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CHART OF ACCOUNTS
By JAN M. GRAYSON, Director
Illinois Department of Commerce and Community Affairs
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This month, I'd like to discuss one of the foundations
of local government accounting systems — the Chart of
Accounts. The Chart of Accounts provides a means to
classify, summarize and record a governmental body's
financial transactions, providing a uniform classification throughout the financial cycle of budgeting, accounting and reporting. Utilizing the same terminology, a uniform chart helps the auditor to evaluate the
operations of a municipality and report the findings on
a consistent basis, providing a numeric classification of
all financial transactions of the municipality. Without a
uniform chart, municipalities tend to classify financial
transactions differently for each document. With a
chart, confusion is eliminated when the clerk, treasurer,
comptroller or any other related finance person is replaced. And, once the municipality establishes a uniform system for recording all of its financial transactions, it will help eliminate any guesswork in classifying
financial data.
The Chart of Accounts recommended by the Department of Commerce and Community Affairs provides adequate codes and documentation to handle
most municipalities up to 50,000 population, while still
allowing for the special needs of the municipality in the
final design. The chart is designed to meet most of the
principles outlined by the National Council on Governmental Accounting (NCCA). Certain deviations
have been made to the standards to allow greater flexibility in the handling of financial transactions while still
meeting requirements.
The Chart of Accounts provides numeric classifications for Funds, Assets, Liabilities, Equity, Revenues
and Expenditures. An asset is something owned by the
municipality, divided between current and fixed. A
liability is something owned by the municipality, divided between current and long-term. Equity is the net
worth of the municipality, either classified as fund balance or retained earnings, depending upon the type of
fund. Revenues are the cash and other types of income
received by the municipality. Expenditures/expenses
are cash payments, liabilities created and fixed asset
purchases incurred by the municipality.
DCCA utilizes the following numeric classifications
in the Chart of Accounts: Assets, 100; Liabilities. 200;
Equity, 200; Revenues, 300; and Expenditures/Expenses, 400-900, Under these major groupings are
further breakdowns based upon various classifications
of data required. Expenditures/Expenses are subdivided into the following major groups: Personnel, 400;
Contractual Services, 500; Commodities, 600; Debt
Service, 700; Capital Outlay, 800; and Other Expenditures, 900. The chart also provides the following numeric classification for funds: 01-09, General Fund; 10-
29, Special Revenue Funds; 30-39, Capital Project
Funds; 40-49, Debt Service Funds; 50-59, Enterprise
Funds; 60-69, Internal Service Funds; 70-79, Trust and
Agency Funds; and 80-89, Account Groups. An additional code is provided for those municipalities that
wish to further break down their Expenditures/Expenses into specific activities of operation. Codes are
also provided for function and programs.
DCCA utilizes a numeric coded chart since it is
easily adapted to computerization. Even small municipalities are beginning to switch from the manual system
of accounting to the use of computers. By adopting
DCCA's chart or something similar, a municipality will
be in a good position to begin providing more detailed
financial reports to its department heads, governing
body and citizens of the community. Uniform classification is the key to improvements.
DCCA's Chart of Accounts is available upon request by either calling 1-800-562-4688 or writing to the
Department of Commerce and Community Affairs,
Local Government Management Services, 620 East
Adams Street, Springfield, Illinois 62701. •
Credits to: Richard Rynke, Local Government Management Services
May 1991 / Illinois Municipal Review / Page 9
JAN M. GRAYSON
Jan M. Grayson is Director of the Illinois Department of Commerce and Community Affairs, overseeing operations of Illinois' lead economic development
agency.
Appointed by Gov. Jim Edgar in March 1991, Grayson joined state government after more than two
decades in top management positions within the private sector. From 1988 until 1990, Grayson served as a
partner in the Coopers & Lybrand consulting firm,
leading the company's efforts to counsel troubled companies in need of crisis management.
Before joining Coopers & Lybrand, Grayson served
for two years as executive vice president and chief
financial officer for Charles A. Stevens & Company, a
Chicago-based retailer. Although the company already
was in financial difficulty and eventually liquidated,
Grayson was lauded for his efforts to maximize cash
flow, obtain outside financial support and improve
day-to-day operations.
From 1970 until 1986, Grayson held various management positions with Deloitte-Touche, a leading accounting and business consulting firm. During this
period, he provided financial, strategic planning and
information systems consulting services with many
manufacturing, service and financial institutions, including Navistar, Deere & Company and the Social
Security Administration. During his final three years
with the company, Grayson served as partner in charge
of the firm's Chicago small business consulting practice.
Grayson has had significant international experience serving clients in the United Kingdom, France
and the Middle East lie also has had banking experience working for the Northern Trust Company prior
to joining Deloitte-Touche.
A former high-school mathematics teacher and college instructor, Crayson, 49, holds a bachelor of science
degree in biology, a master's degree in business administration from the University of Chicago, and is a CPA.
He resides in Chicago.
Page 10 / Illinois Municipal Review / May 1991