Statewide Policy Directory

Cash and cash equivalents consist of the pooled cash accounts of the State Treasurer and the following items managed by agencies and institutions of the State and its component units: 

•    Undeposited receipts 
•    Petty cash 
•    Checking accounts outside the State Treasurer 
•    Time deposits outside the State Treasurer, excluding certificates of deposit, which are considered investments. 

Cash and cash equivalents are reported on both the balance sheet and the statement of cash flows as cash and cash equivalents...

These inventories consist of general supplies and materials. Where inventories are distributed among several locations, the cumulative total value should be considered in determining materiality. The exception to the foregoing is postage. Because of its liquidity, postage must be recorded when it exceeds $100.00 in value. At year-end, inventories for governmental funds should be reported in the balance sheet as an asset...
 

Prepaid items are payments for services that benefit more than one accounting period, such as insurance, rent, and subscriptions...

For governmental funds of the State primary government, the accounting classification of restricted assets will be handled at a statewide level. For year-end reporting, OSC staff will prepare worksheet entries on the fund level working trial balances to reclassify unrestricted cash and cash equivalents, investments, and receivables to restricted accounts...

For classification of governmental fund balances, the State assumes an expenditure to be made from the most restrictive resource when more than one fund balance classification is available for use...

The following applies to the proprietary and government-wide financial statements of the State primary government and to component units. Net Position Restricted by Enabling Legislation (GASB COD 1800): For the State primary government, constraints placed on net position use by enabling legislation are not reported as net position restrictions since such constraints are not legally enforceable...

A capital asset is property, such as land, land improvements, easements, buildings, equipment, works of art and historical treasures, and infrastructure, with a cost equal to or greater than $5,000 and a useful life of two or more years. Capital assets are acquired for use in normal operations and are not for resale. These assets may be subject to depreciation...

Additions are considered separate assets and should be capitalized if the cost equals or exceeds the $5,000 capitalization threshold. An addition increases the physical size or operating capabilities of an asset through expansion or extension...

Maintenance expenses are incurred to keep assets in normal operating condition and to help maintain the original use of the asset. Maintenance expenses do not extend the life of the asset beyond the expected useful life at acquisition or increase the future service potential of the asset. Maintenance costs are incurred to keep the asset operational throughout its useful life...

A library is a repository for literary and artistic materials such as books, e-books, periodicals, newspapers, pamphlets, videos, etc. kept for reading or reference...

The straight-line and units of output methods of depreciation, with an assumed salvage value of zero, are the recommended methods of depreciation. It is also recommended that depreciation for partial periods be computed using either the half-year convention or on the basis of the nearest full month...

When the State does not hold title to property acquired with federal funds, the property should not be capitalized. (Possession does not equal ownership). The property, however, can be inventoried for tracking purposes...

Land is the real estate property held by the State. It can be purchased or donated. Since land is considered not to have a limited useful life and its salvage value is unlikely to be less than its acquisition cost, land is not depreciated...

Buildings are structures that are permanent in nature and have an asset life of two or more years. They are subject to depreciation.

Buildings are valued at the purchase price or construction cost. Cost should include all charges necessary to put the building or structure in its intended state of operation (i.e. professional fees for brokers, attorneys, architects, appraisers, financial advisors, interest during the period of construction through June 30, 2019, etc.)...

Infrastructure assets are long-lived capital assets that normally are stationary in nature and normally can be preserved for a significantly greater number of years than most capital assets...

Intangible assets of State agencies and component units should be capitalized according to the following thresholds: 

$1,000,000 – Internally generated computer software (application development costs only) 
$100,000 – All other intangible assets (including purchased or licensed computer software)...

Except as discussed below, works of art, historical treasures, and similar assets should be capitalized at their historical cost or acquisition value at the date of donation (assets donated prior to July 1, 2015 are recorded at their estimated fair value at the date of donation) whether they are held as individual items or in a collection...

Capital assets should not be revalued when transferred between funds and/or component units of the State’s financial reporting entity...

State Agencies 
State agencies should assess their capital assets at least annually to determine if they have any impaired capital assets with material carrying values...

Component Units
Component units should assess their capital assets at least annually to determine if they have any impaired capital assets with material carrying values...

Each agency is required to have an Internal Policy/Procedure Manual to detail the agency's capital asset requirements. This manual will not replace the requirements set forth in the statewide policies, but will individualize the statewide policies/procedures for each agency...

