Accounting looks different for municipalities than for private companies and organizations. Municipalities often have multiple sources of funding, from taxpayer dollars to grants. They also have to abide by a more stringent set of accounting standards established by the Governmental Accounting Standards Board (GASB). In addition to complying with the GASB, municipalities are accountable to their citizens. Residents of a municipality need to see how the local government is using its funds.
Municipal accounting can be complex, but there are ways to simplify it. One option is using accounting software for small municipalities. Municipal fund accounting software is more robust and has more features than other fund accounting solutions. Learn more about how municipal accounting software can simplify your local government’s accounting process.
Why Use Government Accounting Software
Governments often have multiple funding streams. Revenue comes from grants, taxes, and transfers from the state or federal government. Municipalities also have multiple streams of tax revenue, including income tax from individual, business, and property taxes. Depending on the source of the funds, there might be restrictions on how the municipality can use the money.
Since there are multiple revenue streams and possible restrictions for each, a municipality needs a comprehensive accounting software solution to best manage and keep track of each stream.
Another reason to use fund accounting software specifically for governments is that the software simplifies creating reports that comply with GASB standards. MIP® funding accounting has a built-in GASB report writer that lets municipalities create public-facing documents containing all the elements required for compliance.
Fund accounting software solutions tailor-made for municipalities offer the security that local governments need. Government organizations can host the software in the cloud or on-premises, depending on its specific needs. Government accounting software also has more security features than accounting software designed for private companies.
Municipalities have different financial goals than private companies. A municipality isn’t trying to earn a profit — instead, it has a responsibility to use its funds in a way that best serves its constituents.
Functions and Features of Government Accounting Software
A municipal fund accounting software solution has different functions and features that eliminate the need for manual reporting. Your municipality can connect the accounting software to other software platforms, such as Microsoft Office, to integrate and streamline the process of importing and exporting reports.
Some of the features of government accounting software are:
- Chart of accounts: The chart of accounts (COA) indexes all of a government’s financial transactions during a particular period. The COA divides the transactions by subcategory.
- General ledger: The general ledger sorts a municipality’s past transactions by account type. It’s the report used to produce financial statements and trial balances. General ledgers are sometimes confused with COAs. The primary difference is that the general ledger doesn’t include details about accounts without any recent activity or with zero balances.
- Accounts payable: Municipalities need to purchase and pay for supplies and services. An accounts payable feature makes it easy to keep track of when payments are due and allows the municipality to strategize its payment schedule to maximize cash flow.
- GASB-compliant reports: A built-in report writer feature offers templates that your local government officials can use to produce audit-ready financial statements. The report writer feature also ensures all public-facing documentation has the required elements.
- Data visualization: Data visualization tools streamline the decision-making process by producing graphs that let you analyze, visualize, and easily present different data sets.
- Cash flow statements: Cash flow statements can reflect the most up-to-date transaction information, letting municipalities make informed decisions about future purchases and expenses. Cash flow statements make it easier to keep or distribute records to different departments and officials.
- Audit trails: System auditing is an essential security feature for protecting and tracking critical information. It provides access to audit trails about system access, user actions, and transactions.
- Internal permission control: Municipal governments need to be able to restrict who has access to what in the accounting software. Internal permission controls let you give employees the access they need while limiting access to the most confidential data.
How Accounting Software Can Benefit Your Municipal Government
Adopting a fund accounting solution can benefit a small government in many ways, including:
- Streamlines staffer’s responsibilities: Fund accounting software solutions automate many previously manual tasks. Taking those tasks off your staff members’ plates allows them to focus on more critical duties and responsibilities.
- Ensures accountability: Government accounting software enhances transparency, ensuring government organizations remain accountable to the people they serve.
- Complies with standards: Features such as GASB-compliant report templates make it easy for your municipality to comply with these standards.
- Enhances decision-making: A municipality’s accounting team is responsible for making sound financial decisions on behalf of its constituents. Visualizations and simplified accounting dashboards improve the decision-making process, helping your government organization plan and manage fiscal decisions in the best interests of its citizens.
- Ensures security: While public constituents have a level of ownership over a municipality’s financial data, it’s critical that all information is safe and doesn’t fall into the wrong hands. A fund accounting software solution with adequate security features, such as permission controls and audit trails, protects critical data and keeps bad actors from accessing it.
Other Ways to Simplify Your Accounting Process
The more streamlined and simplified a municipal government’s accounting process, the better it can serve its citizens. Along with adopting a fund accounting solution, there are a few other things you can do to improve the accounting process:
- Keep receipts: Scanning receipts eliminates the need to keep paper copies and eases the burden on your staff considerably.
- Automate payroll: Payroll can appear simple on the surface, but once you start hiring people at different rates and separate benefits packages, it becomes more complex. One way to simplify the process and ensure your staff gets paid on time and for the correct amounts is using a fund accounting solution to automate as much of the payroll process as possible.
- Interconnect applications: Before switching to a government fund accounting solution, many municipalities used a patchwork system, sometimes relying on spreadsheets, enterprise resource planning software, and other applications. Use one software solution with multiple modules that allows interconnection for a more simplified approach. When your account software can communicate easily with a human resources management program, it becomes much easier to stay on top of everything and remain compliant.
Request a Demo of MIP® Today
MIP Fund Accounting® can improve and simplify your municipal accounting processes. Our software solution is tailor-made with the needs of governments in mind. See how it works for yourself by requesting a demo today.
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