KSC, TITLE 10.  FINANCE
 

Chapter 2.  Fiscal Management

Section 10.201.  Accounting; records.
Section 10.202.  Director's powers and duties.
Section 10.203.  Treasurer.
Section 10.204.  Funds of the Treasury.
Section 10.205.  The Revenue Fund.
Section 10.206.  The United States Grant Fund.
Section 10.207.  The Foreign Assistance Fund.
Section 10.207.1.  Legislative Operations Fund.
Section 10.207.2.  Disbursement.
Section 10.207.3.  Accounting.
Section 10.208.  Allotment.
Section 10.209.  Documentation.
Section 10.210.  Lapse.
Section 10.211.  Disbursement.
Section 10.212.  Unexpended funds.
Section 10.213.  Reporting.
Section 10.214.  Closing.

      Section 10.201.  Accounting; records.

     (1)  Government accounting provides for the full disclosure of the results of financial operations and the dissemination of all financial information needed for the management of operations and the formulation and execution of the Government budget and ensures effective control over Government income, expenditures, funds, property, and other assets, whether tangible or intangible.

     (2)  An office record is open for public inspection in accordance with regulation.

      Section 10.202.  Director's powers and duties.
      The Director has the power and duty to:

     (1)  prepare and review plans for the management and enhancement of Government revenues and reimbursements and for the support of public credit;

     (2)  supervise the collection of revenues and reimbursements;

     (3)  prescribe the form of keeping and rendering of public accounts, and issue pursuant to law a warrant for money from the Treasury pursuant to appropriation;

     (4)  prepare and issue reports and fiscal information as may be required by law or resolution of the Legislature;

     (5)  as the general accountant of the Treasury and its Funds record and audit every receipt and disbursement of money paid to, by, or through the Treasury and exercise full supervision of the Funds;

     (6)  withhold his approval when necessary to prevent misuse of State funds, including the disbursement of funds in excess of appropriation;

     (7)  keep a complete set of double entry books in which appear accounts which show the current status of each appropriation, and record daily therein all business transactions pertaining to appropriations in detail;

     (8)  keep ledgers in which appear in a systematic manner accounts which show all current Government funds, assets, liabilities, income and expenditures;

     (9)  maintain other books, records and documents as are necessary for the proper administration of the Office;

     (10)  in consultation with the Director of [the] Department of Administration and Finance continuously review Government accounting and financial reporting practices and make required improvements;

     (11)  maintain accounting systems and produce financial reports regarding Government operations, including central facilities which gather and disseminate information concerning Government financial operations and their results;

     (12)  give full consideration to the Government's needs and responsibilities in establishing accounting and reporting systems and other fiscal requirements; and

     (13)  emphasize systematic and orderly improvement in Government financial management in order to formulate, adopt and maintain simplified and more effective accounting systems, financial reporting procedures, budget processes, auditing requirements and procedures, and to eliminate duplication and processes which do not serve a purpose commensurate with the cost involved.

Background
Amended by State Law 7-1.

      Section 10.203.  Treasurer.
       The Director is the Treasurer and has full responsibility and authority for the Treasury, for the collection, administration, and safekeeping of all public funds deposited in the Treasury as general realizations of the Government and for disbursements from the Treasury pursuant to law.

      Section 10.204. Funds of the Treasury.
       Within the Treasury there are:

     (1)  the Revenue Fund;

     (2)  the United States Grant Fund; and

     (3)  the Foreign Assistance Fund.

      Section 10.205. The Revenue Fund.

     (1)  The Revenue Fund contains all monies received by the Government pursuant to a law imposing a tax, duty or tariff, and all other revenues and reimbursements from a fine, fee, license, interest, rent, or Government service, and other Government collection or collections by a government for the Government's benefit. A person who receives monies pursuant to this section transmits the monies within seven days of receipt to the Division of Finance and Budget for deposit in the Revenue Fund except that:

     (a)  The Department of Agriculture, Land and Fisheries may retain monies received in the sale of supplies and equipment for gardening, livestock and poultry production, and in the marketing of all agricultural produce;

     (b)  The Sports Council may retain funds collected pursuant to Section 7.902(3), funds obtained through contributions and donations, and any interest thereon for funding operations, acquisition of equipment and the purchase of prizes;

     (c)  The Division of Finance and Budget retains in a Recycling Fund all monies collected pursuant to Title 9, Chapter 22, and promulgates regulations for the disbursement of Recycling Fund monies for the refund of beverage container deposits, and the maintenance of a recycling program;

     (d)  The Department of Commerce and Industry may retain monies received from the sale of books, postcards, handicrafts, and other tourist material for the purpose of acquiring additional inventory of such classes of items; and

     (e)  The Division of Finance and Budget retains in a Publication Fund the proceeds received from the sale of copies of the Kosrae State Code and the Selected Laws of the State of Kosrae, which proceeds are available for use by the Code Revision and Publication Commission to defray the costs of preparation and publication of the Selected Laws of the State of Kosrae;

     (f)  The Division of Finance and Budget retains in a Health Care Fund all monies collected from or on behalf of patients or clients or the Kosrae Department of the Health Services, including, but not limited to, reimbursements from any program of medical insurance and payments received by the State in connection with off-island referrals. Monies in the Health Care Fund are continually appropriated for expenditures by the Department of Health Services solely for the purchase of medical supplies, inclusive of pharmaceutical supplies, for use by the Department of Health Services, its clinics, dispensaries, programs and patients.