Maintaining a positive identification of assets is the primary purpose of tagging. Tagging is important to: 
•    Provide an accurate method of identifying individual assets, 
•    Aid in the taking of physical inventory, 
•    Control the location of all physical assets, 
•    Aid in maintenance of fixed assets, and 
•    Provide a common ground of communication for both the accounting department and the assets' users...

A physical inventory of capital and inventoried fixed assets is taken to verify that assets recorded are physically located in an agency. Inventories are taken at least annually...

Missing Assets 
Management is responsible for implementing procedures for maintaining control over and the safeguarding of assets. Physical security measures over facilities and authorized personnel must be established and documented...

Stolen Assets 
According to G.S. 143-920, if any state property has been stolen, the employee discovering the theft must report the theft to his/her supervisor...

Prior to changing the assigned location of equipment within an agency, Part A of Form FAS-1 (or equivalent agency form) must be completed. The fixed asset number, description, current building and room number, and the reassigned building and room number must be included on this form. The form must be signed by the Division/Section Manager and transmitted to the Fixed Asset Officer...

Although the organization of each department is unique, the capital asset responsibilities should be distributed among several positions...

The maximum amount of vacation leave that may be carried by an employee from one calendar year to another is 30 days. Any excess at calendar year-end, except for the provisions of Section 35.26 of Session Law 2018-145, is converted to sick leave and does not appear as a liability...

State agencies and component units should analyze their pollution remediation obligations at least annually and should recognize pollution remediation liabilities in their financial statements according to the following thresholds...

The State of North Carolina recognizes a fiscal year beginning July 1 and ending June 30. Budgetary reporting, budgetary control, and financial reporting in accordance with GAAP are based on this accounting cycle. 
Unless exempted by the State Controller, newly created or acquired component units of the State are required to have the same fiscal year as the State of North Carolina...

The following applies to separately issued and audited GAAP-based fund (or departmental) financial statements issued for reporting units that are not legally separate: 
State agencies, universities, community colleges, and other component units may issue separate GAAP-based financial statements for one or more individual funds (or departments), which are intended to represent financial activities of the specific fund(s) (or departments) and not the State or component unit as a whole...

The following standards should be followed in the preparation of separately issued financial statements for licensing boards of the State of North Carolina ("Boards"): 
•    The financial statements should be prepared in accordance with Generally Accepted Accounting Principles ("GAAP") as applicable to governments. The Governmental Accounting Standards Board ("GASB") establishes standards of financial accounting and reporting for state and local governmental entities...

This policy applies to reporting units included in the State’s Comprehensive Annual Financial Report (Annual Report) that have separately issued financial statements audited by a private CPA firm and which meet at least one of the following two criteria.

1)    The State Annual Report presents the entity in a separate column, or
2)    The State Auditor’s opinion letter in the State Annual Report indicates reliance on the entity’s independent audit report...

GASB Statement No. 39 impacts colleges and universities that have foundations and similarly affiliated organizations whose financial data is not currently blended in the institution's annual report...

This policy establishes the capitalization threshold for lessees that report leases under GASB 87, Leases, and the Procedures section below discusses incremental borrowing rates for lessors and lessees when an interest rate is not explicitly stated in a leasing contract or when an implicit rate cannot be determined.

The Office of the State Controller (OSC) is responsible for the uniform NCAS and related subsystems, which maintain timely, reliable, accurate, consistent, and complete accounting information on the State of North Carolina government entity. The uniform NCAS includes the financial policies, procedures, and computer software that affect all departments and agencies of the State...

Each state agency is responsible for maintaining a complete general ledger and supporting subsystems for all funds and accounts for which it has responsibility...

OSC determines the GASB fund type based on information on the center request form and information provided by the agency...

The provisions set forth in this “General” section apply to all means of access to any information or application designated as a functionality or component of the North Carolina Accounting System (NCAS) or Cash Management Control System (CMCS), under the management and
operation of the Office of the State Controller (OSC) or any State agency assigned these responsibilities...

State agencies must establish internal policies and procedures for the collection of accounts receivable consistent with statewide accounts receivable policies and procedures adopted by the State Controller and the following statutory requirements...

Agencies and institutions should ensure that accounting and financial management systems are adequate to properly account for, record, and manage receivables, whether those systems are manual or automated...

