Wednesday, May 4, 2016

Parsing KRS 424.220 - Financial Statements 0.05

This is the fifth part of a series following after part four:

 Parsing KRS 424.220 - Financial Statements 0.04

"The officer shall procure and include in or attach to the financial statement, as a part thereof, a certificate from the cashier or other proper officer of the banks in which the funds are or have been deposited during the past year, showing the balance, if any, of funds to the credit of the officer making the statement." KRS 424.220(5)
 Funds collected go into a bank and funds expended come out. Simple.

The bank balance at the end of a reporting period can be compared to the balance shown on the Financial Statement from the prior period, and the net change can be calculated. Simple.

All funds collected or received from any source, including loan proceeds, are deposited in the bank and reported on the Financial Statement. The amount of the bank deposits should equal the funds reported as received.

The disbursements shown on the Financial Statement include all disbursements except for payments to vendors less than $1,000. This is the 21st Century. $1000 is nothing.

The plausibility test

If the net change in the bank balance from the end of one reporting period to the next is substantially different from the net difference between funds received and funds disbursed shown in the Financial Statement, the matter warrants closer examination.

Who are those small vendors that were not reported?


Tom Fox, J. D.
Southern Specialty Law Publishing Company
Louisville, Kentucky

A division of Accountable Kentucky Incorporated
a Kentucky Non-profit corporation

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This is not legal advice and I am not a lawyer.

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