Title 9 Part 1642

The segregation of funds, by project and by purpose, as required by the provisions of the various contracts for State aid and the regulations of the commissioner, is achieved by setting up separate bank accounts as follows:

This is the general designation of the bank account or accounts set up to receive the proceeds of loan funds and any other funds received by the local agency in connection with the development of a project. Typical sources of such funds are loan funds advanced by the State, loan funds borrowed from private investors, deposits on plans and specifications, sales of salvage, rents from the operation of the site prior to demolition and construction, sales of excess land, rents and other revenues received in connection with the related programs, interest on development fund investments, etc. A separate development fund bank account shall be set up for each project. The division may further require, depending on the circumstances, the segregation in separate bank accounts of the development funds for the various sites included in a multiple development project and of the development funds for the related programs of a project, in which case the local agency will be so advised. A separate general ledger account shall be set up for each bank account. Where the development fund of a project consists of more than one bank account, each such bank account shall be assigned account numbers in sequence, as account 1111.1, 1111.2, etc. Payments shall be made from the development fund only for such purposes as shall have been previously specified in a signed certificate of purposes (see Part 1646) filed with and approved by the commissioner. Steps should be taken to open a development fund bank account (see § 1642-1.2) prior to the initial financing of the project.

This is the general designation for the bank account or accounts set up to receive all income, cash subsidies, and other funds received by the local agency in connection with the operation of the project proper. Typical sources are rents from the operation of the project proper beginning with the first rents derived from the completed buildings, cash subsidies, penalty charges, sales and services to tenants, telephone commissions, washing machine concessions, interest on administration fund investments, etc. The administration fund bank account is opened at the beginning of the initial operating period of the project proper. All rents received from the operation of the project proper are deposited therein beginning with the first such rents received and all expenses of managing the project proper shall be paid therefrom. The net income or deficit during the initial operating period results in a corresponding credit or charge to development costs and will be reflected in a transfer of funds between the development and administration funds. For details of the procedure during the initial operating period see Part 1646, Development Period Accounting. A separate administration fund bank account or accounts shall be set up for each project, a separate general ledger sheet being maintained for each bank account as described under development fund above. The division may further require, depending on the circumstances, the segregation in separate bank accounts of the administration funds of the various sites included in a multiple development project, in which case the local agency will be so advised. Payments shall be made from the administration fund only for such charges as are eligible to be made to project revenues.

This is the general designation of the bank account or accounts set up to receive security deposits from tenants. A separate security deposits fund bank account shall be set up for each project. The division will not require that separate security deposits fund bank accounts be opened for each of the various sites included in a multiple development project.

This is the general designation of the bank account or accounts set up to receive funds set aside from project revenues for the following reserves:

A separate reserve fund bank account shall be set up for each project. The division will not require that separate reserve fund bank accounts be opened for each of the various sites included in a multiple development project. For details as to setting up the various reserves and the transfers to be made between the administration and reserve funds, see Part 1647, Operating Period Accounting.

No account shall be opened in any bank without the commissioner's prior approval of the depositary. Such depositary shall be a member of the Federal Deposit Insurance Corporation or such other bank as the commissioner shall approve. The first step by the local agency is^*opening a bank account will therefore be to submit the name of the depositary to the division with a request for the commissioner's approval.

With the approval of the depositary, the local agency then passes an appropriate resolution opening the bank account. A model resolution is illustrated at Exhibit 31 of Appendix S-8. Certified copies of the resolution, in duplicate, shall be filed with the division together with the depositary's letter of acceptance.

The local agency shall secure from the depositary a letter, in triplicate, accepting the account. Two copies of this letter shall be filed with the division together with the certified copies of the bank resolution. A specimen letter of acceptance will be supplied by the division.

The designation of each bank account, as reflected in the bank resolution and printed on the face of the check, shall include the name of the local agency, the name of the project, the number of the project, the name of the applicable fund and the phrase “in trust under New York State Loan and Subsidy Contract NYS__,” as per the following example:

Yorkburgh Housing Authority

Sunshine Courts, Project NYS-999

Development Fund

In trust under New York State Loan and Subsidy

Contract NYS-999

Deposits of funds received by a local agency shall be made daily. Deposit tickets shall be made out in duplicate, the duplicate ticket, stamped by the bank, being filed with the other records supporting the deposits. Arrangements should be made for police protection of the project office during days of heavy cash collections and for police protection between the project office and the bank, of the employee making deposits which include substantial sums in cash. Consideration may be given, with division approval, to the use of armored car service where police protection is not available. In choosing a depositary, consideration should be given to the facilities maintained by the bank for the making of deposits during other than regular banking hours. Where such facilities are available, they should be used, with appropriate safeguards relative to the certification and substantiation of the amount deposited both at the project office, when the deposit is made up, and at the bank, when the deposit is opened and counted.

Checks shall be prenumbered, consecutively, in a separate series for each fund and bank account. Checks voided should be stamped cancelled and stapled to the stub of the check book so that all checks can be accounted for.

Checks shall be signed only by persons authorized by resolution of the local agency. Such resolution shall require the signature and counter signature of at least two authorized persons.

The actual cash balance as set forth in the bank's statement shall be reconciled monthly with the corresponding general ledger accounts. The difference between the bank balance and the ledger account is generally the result of outstanding checks and deposits in transit, but there may be items such as bank charges to be considered and errors in the bank statement such as improper charges and credits. The verification of the bank balance shall include a careful examination of the cancelled checks, each check being scrutinized as to amounts, dates, and indorsements, and compared to the voucher and other documents supporting the disbursements. Check books shall be examined and all spoiled or voided checks accounted for. Outstanding checks which are not presented for payment within a reasonable time after issuance shall be investigated. Checks representing transfers between funds shall be noted and compared with the deposits representing transfers. The bank reconciliation may be made in the cash disbursements ledger or may be filed with the respective bank statement and should be in a form similar to the following:

No disbursements of local agency funds shall be made without the proper authorizations, as follows:

The incurring of the liability or obligation is termed a commitment.