     (g)  The Division of Finance and Budget retains in a State Scholarship Grant and Loan Fund, all monies received from student loan repayments including any accrued interest.  Monies in the Scholarship Fund are available solely to the State Scholarship Board to be used for scholarship purposes only.

     (h)  The Department of Education retains in a Yearbook Revolving Fund all monies contributed, received and collected from yearbook sales by depositing that revenue into the fund using it strictly for the Kosrae High School yearbook project.

     Each department, office, and agency retaining monies pursuant to subsections (a) through (h) provides a written monthly report to the Governor and the Speaker on the status of the monies, including amounts received and expended; upon determining that a department, office, or agency has money in excess of the amount necessary for the purpose for which it is allowed to retain the funds, the Governor directs that said excess be turned over to the State Treasury.

     (i)  The Court may retain monies received as payment for published decisions, opinions, rules, or other documents issued by the Court.

     (2)  By regulation the Director of the Department of Agriculture, Land and Fisheries provides for the sale of materials pursuant to subsection (1)(a) so that:

     (a)  sale is at cost plus a reasonable charge for administrative costs; and

     (b)  there is a reasonable balance between the interests of assisting the public and fostering private retail sales.

     (3)  Funds and materials deriving from State Law 1-25 are available in implementing the use stated in subsection (l)(a).

Background
Subsection (1)(a) was amended by State Law 5-36 and further amended by State Law 7-1;  subsection (1)(b) was amended by State Law 5-37 and further amended by State Law 5-116; subsection (1)(c) was added by State Law 4-146 and amended by State Laws 5-59 and 5-198 and further amended by State Law 7-1; subsection (1)(d) was added by State Law 5-15; subsection (1) was amended in its entirety by State Law 5-108, which added subsection (1)(e) and the concluding language of the subsection, Subsection (1)(a) thru (1)(e) were amended by State Laws 5-201 and 6-9; Subsection (1) (f) added by State Law 6-9; Subsection (1)(g) added by State Law 6-87; Subsection (1)(h) [Court fine] added by State Law 6-108; Subsection 1(h) [Scholarship Fund] was added by State Law 7-21; Subsection (1)(c) amended by State Laws 6-121 and 6-146.  Former Subsection (1)(c) [airport trust fund] was repealed by State Law 7-91.  Subsection 2 was amended by State Law 7-1.  Subsection (1)(h) (Yearbook Revolving Fund) was added by State Law 7-134.

      Section 10.206.  The United States Grant Fund.
       The United States Grant Fund contains all monies appropriated or designated by the United States Government for the Government except United States federal agency program monies which are maintained and accounted for in a manner to be provided by regulation.  Monies in the United States Grant Fund are accounted for separately and in accordance with reporting requirements of the United States Government.

      Section 10.207.  The Foreign Assistance Fund.
       The Foreign Assistance Fund contains all monies not belonging to the Revenue Fund and received by the Government for its use from governments, governmental agencies or other external sources other than the United States Government.

     (a)  Foreign Assistance Fund monies, other than U.S. Federal Education Grant and Congress of the Federated States of Micronesia appropriations for educational purposes, shall be deposited into a certificate of deposit held in the name of the State as an Educational Trust Fund to be held and used for educational purposes as set forth herein

     (1)  The principal amount received shall be retained in the certificate of deposit until such time as it is authorized to be used.

     (2)  The interest shall be made available to the Director of Education, as the allottee of said interest, to use as merit/achievement awards for students at school activities such as the annual Education Week.  The Director of Education shall report to the Governor on all expenditures and to the Legislature upon request.

     (b)  Foreign Assistance Fund monies received for the Kosrae State Court shall be deposited into a checking account held in the name of the Kosrae State Court Foreign Assistance Fund to be held, used and distributed for the purposes designated in the grant award documents as set forth herein.

     (1)  The Chief Justice shall be authorized as allottee and shall provide the sole authorization necessary for payment of funds from the checking account.

     (2)  The funds in the checking account shall be available for use by the allottee, to use for the purposes specified in the grant award documents.  The Chief Justice shall report to the Governor and to the Legislature on all expenditures upon request.

Background
Subsection (a) added by State Law 6-164.  Subsection (b) added by State Law 6-181.

      Section 10.207.1.  Legislative Operations Fund.
       "Legislative operations monies" are monies that are appropriated or authorized for legislative operations.  A Legislative Operations Fund, administered by the Department of Administration and Finance, is created to hold legislative operations monies.  At the direction of the allottee of legislative operations monies, or other person designated pursuant to legislative rule, the Department of Administration and Finance transfers legislative operations monies from the Funds of the Treasury to the Legislative Operations Fund.

Background
Added by State Law 5-41.  Amended by State Law 7-1.

