Reconciling December

Reconciling December The month of December should be reconciled and closed just any previous month, special attention should be made the following accounts. Balance Sheet Accounts Cash should balance to the Treasurer’s Cash Trial Balance Accounts Receivable should balance to the Accounts Receivable Report If you have multiple A/R Accounts each account should balance to the group of customer types A/R for Individuals should balance Individuals A/R Report A/R for Townships should balance to Townships A/R Report A/R for Municipalities should balance to Municipalities A/R Report A/R for Other County Departments should balance to Other County Departments A/R Report A/R for Other Governments should balance to Other Governments A/R Report State Aid Receivables should balance to the State Aid SAAS Status Report The balances may differ due to transactions that have not yet been processed by your office or State Aid. State Aid Allotments should balance to the State Aid SAAS Status Report

Reconciling December, continued Balance Sheet Accounts continued Accounts Payable should be zero at the end of December Salaries Payable should be zero at the end of December Unearned (Deferred Revenue) for State Aid Accounts Regular and Municipal Maintenance should be equal to the current year allocation for each account Regular, Municipal, Town Bridge, Special Town Bridge, State Park, Turnback Funding that is paid in advance (95%) is calculated with this formula: Allotment Balance, plus any revenue to be recognized for open projects, minus recognized revenue for overruns on projects that have not been finalized with State Aid.

Accruals

Accruals Daily Time should be posted to for the time worked in December but paid in January. Invoices that were for the current year but paid next year within the accrual dates for the county. If the purchases are interfaced to the county financial system multiple purchase batches may need to be interfaced for each warrant run. Adjustments for year-end accruals Current and Delinquent Taxes receivable Reverse prior year receivable entry Book Current year receivable entry Benefits Payable Reverse prior year payable entry Book Current year payable entry Vacation Payable

Accruals, continued Adjustments for year-end accruals, continued Vested Sick Leave Payable Reverse prior year payable entry Book Current year payable entry Adjust Comp Time Payable If current Comp Time Payable is to high: Debit Comp Time Payable (liability) Credit Comp Time Adjustment (Unallocated Benefit Account) If current Comp Time Payable is to low: Debit Comp Time Adjustment (Unallocated Benefit Account) Credit Comp Time Payable (liability) Contracts Payable

Accruals, continued Recognize Revenue for Certified Work paid within county accrual period Debit Unearned (Deferred) Revenue Credit Revenue Reconcile all Accrual Accounts Accounts Payable should equal the Accounts Payable Report Salaries Payable should equal the Salaries Payable by Employee/Department Contracts Payable should equal retainage for open contracts All adjusted accounts should be the current year receivable or payable balances.

Inventory Variances When all balance sheet accounts have been reconciled for year-end the inventory on the Costrite System must be adjusted to the physical inventories on hand at the end of the year. Field and Shop staff will take a physical inventory of all items included in the system inventory Filters Oil, Anti-Freeze, Trans Fluid Gas and Diesel Signs Culverts Stockpiles Salt and Sand Before making adjustments to inventory review unit prices for inventory items, make adjustments to the unit price if needed. Adjust quantities to each inventory item if needed. After all Balance Sheet Accounts have been reconciled and inventory items have been adjusted to the physical values Unallocated Spreads may be entered for year-end processing.

Year-End Unallocated Spreads

What are Unallocated Costs Unallocated costs are costs that cannot be directly related to A specific road Construction/engineering project Equipment unit Every effort should be made to charge costs directly to the appropriate cost area before using unallocated accounts. Unallocated costs are divided between two categories Highway related Administration Maintenance Construction/engineering Shop/equipment. Non-highway related These should be isolated and will not be distributed highway activities

Administrative Costs Administrative costs Are expenses that are not directly attributable to a specific activity Any unapplied administrative costs will be included with the maintenance reporting by road system as unallocated Examples of unallocated administrative costs are: Administrative Salaries Engineering Computer Program/Service Contract Fringe Benefits County FICA, Medicare, PERA Expenses County Health Insurance Expense for Employees Vacation, Sick Leave, Personal Leave, Military Leave, etc. Minor Office Furniture/Equipment Office Supplies Training and Education Travel and Lodging

Administrative Costs - Continued A portion of the Engineer’s salary may be moved to the construction area Based on a fair estimate of the Engineer’s time. Documentation should be on file to show how this estimate was determined. Some costing systems distribute Fringe Benefits directly to labor costs by actual Fringe Benefit Costs for The period by actual labor activities OR inflate actual labor rates by a Fringe Benefit Overhead Rate.

