New Jersey Division of Local Government Services Local Finance Notice 2024-09

Local Finance Notice 2024-09 General Ledger & Encumbrance Accounting Systems: Local Finance Board Regulatory Update

The Local Finance Board made updated to N.J.A.C 5:30-5.7 as part of its readoption of N.J.A.C 5:30. It establishes required procedures for proper maintenance of a general ledger accounting system. This is applicable to all local units, including authorities, fire districts, and joint meetings/regional service agencies.

• Now all local units are required to do the following:
  • Maintain a general ledger for all funds of a local unit.
  • Maintain required books of original entry in an electronic format.
  • Post the totals for all funds to the general ledger on at least a monthly basis.

• Previously local units only were required to complete a general ledger for the current fund in addition to allowing original books of entry in a manual or electronic format and permitted the closing of funds to be done at year end. 
• N.J.A.C 5:30-5.2 has been amended to require that all purchases charged to “Other Expenses” or other non-salary line items be sequentially numbered through a computerized system that produces appropriate internal controls, previously local units were permitted to utilize pre-printed multiple copy purchase orders in lieu of a computerized system.

What is a General Ledger Accounting System

• It is a permanent record which summarizes all financial transactions recorded in the double-entry accounting system books of original entry.
• The system provides support for the “fund” basis of accounting required by the Division.
• An accounting transaction is not considered completed unless it is:

1. Documented and Supportable
2. Recorded in the applicable book of original entry
3. Posted from the book of original entry to the affected general ledger accounts 

• The general ledger together with the books of original entry and supporting subsidiary ledgers constitutes a complete accounting system

Required Original Books of Entry

• Cash Receipts Journal
• Cash Disbursements Journal
• Payroll Journal
• General Journal

Use of General Ledger

• At the beginning of a local unit’s budget year, the general ledger accounts will reflect opening balances in asset, liability, reserves and surplus/fund balance only. At the end of each accounting period, which is at minimum monthly, the books of original entry shall be reconciled and those totals posted to the General Ledge

Local Finance Notice 2024-09

Please follow the link below to read more about these items and guidance on how your local unit can implement them: https://www.nj.gov/dca/dlgs/lfns/2024/2024-09.pdf

Contact Wielkotz & Company, LLC Today

For further information on Local Finance Notice 2024-09 and its implementation feel free to reach out to Steven Wielkotz at (973)-835-7900 ext. 201 or sdw@w-cpa.com.