The issuance of a check or the outlay of cash, or the equivalent, is termed a disbursement. The authorization for the issuance of a check shall be an approved accounts payable voucher properly supported (see § 1642-2.4). Disbursements in the form of cash are limited to items of a petty cash nature (see § 1642-2.5, Petty cash fund, below). Authorization for the outlay of cash shall be an approved petty cash voucher. Vouchered liabilities are termed expenditures.

All commitments of a local agency shall be of record. The power to make commitments resides in the governing body of the local agency. The local agency may, however, through its governing body, delegate authority to make commitments to a designated person or persons. Such delegation of authority shall be recorded in the minutes of the local agency and shall spell out clearly the person or persons designated and the extent of the authority delegated. The bulk of the local agency's commitments will be in the form of contracts and purchase orders. These shall be of record prior to the date of service or the delivery of materials. Other commitments will take the form of approved travel vouchers, payrolls, authorized rent and security deposit refunds, etc. Certain commitments, such as contracts for the purchase of land and for the construction of the project, etc., require the prior approval of the division before being entered into. While all commitments shall be of record, the point at which the commitment is reflected in the accounts will depend on the nature of the commitment. Thus, commitments for development contracts and changes therein will be fully reflected in the accounts, as they are entered into, as described in Part 1646, Development Period Accounting. Other commitments, such as purchase orders and travel vouchers, will be reflected in the accounts only as they are vouchered for payment, as described in section 1642-2.4, etc. However, commitments for services rendered or materials delivered as of the end of a fiscal year, which have not yet been vouchered for payment, should be reflected as accrued liabilities at the end of the fiscal year.

All disbursements of funds in the custody and control of the local agency shall be by check, except for items of a petty cash nature which may be made in cash (see § 1642-2.5, infra). No check shall be issued except in payment of an accounts payable voucher duly executed and approved, and properly supported (see § 1642-2.4 below). The opening of the bank accounts, the numbering of checks, check signing and bank reconciliations have been described in Subpart 1642-1. Checks, when issued, shall be recorded in the cash disbursements-voucher register (see § 1642-3.3). Space should be reserved on the face of the check to give the invoice number and other data which will enable the creditor to identify the payment.

The authorization for the issuance of a check shall be an accounts payable voucher, prepared in advance of the drawing of the check and recorded in the cash disbursements-voucher register (see § 1642-3.3). A specimen form of accounts payable voucher is shown as Exhibit 1 of Appendix S-8. These forms should be printed in an original only and are to be provided by the local agency. The former requirement for the printing of these forms in an original and duplicate, with the duplicate reserved for submission to the division has been eliminated. The forms should not be prenumbered when printed. A separate series of accounts payable vouchers shall be used for each type of fund. Thus, for each single or multiple development project, there shall be one series of account payable vouchers for the development fund, another for the administration fund, etc., regardless of the number of bank accounts constituting each fund. The vouchers in each such series shall be numbered in sequence. Vouchers shall be filed by series and by number. It is suggested that the vouchers for the various series be printed on different colors of paper and that the voucher number be preceded by some identifying character, such as D for development fund, A for administration fund, etc. The name of the local agency, the name and number of the project, the name of the fund and the name of the bank on which the checks are to be drawn, if known at the time the printing order is given, may be preprinted on the form. In this connection, it may be well to bear in mind that only limited quantities, relatively, of voucher forms will be required for the reserve and security deposits funds and that, in lieu of ordering the printing of separate series, therefore, consideration may be given to using administration fund voucher forms, suitably modified, for vouchering disbursements from these funds.

Invoices should be based on purchase orders or contracts. Exceptions are claims for payment for travel expenses, utility services, payrolls, payroll withholdings, reimbursement of petty cash fund, rent refunds, security deposit refunds, and transfers of funds. All extensions and footings shall be checked in detail and the initials of the employees responsible for the computations shall be indicated on each invoice or other claim for payment. The project or projects affected and the accounts to be charged as well as the amounts to be so charged shall be entered on the invoice or other claims for payment as a basis for preparing the accounts payable voucher. Instructions in connection with the various types of claims for payment follow:

Travel claims shall be prepared by the person desiring to be reimbursed and shall be submitted to the local agency together with the required supports for audit in accordance with the travel regulations of the local agency (see § 1640-10.1, Travel regulations, for the required supports and for the maximum travel expenses chargeable to State-aided projects). The travel claim shall be approved, after audit, by the person designated by the local agency prior to being vouchered for payment. The travel claim and the supports shall be attached to the accounts payable voucher.

When a bill for utility services is received, the bill, prior to payment, shall be checked against the contract or rate schedule (or the extract or summary thereof) to make certain that (i) the schedule approved by the division is correctly applied, and (ii) consumption figures are correct, and (iii) all discounts, such as those for prompt payment of the bill, etc., have been applied. After this is done, all calculations on the face of the bill should be checked for mathematical accuracy. If any substantial discrepancies not due to changes in project operating conditions or to seasonal factors are observed, a detailed investigation, including a check of previous bills by the utility company, should be undertaken. Where the review of the billing is satisfactory, a voucher shall be prepared for the amount and the utility bill shall be attached to the voucher.

Accounts payable vouchers prepared to authorize disbursements of amounts withheld from salaries for income taxes, pension fund contributions, etc., shall be supported by the appropriate documents such as are required by law or by an original invoice or other claim for payment of the organization to whom the payments are to be made, listing the individual amounts. The supporting material shall be attached to the voucher. In the accounting information on the voucher, the account previously credited with the deduction shall be charged.

Accounts payable vouchers prepared to reimburse the petty cash fund shall be supported by the petty cash vouchers and attached invoices and by an analysis sheet, based on the petty cash vouchers, distributing the amount of the reimbursement to the applicable cost or expense account. The reimbursement shall be for the total of the petty cash vouchers and all the supports mentioned shall be attached to the accounts payable voucher. In the accounting information section of the latter, the applicable cost or expense accounts shall be charged in accordance with the supporting analysis of the petty cash vouchers and development fund or administration fund, whichever is applicable, shall be credited. See section 1642-2.5 for the operation of the petty cash fund.

