VPRS 15222 Annual Statements of Accounts

Full description

This series comprises records that belonged to an accounting system. An explanation of the types of records found within accounting systems follows.

Accounting Records

Accounting systems comprise a structured collection of records which together document financial transactions. At the most basic level the flow of information between the integral components, or records, within the system is as follows:
Source Documents
Cash Books and Journals
Subsidiary Ledgers
General Ledger
Finance 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 journalising.

Cash Books

A cash book is a combination of a book of original entry (ie. a journal) and the ledger account for cash (often including the bank account). As a book of original entry it is used to record receipt and payment transactions in chronological order. Following a standard format, cash (and cheque) receipts are entered on the left hand side of the book, and cash (and cheque payments) are recorded on the right hand 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, it is 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 appropriate ledger accounts. Like the cash book the journal is a book of original entry which records transactions in chronological order. Specific journals are often maintained to summarise information about similar types of transactions, including cash transactions, eg. cash receipts journal, wages and stores journal. General journals, on the other hand, provide a convenient record of other transactions, including adjustments to ledger accounts (to correct errors for example) and the sale or purchase of assets.

Journals may also be used to record the posting of amounts from one account to another (particularly common at the end of a financial year). The relevant accounts are identified either by the ledger folio number or an account number.

Ledgers (Subsidiary and General)

Ledgers comprise a record of changes (debit and credit transactions) concerning one or more accounts. The make up (classification) of accounts is arbitrary and usually depends on the functions of the agency and the regulations governing its financial reporting requirements. Transactions are posted to the ledger accounts from the cash books and journals. The source of the posting is usually indicated by a combination of folio numbers and an abbreviation of the source record eg. C or CB= Cash Book, J = Journal, PC = Petty Cash Book etc.

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

A general ledger, however, comprises all accounts necessary for the compilation of the finance statements required by the agency. If subsidiary ledgers are used it is common for a general ledger to include a single account which represents the totals of the transactions of the accounts in each of the subsidiary ledgers. This device is called a control account.

Finance Statements

Examples include Statements of Operations, Balance Sheets, Profit and Loss Statements.

Finance statements provide the final summary of the agency's financial situation at a particular point in time. They are usually compiled once a year and published with an annual report, although they may be compiled at more regular intervals. 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.

Legislation
The various Water Acts have required that books of account be kept. Further, they were to be kept up to date and ready for inspection and audit at all times during the year. An annual statement of accounts was to be prepared containing the amount of all moneys received and expended by it, all rates made, contracts entered into, and works begun, continued or completed during the year. The annual statement was to include also an account of all the assets and liabilities of the trust/board at the end of the reporting period. Where a municipal council was appointed in the place of a Waterworks Trust, it was required to keep separate books and accounts of such waterworks district.