Techniques for collection of accounts receivable shall include use of credit reporting bureaus, judicial remedies authorized by law, and administrative setoff by a reduction of an individual's tax refund pursuant to the Setoff Debt Collection Act, Chapter 105A of the General Statutes, or a reduction of another payment, other than payroll, due from the State to a person to reduce or eliminate an accounts receivable that the person owes the State...

State agencies should obtain the following minimum prescribed information on prospective debtors, wherever practical...

Collection techniques used by state agencies may include:

• Credit Bureaus: Use the credit bureaus to report past-due accounts, gain information on past-due accounts, and where applicable, determine the credit potential of a prospective account. Statewide contracts with collection agencies require that the collection agencies use credit bureaus...

All accounts sent to the Office of the Attorney General will go through the following procedure...

State agencies will develop and implement internal policies and procedures to charge, as directed and in the manner prescribed by State Statute, interest and a late penalty fee on past-due accounts receivable...

Agencies and institutions shall develop internal policies and procedures for delaying or withholding certain state services to persons who refuse to pay their debts...

The Attorney General’s Office is the primary agency responsible for the provision of all legal services and advice related to the collection of accounts receivable. For detailed procedures regarding submission of past-due accounts, please contact the Attorney General’s Office or the appropriate legal counsel...

Management should establish an allowance for doubtful accounts to reflect the amount of an agency’s receivables that management estimates will be uncollectible. The establishment of an allowance account ensures that the agency’s receivables are not overstated for financial reporting purposes...

Accounts should be written off an agency’s financial accounting records when all collection procedures, including those required by the Office of the Attorney General (OAG), have been conducted without results and management deems the accounts uncollectible. Accounts due from individuals or vendors must be submitted to the Department of Revenue for setoff debt proceedings at least once prior to write off...

The State Controller, with the advice and assistance of the State Treasurer, the State Budget Officer and the State Auditor, is charged with developing and implementing a uniform statewide plan to carry out the cash management policy for all State agencies, departments and institutions...

OSC develops, implements, and amends the Statewide Cash Management Policy for all State agencies. The Office of the State Auditor (OSA) monitors agency compliance with the cash management policy...

All agencies, institutions, departments, bureaus, boards, commissions, and officers of the State shall devise techniques and procedures for receiving, depositing, and disbursing monies in their control and custody that are designed to maximize interest-bearing investment of cash while minimizing idle and nonproductive cash balances...

All community colleges and their officers and employees are subject to the provisions of G.S. 147-86.11 with respect to moneys required by law to be deposited with the State Treasurer and with respect to moneys made available to them for expenditure by warrants drawn on the State Treasurer...

All agencies, institutions, bureaus, boards, commissions, and officers of the General Court of Justice as defined in Article IV of the Constitution are subject to the provisions of G.S. 147-86.11 with respect to moneys required by law to be deposited with the State Treasurer and with respect to moneys made available to them for expenditure by warrants drawn on the State Treasurer...

All school administrative units and their officers and employees are subject to the provision of G.S. 147-86.11 with respect to moneys required by law to be deposited with the State Treasurer and with respect to moneys made available to the school administrative unit for expenditure by warrants drawn on the State Treasurer...

The purpose of this policy is to ensure that neither the federal government nor the State of North Carolina benefits or suffers financially as a result of the transfer of cash in support of State-administered federal assistance programs. 

When developing agency cash management plans, each state agency shall consider utilizing electronic payments methods for both outbound and inbound payments...

The Office of the State Controller (OSC), in concurrence with the State Treasurer, shall select a service provider to provide merchant card services to eligible participants, and shall select a service provider to provide electronic funds transfer financial services to eligible participants... 

The following requirements are to be adhered to in regards to funding for electronic payment costs: 

• When General and Highway fund appropriations are to be used, the state entity must obtain approval from the Office of State Budget and Management (OSBM) on the availability of an appropriation...

All state entities desiring to impose a transaction fee must comply with the following requirements: 

• All agencies must adhere to the policies established by the Office of State Budget and Management (OSBM) and the Office of Information Technology Services. The agency must request the establishment of a special fund budget code by OSBM and OSC. All transaction fees collected are to be recorded separately from the revenue being collected, with the transaction fees being deposited to the special fund budget code...

All applications that utilize merchant cards or electronic funds transfer (EFT) transactions as a method of payment via the Worldwide Web shall provide for the generation of a confirmation of the transaction at the time of the order. Confirmations shall adhere to the Office of State Controller Policy on “Security and Privacy of Data,” regarding the disclosure of confidential information...