Formal requests for rent refunds approved by the project manager or other designated official shall be attached to the accounts payable voucher prepared to authorize the issuance of a check for such refund. Computation of the amount of the refund shall be verified prior to preparation of the voucher. In the accounting information section of the voucher, the amount refunded shall be charged to account 1122, Tenants Accounts Receivable.

Formal requests for security deposit refunds approved by the project manager or other designated official shall be attached to the accounts payable voucher prepared to authorize the issuance of a check for such refund. The request for security deposit refund should show the amount of the security deposit, interest earned and unpaid charges deductible from the security deposit (but not in excess of the security deposit plus interest thereon) and the balance, if any, payable to the tenant. In the accounting information section of the voucher, account 2114, Tenants Security Deposits, is charged with the gross amount of the security deposit balance before any deductions, and account 1114, Security Deposits Fund, is credited with the sum of the two charges. Separate checks are drawn for the amount deductible for unpaid charges, which check is drawn to the order of the administration fund, and for the net amount to be refunded to the tenant. The check for the unpaid charges deducted is credited, when deposited, to account 1122, Tenants Accounts Receivable, which will have already been charged.

Accounts payable vouchers authorizing transfers between funds shall be supported by a full explanation, attached to the voucher, of the reason for the transfer.

A petty cash fund may be established from which disbursements may be made for such items as postage stamps and incidental office supplies. In establishing such a fund, the amount authorized shall be withdrawn, by check authorized by an accounts payable voucher, from the administration or development fund, whichever is applicable. Account 1117, Petty Cash Fund, shall be charged with the amount of the fund so established. Each expenditure from the fund shall be supported by a prenumbered petty cash voucher to which there shall be attached the receipted invoice and other pertinent documents. A specimen petty cash voucher is shown as Exhibit 2 of Appendix S-8. The petty cash fund shall be reimbursed periodically for disbursements made from it by drawing a check on the administration or development fund, whichever is applicable. The preparation of the accounts payable voucher authorizing the issuance of the reimbursing check, and the distribution of the petty cash expenditures to the applicable cost and expense accounts are described in paragraph (7) of subdivision (c) of section 1642-2.4. The petty cash fund should be reconciled at least once a week. The cash balance of the fund plus the amount of petty cash vouchers on hand and awaiting reimbursement shall at all times equal the total amount of the fund. After the petty cash fund is established, no further entries are made in account 1117, Petty Cash Fund, unless to reflect an increase or a decrease in the amount of the fund.

Exceptions to the rule that all disbursements of a local agency shall be vouchered and shall (with the exception of petty cash items) be made by check arise as follows:

Bank debits include service charges made by banks and bad checks, and are supported by debit memos included with the bank statements and, in the case of a bad check, by the check itself, to which is ordinarily attached a slip stating the reason the check is returned. Bank debits are recorded in the cash disbursements-voucher register (see par. 303.5^*), account 1122, Tenants Accounts Receivable, being charged therein for bad checks received from tenants and for charges made by the bank in connection with such check and the applicable cost or expense account being charged for other bank debits representing service charges. No accounts payable vouchers are prepared for bank debits, inasmuch as no checks are to be drawn by the local agency. The supports for the entry in the cash disbursements-voucher register shall be the bank debit memo filed with the bank statement for the particular month.

In connection with the refinancing of a temporary loan note issue (see Part 1643, Financing) the paying agent will ordinarily apply the proceeds of the new issue directly to the payment of principal and interest on the maturing issue in accordance with the authorization contained in a letter of instruction. In such event, the proceeds applied will not pass through the local agency's bank account and no accounts payable vouchers are prepared inasmuch as no checks are to be drawn by the local agency. The entries to record the direct application of the proceeds of an issue of temporary loan notes are described in Part 1643, Financing, and are supported by the underlying financing documents, bank statements, correspondence, etc.

The proceeds of a bond issue and premiums thereon, if any, may, similarly, be applied by the State Comptroller directly to the payment of principal and interest on maturing temporary indebtedness. In such event, similarly, no accounts payable vouchers are prepared inasmuch as no checks are to be drawn by the local agency. The entries to record the direct application by the Comptroller of the proceeds of a bond issue and the premium thereon, if any, are described in Part 1643, Financing, and are supported by the underlying contract for State aid and correspondence and authorization from the division.

A separate cash receipts register shall be maintained for each general ledger. All funds received by the local agency, for which it is accountable with respect to a State-aided project, shall be recorded in the cash receipts register. All receipts, except receipts from tenants which may be recorded in summary form from the underlying analysis, shall be entered individually upon receipt, each cash transaction being entered on a separate line. The use of a journal voucher as a device making possible the fuller explanation of a cash receipts transaction is recommended when such explanation is found necessary or advisable. Account 1129, Sundry Accounts Receivable, may be used in this connection where applicable. Deposits of funds received shall be made at least once daily. The date of receipt, however, shall control the entry to the cash receipts register, not the date of deposit. The cash receipts register is ruled off at the end of each month. A specimen cash receipts register for a single development project is shown as Exhibit 7 of Appendix S-8. A separate column shall be used for each bank account. Entries made in the general ledger columns shall be posted to the general ledger individually and currently. Entries made in the other columns are posted, in total, at the end of each month to the respective accounts in the general ledger. Columns (16) and (17), other credits, are provided in the event that cash credits to a particular general ledger account are sufficiently numerous to justify a separate column for the accumulation of such credits. If used, the column shall be headed by the appropriate account title dispensing with the designation “other credits” and the total of the column shall be posted at the end of the month as a credit to the appropriate general ledger account. Bank debits such as for bad checks shall not be entered in the cash receipts register as a reduction of the amount received but shall be entered in the cash disbursements-voucher register. The instructions herein with respect to the specimen form of cash receipts register for a single development project also apply, in principle, to Exhibit 8 of Appendix S-8, the specimen form for a multiple development project. The specimen form of cash receipts register for a multiple development project reflects the segregation in separate bank accounts of the development and administration funds for the various sites included in the project and separate accountability for each site. Such segregation and separate accountability are not, however, mandatory, unless the division so directs the local agency.