Administrative Costs - Continued If Fringe Benefits are applied to actual labor costs The amount applied will appear in a separate column on various reports provided by the costing system The credit offset for the Fringe Benefit Expense will be cash or a liability account If Fringe Benefits are applied by inflating actual labor rates by a Fringe Benefit Overhead Rate The labor cost column on various reports will be inflated by the Fringe Benefit Overhead Rate Reports may be printed including or excluding the Fringe Benefit Overhead Rate The credit offset for the Fringe Benefit Overhead Rate is included in the Fringe Benefit section of the unallocated costs

Construction Costs Unallocated construction costs Expenses relating to construction operations that cannot be identified to a particular construction project. The costs in these accounts should be prorated to engineering based on total costs of the projects at year-end. If the County chooses, they may seek reimbursement of these engineering costs using their State Aid allocation. Examples of unallocated construction costs include Alignment Surveys Cross Section Stock Piles Drafting Supplies Engineering Expense Engineering Field Work Field Engineering Supplies General Permits Road Studies Wetlands Bank/Mitigation

Construction Costs - Continued Education and training costs related to the county engineering staff Are not allowed to be prorated to construction projects or individual roads These costs should be included in the administrative unallocated dollar amount on the maintenance report by road system

Maintenance Costs Unallocated maintenance costs Are maintenance expenses that are difficult to associate with a particular road All efforts should be made to charge to the individual roads before using unallocated maintenance accounts After costs have been accumulated in each unallocated account They may be spread to the individual roads in the appropriate maintenance account

Maintenance Costs - Continued Unallocated maintenance costs may be distributed to the roads based on Total mileage System mileage Surface mileage Labor Number of intersections, curves and hills The formula used to distribute unallocated costs will be determined by the type of unallocated cost

Maintenance Costs - Continued Examples of unallocated maintenance costs include Annual Bridge Inspections & Report Bridge Inspections – Not related to a project Building Barricades Gravel (stockpiled, crushing, prospecting) Maintenance Supplies for specific maintenance accounts (brooms for minor surface maintenance sweeping) Salt and Sand, materials and mixing costs Sign Materials Straightening Sign Posts Traffic Studies/Counts Weight Restrictions Weight Scale Calibration

Maintenance Costs - Continued Most unallocated costs Will be distributed by mileage Some costs that will be distributed based on special distribution formulas

Maintenance Costs - Continued Each county should develop a method of allocating materials they choose to spread that works best for them Salt and sand is a good example of a special distribution formula It’s usually applied to bituminous or concrete surfaces only at intersections, curves and hills A survey of all road systems should be done to determine the number of intersections, curves and hills on bituminous or concrete roads Example CSAH Regular: 120 intersections, 55 curves, 30 hills = 205 CSAH Municipal: 110 intersections, 20 curves, 3 hills = 133 County Roads: 30 intersections, 5 curves, 10 hills = 45

Maintenance Costs - Continued Based on this example The percentage of salt and sand distributed to CSAH Regular would be 54% CSAH Municipal would be 35% County roads would be 11% The salt and sand would be distributed to each road program Based on the calculated percentages to bituminous or concrete surfaces only Using this formula will place more costs on the CSAH Municipal roads since the number of CSAH Municipal miles are usually the least of the county’s road systems.

