Requesting Establishment/Deletion of Funds/Agencies
SUBJECT: REQUESTING ESTABLISHMENT/DELETION OF FUNDS/AGENCIES
DEPARTMENTS & DISTRICTS AFFECTED: ALL DEPARTMENTS, AGENCIES, AND DISTRICTS GOVERNED BY THE BOARD OF SUPERVISORS
EFFECTIVE: 11/19/96 REVISED: 1/99
_________________________________ David E. Sundstrom, Auditor-Controller
Funds and agencies must be established, and obsolete funds and agencies must be deleted, either by action of the Board of Supervisors (Board) or by request to the Auditor-Controller, with the concurrence of the County Executive Office (CEO).
To provide control over, and establish a procedure for, creating new funds and new agencies, and deleting obsolete funds and agencies, from the County's Chart of Accounts.
Government Code Section 25252
Government Code Section 25252 allows the Board to establish or abolish funds as necessary for the proper transaction of the business of the County, and provides that the Board may by resolution authorize the Auditor-Controller to perform these functions.
Board of Supervisors Resolution No. 71-1006
Board Resolution No. 71-1006 dated September 14, 1971 authorized the Auditor-Controller to establish and abolish funds as provided in Government Code Section 25252.
Government Code Section 53684
Government Code Section 53684 allows the County Treasurer, upon approval of the Board, to accept deposits of funds from local agencies into the County Treasury, upon the adoption of a resolution by the legislative or governing body of the local agency authorizing the investment of funds and with the consent of the County Treasurer.
Board of Supervisors Resolution No. 97-550
Board Resolution No. 97-550 dated December 16, 1997 authorized the Treasurer-Tax Collector to deposit excess funds of local agencies into the County Treasury pursuant to Government Code Section 53684, subject to Board approval of each local agency's participation, and the prohibition of participation by agencies located outside of Orange County.
A fiscal and accounting entity with a self-balancing set of accounts in which cash and other financial resources, all related liabilities and residual equities, or balances, and changes therein, are recorded and segregated to carry on specific activities or attain certain objectives in accordance with special regulations, restrictions or limitations.
For multiple-agency funds (Fund 100 - General Fund, Fund 101 - Cash Overage Fund, and Fund 300 - Non-Interest Earning Trust Fund), agencies are subsets of the funds. Agencies are classifications of expenditure requirements into appropriately identified accounting, budgetary, or cost centers, as deemed necessary for management control of the County's operations. For example, agencies within the County General Fund denote separate County departments and agencies. Similarly, agencies within Trust Fund 300 denote separate non-interest earning trust accounts administered by separate County departments and agencies. For multiple-agency funds, agencies utilize one common cash account. For all other funds, the agency number and the fund number are the same.
Requirement for New Fund or Agency
In order to be established, a new fund or a new agency must be required by state statute or regulation, federal law or regulation, court order, or other legal requirement, or must have a compelling policy or administrative reason for being established.
County Executive Office Approval
The policy or administrative reason for the fund or agency must be discussed with and approved by the CEO before a request to establish the fund or agency is prepared.
Approvals for Establishment of Fund or Agency
Board of Supervisors' Approval
A new fund or agency which is required to be established by the Board, because the statute, regulation or other authority requires that the fund or agency be established by Board action, must be submitted to the Board on an Agenda Item Transmittal (AIT). The AIT must be submitted to the Auditor-Controller and to the CEO for review, and concurrence must be obtained from the CEO.
A new fund or agency which does not require Board action to be established must first be discussed with and approved by the CEO (see 2.1.2 above) before a request to establish the fund or agency is prepared. If authorized by the CEO, the department/agency must request the new fund or agency to be established by a letter to the Auditor-Controller, signed by the department/agency head, with a copy to the appropriate CEO analyst. Auditor-Controller staff will review the request and send the original to the CEO for concurrence before the fund or agency is opened.
Board Approval: Mid-Year Creation
If the fund or agency is a budgeted fund, is created mid-year, and will require expenditure authority mid-year, the creation of the fund or agency and the establishment of estimated revenues and appropriations pursuant to Government Code Section 29130 must be submitted to the Board on an AIT, regardless of whether or not the fund or agency would otherwise require Board action to be established. The AIT must be submitted to the Auditor-Controller and the CEO for review, and concurrence must be obtained from the CEO. The mid-year establishment of appropriations and estimated revenue for the new fund or agency requires a four-fifths (4/5) vote of the Board, pursuant to Government Code Section 29130.
