Accounting Records

Full description

Municipal Accounting

Under the provisions of the Local Government Act 1874 and subsequent Local Government legislation and Municipal Accounting Regulations, the income and expenditure of Victorian municipal councils is segregated into various funds, namely

Municipal Funds
Loan Funds
Country Roads Board Fund

Municipalities are required to carry ordinary revenue to the credit of the Municipal Fund. This ordinary revenue includes:

Rates
Tolls and rent of tolls
Any grants
All other moneys not being the proceeds of a loan

The Municipal Accounting Regulations provide for a further division of the Municipal Fund into several funds and separate accounting records are required to be kept for the following:

General Fund comprising all ordinary revenue and expenditure
Undertakings such as abattoirs, electricity supply etc
Street Construction, Separate Rate and Special Improvement Charges

The subdivision of the Municipal Fund into three types of funds is a functional classification for accounting purposes.

The General Fund is the principal fund of the council and its accounts show the main items of municipal income and expenditure.

Accounting Records

Accounting systems comprise a structured collection of records which together document the financial transactions of the municipality. At the most basic level the flow of information between the integral components, or records, within the system is indicated by the following diagram:


????????????? ?????????????? ????????????? ??????????? ??????????????
? ?????? Cash Books ?????Subsidiary ???? ????? ?
? Source ? ? and ? ? Ledgers ? ? General ? ? Financial ?
? Documents ? ? Journals ? ????????????? ? Ledger ? ? Statements ?
? ?????? ???????????????????? ????? ?
????????????? ?????????????? ??????????? ??????????????

The flow of information, however, is not always this straightforward.

Source Documents

Examples include : receipt books, cheque butts, vouchers etc. Information is extracted from these documents and entered chronologically, in full or summary form, into cash books or journals. This process is called journalizing.

Cash Books

A cash book is a combination of a book of original entry (like a journal) and the ledger account for cash (and often the bank account). As a book of original entry it serves to chronologically record in a two sided format cash (and cheque) receipts on the lefthand side, and cash (and cheque) payments on the righthand side. These amounts are then 'posted' to the relevant ledger accounts which are identified either by ledger folio numbers or account numbers. As the cash book is also a replacement of the ledger account for cash (and often for bank) it is therefore balanced at regular intervals.

Journals (Specific and General)

The prime function of a journal is to facilitate the 'posting' of credit and debit transactions into the necessary ledger accounts. Like the cash book it is also a book of original entry and is maintained chronologically. Specific journals are often maintained to summarize information for similar transactions, including cash transactions, eg. cash receipts journal, wages and stores journal. Rather than summarize similar transactions, general journals, on the other hand, provide a convenient record of unusual transactions, including:

adjustments to ledger accounts eg. to correct errors
transfers from one account to another
sales or purchases of assets

Although the primary flow of information is from the journal to the ledger accounts, where amounts are only to be posted from one account to another (particularly common at the end of a financial year), the transactions will be posted through the journal. Relevant accounts are identified either by the ledger folio number or an account number.

Ledger (Subsidiary and General)

Ledgers comprise one or more accounts, each account being a statement of all transactions relating to a particular item about which the recording of changes -debit and credit transactions - is required. Transactions are posted to the ledger accounts from the cash books and journals. The source of the information is subsequently indicated by reference to folio numbers often accompanied by an abbreviation of the source record eg. 'C' or 'CB'=Cash Book, 'J'=Journal, 'PC'=Petty Cash Book etc. The classification of accounts is diverse and usually depends on the operations of the agency and the nature of the information required as part of the financial statements of the agency.

Subsidiary ledgers are often maintained either to facilitate a division of responsibilities within a large account, or to provide a separate record of a particular account.

The general ledger, however, comprises all accounts necessary for the compilation of the finance statements required by the agency. It is common for a general ledger to comprise a single account to represent the total of the individual accounts in each of the subsidiary ledgers. This device is called a 'control account'.

Finance Statements

Examples include : Statement of Operations, Balance Sheet, Profit and Loss Statement.

Finance statements, which are usually published with an annual report, although they may be compiled at more regular intervals, provide the final summary of the agency's financial situation at a particular point in time. The types of statements and their format are generally determined by legislative requirements, and these in turn determine the nature of the accounts required to be maintained.
This series consists of General Fund accounting records of the Keilor municipality.

The P1 consignment comprises:

Ledgers for the period 1865 to 1867
Cash Books for the period 1863 to 1896

This series has been retained on an only record extant basis as there were no summary annual financial statements extant for the period covered. It also provides an example of a 19th century municipal accounting system.

Similar accounting records for the early 20th century were presumed not extant at the time of transfer.


Conservation Note

[Unit 3, covering the period 1892 to 1896 is very badly water damaged and is currently closed under Regulation 7.]