Shop/Equipment Costs Unallocated shop and equipment costs are expenses Relating to shop and equipment operations that cannot be identified to a particular unit Examples of unallocated equipment costs include Shop Overhead (Utilities) Shop Supplies & Small Tools Miscellaneous Repair Parts Building & Grounds Maintenance Inventory Adjustments for Fuel Inventory Adjustments for Parts and Replacements

Shop/Equipment Costs - Continued Inventory adjustment Should be held to a minimum through the use of good inventory control and management Should become part of cost added to equipment And prorated back to the units in developing a rate Or ultimately become an entry into adjustment to equalize depreciation

Non-Highway Related Costs Non-highway costs Should be accumulated in the area for county dollars or authorized work for others. Non-highway related activities must not be included in the unallocated costs which are distributed to the road system Non-highway costs may include costs associated with Capital Outlay Ditch Fund for Flood Control Agricultural Inspection Work for Others Other Non-Highway Related Costs 911 Signing

Conclusion Every effort should be made to charge costs directly to the appropriate cost area before using unallocated accounts. Unallocated costs are divided between two categories – highway related and non-highway related. The highway related unallocated costs are divided into categories for administration, maintenance, construction/engineering and shop/equipment. Non-highway related unallocated costs should be isolated and will not be distributed highway activities. A worksheet for distributing unallocated costs at year-End is available on the State Aid Finance Website: http://www.dot.state.mn.us/safinance/spreadsheets.html/eoy_spreads.xls

Year-End Reports and Final Adjustments

Year-End Reports and Final Adjustments, continued Fixed Asset Report Print the Fixed Asset Report, Annual Depreciation is included in the report Summary of Road Program Maintenance Costs This report provides the total costs by road program for the year This report is used to determine the revenue recognized for the year for Regular and Municipal Maintenance Adjustment for Regular/Municipal Revenue Compare the total expenses for Regular/Municipal Maintenance to the Unearned Revenue Account Balance If the expense exceeds the Unearned Revenue Balance, the amount of revenue is the Unearned Revenue Balance. If the expense is less than the Unearned Revenue Balance, the amount of revenue is equal to the total expense. Adjustment for Regular/Municipal Receivable If there is an unpaid balance for the Regular/Municipal Maintenance Allotment, determine if the amount already received by the county is less than the Regular/Municipal Revenue. Compare the Regular/Municipal Revenue to the receipted amount for the current year, if revenue exceeds the receipt amount the county is due additional funds, the difference in these amounts represents the Regular/Municipal Receivable. Debit Regular/Municipal Maintenance Receivable Credit Regular/Municipal Maintenance Allotment

Year-End Reports and Final Adjustments, continued Adjustment for Regular/Municipal Overpayment If the Regular/Municipal Maintenance Expense is less than the amount receipted for the current year and overpayment of maintenance has occurred. The amount that the receipt exceeds expense is the amount that the county has been overpaid. Debit Regular/Municipal Maintenance Allotment Credit Regular/Municipal Construction Overpayment Account Debit Regular/Municipal Maintenance Unearned Revenue Credit Regular/Municipal Construction Unearned Revenue Adjustment for Regular/Municipal Maintenance Transfer to Construction If Regular/Municipal Maintenance expenses did not exceed the current year allotment the remaining Allotment and Unearned Revenue balances are transferred to Regular/Municipal Construction Credit Regular/Municipal Maintenance Allotment Debit Regular/Municipal Construction Allotment

Annual Report

Annual Report A number of reports from the Costrite System may be used to complete a number of pages in the annual report: Page 3 Financial Statement – Costrite Trial Balance Page 4 Accounts Receivable – Costrite Accounts Receivable Report Page 6 Inventory of Materials and Supplies – Costrite Inventory Balance Report Page 7a Accounts Payable Detail – Costrite Accounts Payable Report Page 8 Fixed Asset – Costrite Fixed Asset Report Page 10 Statement of Revenues and Expenditures – Costrite Revenues and Expenditure Guidelines, IFS Account Activity Report Page 11 Summary of Maintenance Costs by Funds – Costrite Summary of Maintenance Costs by Date Range Page 12 Detailed Maintenance Costs by Funds – Costrite Analysis of Routine Maintenance

The End