbers in Section 4 for detailed information.

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