      Section 10.207.2.  Disbursement.
       Monies in the Legislative Operations Fund are available for withdrawal at the allottee's or designated person's discretion, upon request made to the Department of Administration and Finance.  The request identifies in writing the appropriation or authorization under which the disbursement is sought.  The Department of Administration and Finance does not withhold monies requested for disbursement pursuant to this section.

Background
Added by State Law 5-41.  Amended by State Law 7-1.

      Section 10.207.3.  Accounting.
       The allottee or person designated by legislative rule renders a quarterly statement of accounting for all public money withdrawn or expended from the Legislative Operations Fund.

Background
Added by State Law 5-41.

      Section 10.208.  Allotment.

     (1)  The Director of the Department of Administration and Finance has the power and duty to:

     (a)  make allotments

     (b)  make allotments of appropriated sums not later than ten days before the beginning of the fiscal year for which the appropriation is available or not more than thirty days after the effective date of an appropriation, whichever is later;

     (c)  make allotments at monthly, quarterly or other intervals, if sound financial management practices permit and require; and

     (d)  immediately notify an allottee in writing of an allotment and of the periodic nature of the allotment.

     (2)  Unless otherwise provided by law, the allottees of State funds are:

     (a)  The Governor, for the operations of the Executive;

     (b)  The Speaker, for operations of the Legislature; and

     (c)  The Chief Justice, for operations of the Judiciary.

     (3)  The Governor is the allottee of funds appropriated for a Government operation not stated in subsection 2 when an allottee is not provided by law.

Background
Subsection (1) was amended by State Law 7-1.

      Section 10.209.  Documentation.

     (1)  Public funds are not recorded as a Government obligation unless it is supported by documentary evidence of:

     (a)  a binding agreement for a purpose authorized by law, executed before the expiration of the period of availability of the funds for obligation;

     (b)  a valid loan agreement, showing the amount of the loan to be made and the terms and schedule of payment;

     (c)  a purchase order required by law, regulation, administrative directive or established administrative practice;

     (d)  an order issued pursuant to law authorizing purchases without advertising when necessitated by public exigency or for perishable subsistence supplies or within specific monetary limitations;

     (e)  a grant or subsidy payable:

     (1)  from an appropriation made for payment of, or contribution toward, sums required to be paid in specific amounts fixed by law, or in accordance with a formula prescribed by law; and

     (2)  pursuant to an agreement authorized by law, or plans approved in accordance with and authorized by law.

     (f)  a valid Government liability resulting from litigation or settlement;

     (g)  employment or services or expenses of travel made in accordance with law, or services performed by public utilities;

     (1)   The Department may not, by regulation or otherwise, routinely require the submission of a trip report or other narrative description of the acts undertaken by a traveler on State business in order to receive payment of travel expenses; or

     (h)  a valid Government liability payable by funds appropriated or otherwise lawfully available for that purpose.

Background
Subsection (1)(g)(1) added by State Law 7-150.

      Section 10.210.  Lapse.
       Funds limited for obligation to a definite period of time are not available for expenditure after the expiration of the period except for the liquidation of an amount obligated in accordance with Section [10.212].   Funds are not available for expenditure beyond the period provided by law.

      Section 10.211.  Disbursement.
       Unless otherwise provided by law, the following procedures control the administration and management of funds:

     (1)  Funds remain in the custody and control of the Director until they are disbursed by him in accordance with law.

     (2)  Funds are obligated as of the date the allottee executes the document required by Section 10.209.

     (3)  The Director disburses funds to liquidate valid obligation within thirty days of its becoming payable, as indicated by valid documentary evidence of the obligation and a valid claim for payment, if required by the document evidencing the obligation.

     (4)  Only the Director signs a check in disbursement of funds unless he designates in writing no more than two persons, any one of whom may sign a check on his behalf.  The Director transmits a copy of a designation to the Legislature.

      Section 10.212.  Unexpended funds.

     (1)  Unless otherwise provided by law, an appropriation which requires expenditure within a stated period becomes void to the extent that the appropriated sum is not obligated by the end of the period.  A sum is available for expenditure for the purpose of the appropriation only if a valid obligation for payment of the sum occurs before the expiration of the period and the Director receives a copy of a valid document evidencing the obligation, certified by the allottee.

     (2)  The Director may cancel an obligation not liquidated within one year following the date it became payable, as evidenced by a valid document, if the sole reason for the obligation's not being liquidated was the failure of the party to whom the obligation was due to submit a valid claim for payment as required by the terms of the document evidencing the obligation.

      Section 10.213.  Reporting.
       The Department of Administration and Finance gives to the Legislature its monthly or other periodic computer statement of the status of an appropriated sum, and upon request gives the Legislature other data regarding Government finances or an appropriated sum.

Background
Amended by State Law 7-1.

      Section 10.214.  Closing.
       When an unexpended balance remains to the credit of an appropriation after the purposes of the appropriation have been accomplished, after the period within which those purposes may be accomplished has ended, or after the reasons for the appropriation no longer exist, the Director, upon the receipt of a written statement from the allottee or person charged with the duty of expending the appropriation that all obligations have been fully paid and satisfied, may close out the appropriation account and transfer the unexpended balance to the appropriate fund of the Treasury.
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