For Merchant card transactions, the rules governing disputes are established by national card associations (e.g., MasterCard and Visa) or by other similar organizations for proprietary cards (e.g., American Express and Discover). For electronic funds transfer transactions, the rules governing disputes are established by the National Automated Clearing House Association (NACHA). Various laws and regulations may also apply, including the Federal Reserve Bank’s Regulation E...

All State agencies or other participants utilizing Merchant Card services, whether through the OSC’s Master Services Agreement or under separate arrangement, shall develop procedures to ensure compliance with the Processor’s operating guide regarding the obtaining of authorizations. Prior to the finalization of a merchant card transaction, an authorization approval code must be obtained from the merchant card processor...

All State agencies or other participants utilizing Electronic Funds Transfer (EFT), whether through the OSC’s Master Services Agreement or under separate arrangement, shall develop procedures to ensure compliance with all NACHA operating rules, specifically as they pertain to Receiver (i.e. citizen or business) Authentication and Authorization, before originating debit or credit entries against the Receiver’s account (Article Two)...

The Office of the State Controller (OSC) will periodically consider the types of merchant cards that may be appropriate to be accepted as a means of payment by entities participating under a master services agreement provided by the State Controller, and participating entities shall adhere to the guidelines prescribed herein...

All participants in the State Controller’s Master Services Agreement for Merchant Card Services, as well as State agencies engaging in separate arrangements, are to devise a security incident response plan that incorporates the requirements of the Payment Card Industry Security Council...

Not withstanding any conflict with the “Security and Privacy of Data Policy” or with the Master Services Agreement with the merchant card vendor, the following requirements are to be adhered to: 
• For all participants in the Merchant Card Services master agreement provided by Office of the State Controller (OSC), the OSC shall secure the services of a security services provider considered to be both a Qualified Security Assessor (QSA) and an Approved Scanning Vendor (ASV), for the purposes of providing both remote validation services and vulnerability scanning services. Costs of the various services secured from the security services provider may be borne by either the OSC and/or the participants as may be determined appropriate by the OSC...

To leverage the established state enterprise agreement between Division of Purchase & Contract (P&C) and a commercial card vendor bank, state agencies requiring procurement card services and/or payment card services shall acquire either or both services through P&C...

All participants in any of the Master Services Agreements (i.e., Merchant Card Services and Electronic Funds Transfer Financial Services), as well as State agencies engaging in separate arrangements, are to adhere to the appropriate security and privacy requirements that may govern the entity...

The reporting and withholding of taxes associated with payments made to non-U.S. citizens by universities, community colleges, and other agencies of the State of North Carolina are in accordance with the laws and regulations of the U.S. Citizenship and Immigration Services (USCIS) and the Internal Revenue Service (IRS)...

All State entities either through the Office of the State Controller or University must prescribe, develop, operate, and maintain a uniform payroll system...

All State employees shall fulfill certain responsibilities in regards to payroll...

All State entities must prescribe, develop, operate, and maintain a uniform payroll system, in accordance with the General Statute 143B-426.40G for all State agencies:
http://www.ncga.state.nc.us/enactedlegislation/statutes/pdf/bysection/chapter_143b/gs_143b-426.39.pdf...

All State entities whose payroll expense requirements are provided by a payroll system administered by the Office of the State Controller (OSC), shall ensure that sufficient funds are available and remitted to the OSC payroll disbursing account; prior to the date payments are scheduled to be made to employees and vendors receiving withholdings...

All State entities should perform proper payroll reconciliations...

All responses to requests for payroll information must comply with the provisions of G.S. 132 (Confidential Communications), and the Internal Revenue Code...

• It is the policy of the State of North Carolina to comply with all applicable federal and state regulations regarding payment of deceased employees’ earnings. 

 
Wages or other taxable income of a deceased employee owed to an estate or beneficiary must be reported on Form 1099 – Misc.  Report these wages in Box 3 (Other income).  In addition, these payments are reportable on Form W-2 for social security (up to the maximum wage base) and Medicare taxation if paid in the year of death...

All State entities shall comply with all applicable federal and state regulations regarding the payment and taxation of employee moving expenses...

All State entities shall comply with established regulations and procedures when separating employees. Separation actions should be timely to minimize payroll overpayments and errors...

All State entities shall comply with all applicable laws and regulations governing processing payroll deductions during a leave without pay period...