Accounts payable vouchers have been described in section 1642-2.4. See also Exhibit 1 of Appendix S-8.

All postings to the general ledger other than those made from the books of original entry shall originate from journal vouchers. Postings may be made directly from the journal vouchers, the bound vouchers then serving in lieu of a journal voucher register, or, alternatively, a bound journal voucher register may be maintained as the posting medium. Typical transactions requiring the use of journal vouchers include accruals of expenses, write-offs of deferred charges to cost or expense, adjustments of inventories, distribution of payroll expense, establishment of reserves, authorization for the issuance of evidences of indebtedness, awards of contracts, and similar entries which do not originate from one of the books of original entry. Journal vouchers shall not be used as a medium of entry for the transfer of cash, the accounts payable voucher having been provided for such purpose. Journal vouchers shall be prepared in an original only. The former requirement for transmittal of a duplicate copy to the division has been eliminated. All journal vouchers shall be approved by a responsible official of the local agency other than the person preparing the voucher. The official designated to approve journal vouchers should be a check signer. Each journal voucher shall contain a full and complete explanation of the transaction to be recorded. Reference should be made in the explanation to schedules, correspondence, or other evidence supporting the entry. If the entry results from formal action taken by the members of the local agency, specific reference to the minutes or resolutions, including the dates thereof, shall be included. Journal vouchers recording contract awards shall include reference to the date of communication from the division approving the contract. Journal vouchers shall indicate the amount or amounts to be charged and credited, and the accounts, including both general ledger and subsidiary ledger accounts, to be so charged and credited. Journal vouchers shall be numbered consecutively, a separate series of journal vouchers being maintained for each general ledger. A specimen journal voucher form is shown as Exhibit 11 of Appendix S-8. These forms are supplied by the local agency and should be printed. The forms should not, however, be prenumbered. A standard stock form which provides the required information may be used. The use of a colored paper stock to distinguish journal vouchers from accounts payable vouchers is recommended. The specimen form exhibited can be adapted for use for a multiple development project where separate accountability is prescribed or desired, by substituting for the project name and number in the heading, a column for entering the project numbers of the various sites.

A separate cost analysis ledger, controlled by an account or accounts in the general ledger (depending on whether single or multiple general ledger controls are being operated for account 1400, Development Costs) shall be maintained for each project to record development costs. The division may further require, depending on the circumstances, that separate cost analysis ledgers be maintained for each site included in a multiple development project in which case the local agency will be so advised. Separate cost analysis ledgers, controlled by the respective subsidiary ledger accounts shall be maintained for each related program. Binding the various cost analysis ledgers of a project in a single binder is recommended. The cost analysis ledger shall show, in detail, the development costs chargeable to a project. Postings are made to the cost analysis ledger directly from the accounts payable and journal vouchers, the detailed costs recorded thereon being posted individually to the respective cost accounts. Occasional postings to the cost analysis ledger may originate from the books of original entry. The cost analysis ledger may consist of a card or a loose-leaf sheet for each cost account, as per Exhibit 12 of Appendix S-8 or, alternatively, of a loose-leaf sheet for each subgroup of cost accounts with columns for the individual accounts, as per Exhibit 13 of Appendix S-8. The former is recommended as providing a continuous record of all transactions affecting a particular cost classification exclusively and as affording better control over commitments and expenditures inasmuch as space is provided for recording the current approved development cost budget figure for the particular cost classification and the amount requisitioned on the most recent approved certificate of purposes. Cost analysis ledger sheets are provided by the local agency. Stock forms for either specimen, or forms which may be adapted, may be procured at most stationers, either without printing or overprinted. At the end of each calendar month, after all postings have been made, the cost analysis ledger is footed and the total for each account as of the end of that month is determined. The aggregate cumulative totals to date of all accounts, as determined by a monthly trial balance, shall agree with the balance reflected in the 1400 account in the general ledger, a suitable grouping in the trial balance being made, of course, if multiple general ledger controls, as described in section 1642-3.3, are maintained. This procedure produces in readily available form, the controlled figures for previous, current, and cumulative costs required in preparing form DH-213, the analysis of expenditures and budget control statement filed with the periodic reports to the division. After footing the cost analysis ledger for the month, transactions for the succeeding month may be recorded immediately following. It will not be necessary to head up a new cost analysis ledger sheet for each new month if space remains on the sheet used for the previous month. Alternative procedures for determining and recording previous current and cumulative costs, as by a different columnar arrangement of the cost analysis ledger sheet or by machine bookkeeping, may be adopted by the local agency.

