CHAPTER 2
On the other hand, financial accounting takes a historical look back to answer questions such as: “Where did our money come from?” “How much did we get?” and “What did we spend it on?” The Uniform Budgeting and Accounting Act (PA 2 of 1968, MCL 141.421, et. al.) requires all local units to address these questions as they seek to account for the financial resources and expenditures the agency made. Local units of governments’ accounting systems must comply with GAAP (Generally Accepted Accounting Principles) standards. These standards provide consistency in annual reports from one year to the next, as well as a pattern against which auditors can evaluate the reliability of the transaction data. GAAP standards also provide the framework for CRC annual reports and comparability between years and between other CRCs. The annual financial reports of the CRC will include the kinds of information included in local government reports: Revenues by source and expenditures by type, such as salaries, wages, employee benefits, various types of supplies and services. CRCs, however, have an added responsibility. It is one of attributing a large proportion of their expenditures to various projects and services. This complicates the accounting processes because the time of non-administrative personnel and the use of equipment must be reported, translated into dollars, and assigned to projects and services. Road commissioners, then, as they review the financial reports, can evaluate CRC operations in terms of the perspectives of “What kinds of things did we buy for our money?” “What did we spend it on?” and “What did we get for the money?” Road commissioners should spend some time each month comparing the monthly financial reports with the budget plans and the anticipated costs of various projects. Examining these data will provide the basis for a thorough understanding of financials, including raising questions when necessary. This gives the CRC board member a basis for carrying out the multiple roles as evaluator, critic and communicator to outside stakeholders.
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Michigan County Road Commissioners Handbook