All State employees must have completed and signed a Form NC-4 or NC-4 EZ upon hire.  The employer must withhold tax as if the employee’s status is single with zero withholding allowances, if the form is not completed...

All State entities, shall issue accurate W-2 Tax and Wage Statements as mandated by federal and state regulations...

It is the policy of the Office of the State Controller (OSC) to comply with all applicable security standards issued by the State CIO under the authority of G. S. § 143B-1376.  In accordance with the requirements of Security Standard 020101, Managing Access Control Standards, the access rights for users of OSC’s enterprise application systems1 shall be reviewed and documented at least annually for user accounts and semi-annually for privileged accounts/roles.

North Carolina General Statute §143D-6 provides that “The State Controller, in consultation with the State Auditor, shall establish comprehensive standards, policies, and procedures to ensure a strong and effective system of internal control within State government.”...

North Carolina General Statute §143D-7 provides that “The management of each State agency bears full responsibility for establishing and maintaining a proper system of internal control within that agency.”...

North Carolina General Statute §143D-7 provides that “The management of each State agency bears full responsibility for establishing and maintaining a proper system of internal control within that agency.”...

North Carolina General Statute §143D-7 provides that “The State Controller shall develop policies and procedures to direct agencies in their evaluation” of whether “the agency has in place a proper system of internal control.”...

North Carolina General Statute §143D-7 provides that “Each principal executive officer and each principal fiscal officer shall annually certify, in a manner prescribed by the State Controller, that the agency has in place a proper system of internal control.”...

North Carolina General Statute §143D-7 provides that “The management of each State agency also bears the responsibility periodically to submit accurate and complete financial information to the State Controller for compilation into North Carolina State government's various financial reports and other related financial information disseminated to the public...

North Carolina General Statute §143D-8 provides that “Each State agency shall maintain documentation, as prescribed by the State Controller, of the system of internal control within that agency.”...

North Carolina General Statute §143D-8 provides that “Each State agency shall maintain documentation, as prescribed by the State Controller, of the system of internal control within that agency.”...

North Carolina General Statute §143D-11 provides that “The State Controller, in consultation with the State Auditor, shall establish a mechanism to allow for the reporting and investigation of violations of the provisions of this Chapter.”...

North Carolina General Statute §143D-12 provides that “A willful or continued failure of an employee paid from State funds or employed by a State agency to adhere to the requirements of this Chapter is sufficient cause for disciplinary action, up to and including dismissal of the employee."...

It is the responsibility of every state agency to address deficiencies or weaknesses identified through an audit on a timely basis...

Inadvertent overpayments occur because of pricing errors, neglected rebates and discounts, miscalculated freight charges, unclaimed refunds, erroneously paid excise taxes, and other related errors. North Carolina G.S. 147-86.22 requires the Office of the State Controller (OSC) to negotiate a contract with a third party to perform an audit process of inadvertent overpayments by State agencies. 

The State Controller may authorize a State agency to make expenditures through a disbursing account with the State Treasurer...

To ensure that payroll funds remain on deposit with the State Treasurer and available for investment until the payroll due date and that funds are on deposit to cover the payroll disbursement, under no circumstances shall a payroll warrant be issued to an employee that would allow the employee to cash the warrant prior to payday. This policy shall apply to all State payroll disbursements...

To minimize the daily outflow of General Fund cash, agencies and institutions that requisition funds from the General Fund of the State must submit a separate requisition for each check write...

“A processing fee” is not to exceed twenty-five dollars($25.00), may be charged and collected for checks on which payment has been refused by the payor bank because of insufficient funds or because the drawer did not have an account at that bank if at the time the consumer presented the check to the person, a sign...

State agencies are often required to deploy employees to areas affected by disaster whether caused by nature or event...

General Obligation (GO) bond proceeds must be invested by the State Treasurer and Special Indebtedness (SI) and Two Thirds General Obligation Bonds (Two Thirds GO) proceeds must be held by the Trustee until they are required for expenditure...

Each agency will assign two (2) users to print their NCAS checks...

Each state agency/institution must comply with Federal information returns and Form W-2 reporting requirements.   This includes developing procedures for accumulating calendar year data and preparing the appropriate information returns in the IRS acceptable media...

Agencies are to comply with the Internal Revenue Service (IRS) rules regarding compliance with tax information reporting, “B” notices, backup withholding and making timely deposits with the IRS.