A separate income analysis ledger, using the 3000 group of detailed income accounts, and controlled (subsequent to the date of substantial completion) by an account or accounts in the general ledger (depending on whether single or multiple general ledger controls are being operated) shall be maintained for each project, beginning with the first day of the initial operating period, to record the income derived from project rentals and other sources of revenue. Separate income analysis ledgers, using the 3000 group of detailed income accounts to record the rental and other income derived from the operation of the respective properties, and controlled by the respective development cost subaccounts, shall also be maintained for each related program and for the project site prior to demolition and construction. The division may further require, depending on the circumstances, that separate income analysis ledgers be maintained, prior and subsequent to construction, for each site included in a multiple development project, in which case the local agency will be so advised. The income analysis ledger set up to record rent and other revenues from the operation of the site prior to demolition and construction may also be used subsequent to construction, but it is preferable to set up a new income analysis ledger upon the initial occupancy of the newly constructed buildings and to carry this ledger forward into the operating period. During the initial operating period, account 1470.3 shall control both the income and the expense analysis ledgers. If desired, however, the local agency may set up one account, say 1470.3 (3000), to control the income during the initial operating period, and another account, say 1470.3 (4000) to control the expense. These accounts may then be closed at the end of each month into account 1470.3, which will then operate as a profit and loss account. The general ledger controls, i.e., account 3000, the Income Control Account, and account 4000, the Expense Control Account, come into operation only with the date of substantial completion of the project proper. Postings to income analysis ledgers will originate almost exclusively from journal vouchers. Occasional postings may originate from the books of original entry. The income analysis ledger may consist of a card or a loose leaf sheet for each income account, as per Exhibit 14 of Appendix S-8, or, alternatively, of a loose-leaf sheet providing columns for each of the necessary accounts, as per Exhibit 15 of Appendix S-8. The former is recommended as providing a continuous record of all transactions affecting a particular income classification exclusively and as affording a better control during the operating period, inasmuch as space is provided for recording the quarterly and annual budget figures for the particular income classification. Income analysis ledger sheets are provided by the local agency, stock forms for either specimen, or forms which may be adapted, may be procured at most stationers, either without printing or overprinted. At the end of each calendar month, after all postings have been made, the income analysis ledger is footed and the total for each account as of the end of that month is determined. The aggregate cumulative totals to date, as determined by a monthly trial balance, shall agree with the balances reflected in the respective control accounts. During the operating period, the cumulative totals are stated on a quarterly and on an annual basis as indicated by the specimen forms. This procedure produces, in readily available form, the controlled figures for previous, current, and cumulative income required in preparing form DH-621, the operating budget-income control statement filed with the periodic reports to the division. After footing the income analysis ledger for the month, transactions for the succeeding month may be recorded immediately following. It will not be necessary to head up a new income analysis ledger sheet for each new month, if space remains on the sheet for the previous month. Alternative procedures for determining and recording previous, current, and cumulative income, as by a different columnar arrangement of the income analysis ledger sheet or by a machine bookkeeping, may be adopted by the local agency. Where loose-leaf sheets are used, the income analysis ledger should be kept in the same binder with the related expense analysis ledger. Where the division has directed the maintenance of separate income analysis ledgers for the various sites included in a multiple development project, consideration may be given to their consolidation when the project as a whole has been substantially completed and bonds have been issued.

A separate expense analysis ledger, using the 4000 and 6000 groups of detailed expense accounts, and controlled, subsequent to the date of substantial completion, by an account or accounts in the general ledger (depending on whether single or multiple general ledger controls are being operated) shall be maintained for each project, beginning with the first day of the initial operating period, to record all expenses, operating and nonoperating, chargeable to project revenues. Separate expense analysis ledgers, using the 4000 group of detailed expense accounts to record the expenses chargeable to the revenues derived from the operation of the respective properties, shall also be maintained for each related program and for the project site prior to demolition and construction. The division may further require, depending on the circumstances, that separate expense analysis ledgers be maintained, prior and subsequent to construction, for each site included in a multiple development project, in which case the local agency will be so advised. The expense analysis ledger set up to record the expenses chargeable to revenues derived from the operation of the site prior [to] demolition and construction may also be used during the initial operating period, but it is preferable to set up a new expense analysis ledger upon the initial occupancy of the newly constructed buildings and to carry this ledger forward into the operating period. The control of the expense analysis ledger during the initial operating period by account 1470.3 has been described in section 1642-3.8. Account 4000, the Expense Control Account, in the general ledger comes into operation only with the date of substantial completion and controls all expenses, both operating (4000 group) and nonoperating (6000 group) thereafter. Individual postings to the expense analysis ledger shall be made directly from the accounts payable and journal vouchers. Occasional postings may originate from the books of original entry. The expense analysis ledger, like the cost and income analysis ledgers, may consist of a card or a loose-leaf sheet for each expense account, as per Exhibit 16 of Appendix S-8, or, alternatively, of a loose-leaf sheet for each subgroup of expense accounts with columns for the individual accounts, as per Exhibit 17 of Appendix S-8. The former is recommended for the reasons described in section 1642-3.8. Expense analysis ledger sheets are provided by the local agency. Stock forms for either specimen, or forms which may be adapted, may be procured at most stationers, either without printing or overprinted. At the end of each month, after all postings have been made, the expense analysis ledger is footed and the total for each account as of the end of that month is determined, and a trial balance to agree with the controls taken exactly as for the income analysis ledger (see § 1642-3.8). It will not be necessary to head up a new expense analysis ledger sheet for each new month, if space remains on the sheet for the previous month. Alternative procedures for determining and recording previous, current, and cumulative expenses, as by a different columnar arrangement of the expense analysis ledger sheet or by machine-bookkeeping, may be adopted by the local agency. The suggested forms may be expanded, if the local agency desires, by providing separate columns for labor and materials under the individual expense classifications. Where loose-leaf sheets are used, the expense analysis ledger should be kept in the same binder with the related income analysis ledger. Where the division has directed the maintenance of separate expense analysis ledgers for the various sites included in a multiple development project, consideration may be given to their consolidation when the project as a whole has been substantially completed and bonds have been issued.

A specimen form of investment ledger is shown as Exhibit 1 of Appendix S-10. The use of the investment ledger is described in section 1645-2.11.

All transactions relating to account 1211, Prepaid Insurance, and account 1212, Anticipated Returnable Premiums, shall be recorded in an insurance ledger. The insurance ledger shall not only serve as a systematic record of all essential details relating to insurance coverage as evidenced by insurance policies, but also shall serve as a subsidiary ledger supporting and controlled by the aforesaid general ledger prepaid insurance accounts and as a medium for the accumulation of the quarterly charges resulting from the straightline distribution of the premiums charged to account 1211 over the lives of the policies. The charges accumulated for the respective quarters are then distributed to the various cost and expense accounts at the end of each quarter by means of a journal voucher. Stock forms of insurance ledgers having a limited number of columns for the monthly distribution are generally available. Flysheets may be used for additional months or new forms may be established each year periodically as required. Regardless of the form used, the insurance ledger shall show the kind of insurance, the name of the insurer and broker, the policy number, description of coverage, amount and extent of coverage, effective date of the policy, the expiration date, the premium paid, the anticipated return premium, if any, the amount to be charged quarterly to development cost or operating expense, and the numbers and dates of the vouchers supporting the entries. A specimen form of insurance ledger reflecting these requirements is shown as Exhibit 18 of Appendix S-8. By a proper use of columns (10), (11), (13), and (14) to record the periodic write-offs, return premiums received, adjustments in return premiums and premium requirements, etc., column (2) being used for an explanation of the transaction, it is apparent that the totals of columns (13) and (14) will always agree with the balances of account 1212, Anticipated Returnable Premiums, and account 1211, Prepaid Insurance, the general ledger controls, respectively.

