The Division of Local Government Services has issued Local Finance Notice 2024-09 providing a Local Finance Board Regulatory Update on the General Ledger and Encumbrance Accounting Systems. The Local Finance Notice provides updated guidance on the procedures for maintaining a general ledger accounting system for all funds and a brief discussion of the updates made to N.J.A.C. 5:30-5.
Some of the changes include:
- Local units are required to maintain a general fund ledger for all funds of the local unit, not just the current fund.
- Requires books of original entry to be maintained in an electronic format.
- Requires the posting of the totals for all funds to the general ledger on an at least monthly basis.
- Purchase Orders charged to “other expenses” must be sequentially numbered through a computerized system that produces appropriate purchasing internal controls.
- Requires the Cash Receipts Journal, Cash Disbursement Journal, the Payroll Journal and General Journal all be maintained in electronic format.
In addition, the Division cautions that “the preparation and/or closing of the general ledger relative to the presentation of financial condition may represent a potential conflict with auditor independence. As these are areas of management decision and prerogative, officials in all local units should carefully review their practices to avoid compromising auditor independence.” For further reference on auditor independence standards the Division recommends a review of “Yellow book Revisions Update Independence Guidance” article.
We suggest you review this Local Finance Notice with your Chief Financial Officer.
Contact: Lori Buckelew, Deputy Executive Director & Director of Government Affairs; lbuckelew@njlm.org; 609-695-3481, ext. 124