Request for Establishment: Required Information
The AIT or request letter must contain the following information:
The legal authority for establishing the new fund or agency;
If no legal authority, the policy/administrative reason or other authority for establishing the fund or agency;
Whether or not the fund or agency is a budgeted fund or agency, and if available, the Activity Code to be used for this budget;
A description of the revenue sources for the fund or agency, and the uses of the fund or agency;
Any expiration date for the fund or agency;
Whether the fund will earn its own interest, or if it does not, which other fund should receive the interest earned on balances in the new fund (this does not apply to new agencies);
If the fund will not earn its own interest, the reason for the redirection of interest: legal or contractual provision, or management decision;
The specific account codings and dollar amounts of appropriations and estimated revenues to be established for the fund or agency, if the fund or agency is being established pursuant to 2.2.3 above; and
The responsible controlling department for the new fund or new agency.
For funds with separate cash accounts, the planned disposition of any residual account balances when the fund is closed. Include legal or other authority for the distribution.
Authorized Signature List
Once the new fund or agency is approved by the Board, or by the CEO and the Auditor-Controller, authorized signature lists for the new fund or agency must be submitted to those departments which require them (Auditor-Controller, CEO/Human Resources, CEO/Purchasing, etc.).
Department/Agency Head Responsibility
Department/Agency heads are responsible for all funds/agencies under their control and must ensure that staff are monitoring all activity in their funds/agencies, and that all subsidiary ledger accounts for their funds/agencies are reconciled to the County's General Ledger balances.
Department/Agency Head Responsibility
Funds/Agencies that are no longer required and which were originally created by action of the Board must be deleted by the Board on an AIT explaining the reasons for the deletion of the funds/agencies. Funds/Agencies which were originally created by request to the Auditor-Controller and CEO must be deleted by a letter to the Auditor-Controller, signed by the department/agency head, with a copy to the appropriate CEO analyst, explaining the reasons for deletion of the fund/agency. The Auditor-Controller will obtain CEO concurrence on all fund/agency deletions.
Request for Deletion: Required Information
The AIT to the Board or the letter to the Auditor-Controller must include the following information:
The name and number of the fund/agency being deleted.
The specific reasons for the deletion of the fund/agency.
The successor fund/agency which will receive any residual account balances and interest earnings from the deleted fund/agency.
If transfer of residual balances between a deleted fund/agency and a successor fund/agency will require budgetary or other actions which require Board approval, then the deletion of the fund/agency and the related budgetary actions must be included in the AIT to the Board, regardless of how the fund/agency was originally established.
If specific legal or contractual authority for the disposition of residual account balances is not available, the department or agency requesting closure should obtain County Counsel approval of the planned transfer.
Non-Board Governed Funds/Agencies
Non-Board governed funds/agencies are funds/agencies established in the County Treasury by the Treasurer-Tax Collector over which the County Board has no authority, such as school district funds/agencies and funds/agencies requested by non-Board governed independent special districts and cities which use the County Treasury.
Requirements for Non-Board Governed Funds/Agencies
Board approval is required for new funds and agencies for non-Board governed agencies who are voluntary participants in the County Treasury, such as cities and independent locally governed special districts not otherwise required to maintain their funds in the County Treasury. Other non-Board governed funds/agencies, such as school districts and independent special districts which are legally required to use the County Treasury, are established or deleted by letter from the Treasurer-Tax Collector, school districts or independent special district to the Auditor-Controller. The same information required in 2.3 above is required for these types of funds/agencies. In addition to the information required in 2.3, all non-Board governed agencies must provide the statute or other legal reference which allows or requires them to deposit funds in the County Treasury, and must provide the full and complete legal name of their entity. A copy of the Auditor-Controller's letter establishing these types of funds/agencies is sent to the CEO. CEO concurrence for these types of funds/agencies will only be required for pooled funds/agencies or other types of Treasurer funds/agencies which may impact County-governed funds/agencies, such as commingled interest pool funds/agencies.
Report to Board and Treasury Committees
The Auditor-Controller will submit a semi-annual report on an AIT (consent calendar) to the Board, with copies to the Treasury Oversight Committee, the Treasury Advisory Committee, and the CEO, listing all new funds and new agencies established and all funds/agencies deleted during the prior six months, including all non-Board funds established/deleted under 2.7 above. A brief summary of the purpose and authority for each new fund and agency will be included in the report, with a reference to the fact that copies of the requests, Board actions, and other supporting detail for the creation/deletion of the funds and agencies are available at the Auditor-Controller Department.
Annual Update of County Chart of Accounts
In January each year, the Auditor-Controller will send a comprehensive update to all holders of the County's Chart of Accounts (Orange Book) which will include all funds and agencies added and deleted during the prior twelve months.