All transactions in connection with numbered contracts during the development period (see the definition of account 1460, Structures, Equipment and Improvements, in Part 1641) shall be recorded in a contractors ledger. A separate sheet shall be set up for each contract awarded. The contractors ledger is subsidiary to and shall be controlled by account 2400, Contract Awards, account 1500, Incompleted Contracts, and account 2112, Contract Retentions, in the general ledger. The specimen form of contractors ledger is shown as Exhibit 19 of Appendix S-8. Generally available stock forms should be adapted by the local agency for the contractors ledger, with or without overprinting. A monthly trial balance of the contractors ledger shall be taken and the balances therein shall at all times agree with the general ledger controls. Postings to the contractors ledger usually originate from journal and accounts payable vouchers. The balanced contractors ledger is the source of all the information required for the schedule of contract awards required to be submitted with the periodic reports to the division. The information for the contractors ledger as to the contract payment for advances for materials stored is obtained from line 16 of the periodical estimate for partial payment (see Exhibit 14, Appendix S-11). Each periodical estimate will have the current figure shown on this line, until by the end of construction, the amount should be zero.

A separate tenants ledger to record all transactions with tenants shall be maintained for each income analysis ledger (see § 1642-3.8). A tenants ledger sheet or card shall be prepared for each dwelling unit or commercial space, even though the space may be vacant. Tenants ledger sheets for units in buildings which have been demolished may be segregated in an inactive section of the respective tenants ledger. A specimen form of tenants ledger sheet designed for use in a hand-posted ledger is shown as Exhibit 20 of Appendix S-8. The specimen form is a loose-leaf sheet, but cards may be used or forms designed for a visible filing system. Where machine-posting is employed, the form must, of course, be adapted to the requirements of the particular machine. Regardless of form, the tenants ledger sheet shall show the name of the local agency, the project number, the name and address of the tenant, the account number, the apartment size, the basic rent, surcharges (if any) and current authorized rent, the effective date of tenancy, the move-out and charge-through dates, the date and explanation of each charge and credit and the balance of the tenant's account. The local agency may add such other information as it deems desirable. Each dwelling unit and commercial space shall be assigned, in advance of initial occupancy, a number which shall reflect the building or stair-hall number and the apartment or commercial space number and which shall be recorded on the tenants ledger sheet as the account number. The tenants ledger sheets shall be arranged in a logical sequence by buildings, stair-halls, and apartment numbers. The sequence, once established, shall remain constant. The account numbers, once established, shall also remain constant notwithstanding that several tenants may have successively occupied the same unit. As a unit or space is leased, a new ledger sheet or card is prepared for the new tenant, the unit being identified by the account number assigned as above. The tenants ledger is controlled by the tenants charge and credit book (see Subpart 1642-4) and the total of the balances in the tenants ledger shall at all times agree with the control. A trial balance of the tenants ledger shall be taken at the end of each calendar month and preserved and dated to establish a formal and periodic proof of such agreement. The operation of the tenants ledger, the details of posting, etc., are described in Subpart 1642-4.

A separate security deposits ledger arranged by sites, related programs, etc. shall be maintained for each project for the recording of security deposits. A separate security deposits ledger card or sheet shall be maintained for each apartment. This card shall be used to record both the receipt of the security deposit, its refund when the tenant vacates and the receipt of the security deposit from the new tenant. A specimen form of a security deposits ledger card is shown in Exhibit 10 of Appendix S-8. Each security deposits ledger sheet or card shall bear the tenants account number, address of the apartment, date security deposit was received and date refunded, tenants name and amount of the security deposit. The security deposits ledger is subsidiary to and shall be controlled by account 2114, Tenants Security Deposits. Prior to substantial completion, monthly trial balances of the security deposits ledger shall be taken, but thereafter the trial balances may be taken quarterly, inasmuch as the security deposits ledger will not ordinarily be very active once the project has been fully rented. Semiannually (as of September 30 and March 31), the total amount determined by multiplying the number of the dwelling units by the amount of the individual security deposit should be compared with the security deposit general ledger balance and the difference, if any, reconciled.

A separate sundry accounts receivable ledger shall be maintained for each general ledger to record all amounts due on open account from others than tenants or the State. The sundry accounts receivable ledger is subsidiary to and shall be controlled by account 1129, Sundry Accounts Receivable. A monthly trial balance of the sundry accounts receivable ledger shall be taken. Sundry accounts receivable may arise from insurance claims, damages to property by nonresidents, etc. A separate ledger sheet shall be prepared for each such account on which will be reflected the name and address of the debtor, and the nature of the terms and conditions of the account. A stock form of ledger sheet, as per Exhibit 3 of Appendix S-8, should be used.

A separate sundry accounts payable ledger shall be maintained for each general ledger to record all amounts due to others, and not allocable to the other accounts provided in the 2110 group of general ledger accounts. The sundry accounts payable ledger is subsidiary to and shall be controlled by account 2119, Sundry Accounts Payable. A monthly trial balance of the sundry accounts payable ledger shall be taken. A separate ledger sheet shall be prepared for each account payable on which will be reflected the name and address of the creditor, and the nature of terms and conditions of the account. A stock form of ledger sheet, as per Exhibit 3 of Appendix S-8, should be used.

The tenants charge and credit book, a specimen form of which is shown as Exhibit 25 of Appendix S-8, recapitulates and summarizes each month's daily statements of operations. The tenants charge and credit book shall be a bound book. A separate tenants charge and credit book shall be maintained for each tenants ledger. On the first of each month, the ledger balance of tenants' accounts receivable as of the close of the previous month shall be brought forward and entered in column 22 of the form. The amounts of the respective charges and credits reflected in the net total column of the daily statement of operations shall be transcribed each day to the corresponding columns of the tenants charge and credit book. Columns 8 and 9 of the form are provided for such additional breakdown of the charges as the local agency may desire. Columns 1 to 9, inclusive, represent and shall at all times equal the income charged the tenants. The sum of the amounts entered in columns 1 through 9 inclusive, shall be entered in column 10. At the end of the month, the total of column 10 is picked up in the journal entry recording project revenue, as described in section 1642-4.8. Charges made to tenants' account for refunds and uncollectible checks will be reported in columns 11 and 12. The amount entered in column 13 shall be the sum of columns 10, 11 and 12. The total revenue collections shall be shown in column 14. Column 15 shall reflect the amount of collection loss written off. The sum of columns 14 and 15 shall be entered in column 20. In column 21, there shall be recorded the difference between column 13 and 20. The difference may be recorded daily or as of the dates trial balances of tenants accounts receivable are taken and will represent the net change in the tenants accounts receivable ledger to date. The amount entered in column 21 shall be applied to the amount previously entered in column 22 and the resultant amount entered in column 22 to reflect the current balance of tenants accounts receivable. The trial balance of the tenants ledger shall, as of any day, agree with the balance noted in column 22 for that day. At the end of the month, the balance in column 22 shall agree with the general ledger control, account 1122.

Debit: Account 4770, Collection Losses $XXX Credit: Account 1122, Tenants Accounts Receivable $XXX

For convenience in making change, an appropriate amount may be withdrawn from the administration fund. The amount of cash in this fund shall at all times be constant for the total amount established. Where more than one person is authorized to accept monies, each shall be assigned a fund for his or her sole use. Funds so established shall be used for change purposes only and no expenditures shall be made therefrom.

The local agency shall prepare a resolution, for the division's approval, setting up procedures and policies in connection with cash overages and shortages. Pending the disposition of such overages and shortages in accordance with the approved resolution, cash overages and shortages shall be charged and credited to a sundry suspense and clearance account, designated cash overages and shortages. The bonding company should be promptly notified of any appreciable shortage, regardless of origin, and where the shortage appears to be due to misappropriation or embezzlement, a claim should be filed for reimbursement.

An index file should be maintained alphabetically by surname, of all tenants residing in the project. Such a file will assist cashiers in locating tenants' ledger cards. This file should show the tenant's name, address, telephone number, account number, monthly authorized rental, date of occupancy, and date vacated. As tenants vacate the development, the file of such tenants should be withdrawn.

The security deposits ledger has been described in section 1642-3.14.

The procedures outlined in subdivision (e) of section 1642-4.3 shall be followed with respect to the posting of security deposit collections.

The procedure for drawing an accounts payable voucher and the issuing of checks in connection with security deposit refunds has been described in paragraph (9) of subdivision (c) of section 1642-2.4. Separate checks are drawn on the security deposits fund for the amount to be deducted for rent due and losses or damages and to be transferred to the administration fund, and for the balance to be refunded to the tenant. Simultaneously, a miscellaneous charge ticket, supported by a copy of the approved tenant refund request and reflecting the breakdown as to the amounts to be transferred and the amount to be refunded, shall be prepared, posted to the individual tenant's security deposit account, and recorded on the daily statement of operations. The check for the amount to be transferred shall be included in the day's collections and deposited in the administration fund, and credited to the tenant's account in the tenants ledger in the same manner as it would be if it were a regular rent collection from the tenant.

Collections, transfers and refunds of security deposits shall be summarized on the daily statement of operations (Exhibits 23 and 24 of Appendix S-8). This form is described in section 1642-4.4.

The general ledger balance of security deposits (account 2114) shall be brought forward on the first of each month and entered in column 26 of the tenants charge and credit book (Exhibit 25 of Appendix S-8). Thereafter the daily statements of operations summarizing the day's security deposits transactions shall be posted currently, the security deposits collections being recorded in column 23, the transfers in column 24 and the refunds in column 25. The amount entered in column 23 minus the sum of the amounts entered in columns 24 and 25 shall be recorded in column 26 for the current day. The trial balance of the security deposits ledger, as of any day shall agree with the balance reflected in column 26 as of that day. At the end of the month, the balance in column 26 shall agree with general ledger account 2114.

The procedure for handling unclaimed security deposits is the same as that for handling unclaimed credit balances of tenants' accounts (see § 1642-4.10), except that the unclaimed security deposits shall be kept open for six years before being transferred to the administration fund as a credit to account 3590, Miscellaneous Project Income. Unclaimed security deposit ledger sheets may be segregated in the back of the security deposits ledger.

This Subpart prescribes the accounting for insurance premiums and the records to be maintained in connection therewith.

The total amount of any disbursement to a stock company shall be charged to account 1211, Prepaid Insurance. When such insurance is written by a mutual company (including State funds operating on a mutual basis), the estimated amount of premium expense as indicated in the proposal received from the company shall be charged to account 1211, Prepaid Insurance, and that portion of the premium which it is estimated will be returned at the expiration of the policy, shall be charged to account 1212, Anticipated Returnable Premiums. Premiums for fidelity bonds purchased prior to the beginning of the initial operating period shall be charged directly to account 1410.12, Fidelity Bonds and Insurance Premiums, or if purchased subsequent to that date, shall be charged directly to account 4710, Insurance.

All transactions relating to insurance shall be recorded in an insurance ledger. A specimen form of insurance ledger is shown as Exhibit 18 of Appendix S-8, and described in section 1642-3.11.

At the close of each quarter, a journal voucher shall be prepared in the amount of the quarterly charge indicated in the insurance register, for entry in the general ledger, debiting the applicable development cost or operating expense account and crediting account 1211, Prepaid Insurance. The quarterly charge is equivalent to the expired portion of the amount of the premium for each policy which was originally charged to account 1211. The portion of the premium charged to account 1212, Anticipated Returnable Premiums, shall not be charged to cost or expense, except as noted in section 1642-7.5. For example, if the amount of the original premium for a three-year mutual policy is $12,000 and the estimated expense is $7,200, account 1212, Anticipated Premium Requirements, would be charged with $7,200 which would be written off to cost or expense at the rate of $600 per quarter. The charge to cost or expense for the first and last months of a policy effective on other than the first day of the month shall be computed as one-thirtieth of the monthly charge for each day the policy was in effect exclusive of the 31st day of any month and including the two extra days if the first month is February, (one extra day in leap years). Where a policy is cancelled, the balance due the local agency for the unexpired portion of the premium is to be transferred from account 1211 to account 1129, Sundry Accounts Receivable.

Upon notice from a mutual company of the actual amount of premium to be returned to the local agency, the amount stated shall be entered on a journal voucher for recording in the general ledger as follows:

Debit: Account 1129, Sundry Accounts Receivable $XXX

Credit: Account 1212, Anticipated Returnable Premiums $XXX

Any debit or credit balance remaining in account 1212 shall be transferred to the applicable cost or expense account, except that during the operating period of the project proper such debits or credits as do not apply to the current fiscal operating year shall be transferred to account 2710, Prior Years Adjustments, on a pro rata basis. The proration between the current and prior fiscal operating years shall be determined by applying the balance in account 1212 over the life of the policy on the same basis as prescribed for monthly charges. The amount charged or credited to account 6010, Prior Years Adjustments, shall be cleared out of the latter account along with the other charges or credits made thereto, as described in Part 1647, Operating Period Accounting.

Alternative procedures for handling advance or deposit premiums on workmen's compensation insurance are possible depending on whether the emphasis is placed on the advance or deposit aspects of such premium. In order to attain uniform accounting practice and terminology, however, the advance or deposit premium for workmen's compensation insurance should be charged to account 1212, Anticipated Returnable Premiums. At the end of each quarter, the periodical charge based on the actual payroll should be made to cost or expense and the liability accrued in account 2136, Accrued Insurance. At the end of the policy period, the insurance carrier will, generally speaking, make an audit of the payroll for the period and render an invoice, debit or credit, for the adjusted premium due. The bookkeeper will check the invoice in order to determine whether or not the invoice as submitted by the insurance carrier is correct. If the invoice is correct, the accrued liability account (2136) should be adjusted in accordance with the invoice. The deposit premium (1212) is then applied against the accrued liability account (2136) by means of a journal voucher. Any excess of deposit premium over the accrued liability, as adjusted, should be recovered from the insurance carrier.

Accounting entries and procedures in connection with claims arising from losses covered by insurance are described in the definition of account 1670, Insurance Claims Clearance (see Part 1641).

A copy of each receiving and inspection report covering the receipt of supplies and equipment will be forwarded to the accounting section. The receiving and inspection report will indicate whether the items are to be charged to an inventory account or directly to expense. Upon receipt of a receiving and inspection report, it shall be processed in accordance with the instructions contained in subdivision (c) of section 1642-2.4.

This procedure applies to commodities, supplies and materials, other than fuel, which have been charged to an inventory account in the first instance. A journal voucher shall be prepared monthly to record the cost of commodities, supplies and materials requisitioned and issued from the inventory. The journal voucher shall be prepared on the basis of the stores requisitions received during the month by the accounting section. In order to facilitate the monthly summarization of the store's requisition, it is recommended that a stores requisition register be used. A specimen form is shown as Exhibit 28 of Appendix S-8. Each requisition, as received by the accounting section, shall be recorded in the register at the close of the month. The register shall be totalled and the journal voucher charging the applicable cost or expense accounts and crediting the inventory accounts shall be prepared. The explanation of the journal voucher shall contain a reference to the register folio number for the supporting detail. Pricing of inventory supplies shall be on a first-in, first-out, basis.

A physical inventory of fuel supplies shall be taken as of the last day of each quarter. On the basis of this inventory, a report will be forwarded to the accounting section which will show the amount of fuel on hand as of the first day of the quarter, the amount received during the quarter, the amount used during the quarter and the balance on hand as of the last day of the quarter. The accounting section, in determining the cost of fuel used during the quarter, shall use the first-in, first-out method in computing unit values. The journal voucher shall be prepared quarterly to record the cost of fuel consumed as follows:

Debit: Account 4340, Fuel $XXX

Credit: Account 1261, Fuel Inventory $XXX

The statutory and budgetary considerations in connection with the employment of personnel and rates of compensation have been described in Subpart 1640-9. See also paragraph (5) of subdivision (c) of section 1642-2.4. The procedure, in general outline, is to prepare the payroll on the basis of attendance reports, and to distribute the payrolls over the cost and expense accounts, in accordance with the account definitions, on the basis of a payroll summary analysis (see Exhibit 32, Appendix S-8) prepared from daily time reports and summaries thereof.

Attendance reports shall be completed for each pay period for all employees of the local agency. The form of attendance report will depend on the system adopted by the local agency, and should be supported by timeclock cards, sign-in sheets, etc. For administrative employees, the reports shall indicate the attendance for each employee and the amount of leave taken, if leave is granted by local agency. For all other employees, the number of hours worked each day and the rates of pay per hour shall be shown in addition to leave, if any.

If leave accrues to employees by resolution of the local agency, approved by the division, a record of such leave shall be maintained for each employee. Charges to accrued leave shall be posted to these records and the balance available to the employee shall be indicated.

Exhibit 30 of Appendix S-8 indicates an analysis and distribution of labor costs to the various cost and expense accounts as specified in the account definitions. The account definitions, in general, place a much greater emphasis on the distribution of labor costs applicable to the 4000 group of expense accounts than to the 1400 group of development cost accounts. The size and type of a local agency's operations may preclude adhering in detail to the methods and procedures outlined herein. In such instance, the plan or method followed shall present, in substantially the same form, the analysis and distribution of labor costs prescribed herein.

This form (Exhibit 30, Appendix S-8) serves as the basis for the distribution of the gross labor costs to the cost and expense accounts, and should be prepared at the end of each payroll period. The information as to employee number, employee name, job title and gross payroll is obtained from columns (1), (2), (3) and (7) respectively, of the payroll form (Exhibit 29, Appendix S-8). The charges to cost or expense accounts shall be in accordance with the distribution approved in the budget for the applicable fiscal year. If the local agency is using the Payroll Clearance account (1640), then it would be necessary to distribute the payroll by means of a journal voucher as described in paragraph (5) of subdivision (c) of section 1642-2.4. No financial statements should be submitted to the division without the distribution of labor costs being reflected therein.