Accounting Policies and Local Government Accounting Systems

Cash and cash equivalents

Definition

cash as cash and the balance of deposits in the bank which can be used at any time to finance highly
liquid local government activities that are ready to be translated / disbursed into cash and free from
the risk of significant changes in value.

PSAP Number 1 concerning Presentation of Financial Statements, defines cash equivalents as short-
term, highly liquid investments that are readily translated into cash and free from the risk of
significant changes in value.

Cash equivalents in local governments are intended to meet short-term cash needs or for other
purposes. To be eligible for cash equivalents, short-term investments must be immediately
converted into cash in a known amount without risk of a significant change in value. Therefore, an
investment is called cash equivalent if the investment has a maturity of less than 3 months from the
date of acquisition.

Classification

Cash and cash equivalents in local governments include cash controlled, managed and under the
responsibility of the regional general treasurer (BUD) and cash controlled, managed and under
responsibility other than the regional general treasurer, for example the expenditure treasurer. Cash
and cash equivalents controlled by and under the responsibility of the regional general treasurer
consist of:

a. regional cash account balance, namely the balance of the accounts at the bank determined
by the regional head to accommodate revenues and expenses.
b. cash equivalents, among others in the form of government bonds (SUN) / bonds and
deposits less than 3 months, which are managed by the regional general treasurer.
RELATED PARTIES

1. Regional Work Units (SKPD)

The parties involved in the cash and cash equivalent accounting system at SKPD include the SKPD
Financial Administration Officer (PPKSKPD), SKPD Receipt Treasurer, SKPD Expenditure Treasurer and
Budget User / Budget User Proxy (PA / KPA).

a. SKPD Financial Administration Officer (PPK-SKPD)

In the cash and cash equivalent accounting system, PPK-SKPD carries out the SKPD
Accounting Function, having the following duties:
1) record transactions / events of cash and cash equivalents based on valid evidence of
transactions to the General Journal Book
2) posting cash and cash equivalents transactions / events into the General Ledger of
each account (object details)
3) making financial reports, which consist of Budget Realization Reports (LRA),
Operational Reports (LO), Changes in Equity Reports (LPE), Balance Sheet and Notes
on Financial Statements (CaLK).
b. Treasurer for Acceptance of SKPD
In the cash and cash equivalents accounting system, the SKPD Receipt Treasurer has the task
of preparing and submitting documents for transactions related to the process of
implementing the cash and cash equivalents accounting system to PPK-SKPD.
c. Expenditure Treasurer of SKPD
In the cash and cash equivalents accounting system, the SKPD Expenditure Treasurer has the
task of preparing and submitting documents for transactions related to the process of
implementing the Cash and Cash Equivalent accounting system to PPK-SKPD.
d. Budget User (PA)
In the Cash and Cash Equivalent accounting system, Budget Users have the task of:
1) signing the SKPD financial report before submitting it in the merger / consolidation
process carried out by the PPKD Accounting Function at PPKD (PPK-PPKD)
2) signing a statement of the responsibility of the Budget User.

2. Regional Financial Management Officer (PPKD)

The parties involved in the cash and cash equivalent accounting system at PPKD include PPKD
Financial Administration Officers (PPKPPKD), PPKD Receipts Treasurers, PPKD Expenditure Treasurers
and PPKDs.

a. PPKD Financial Administration Officer (PPK-PPKD)

In the cash and cash equivalent accounting system, PPK-PPKD carries out the PPKD
accounting function, having the following duties:
1) record cash and cash equivalents transactions / events based on valid evidence of
transactions to the General Journal Book;
2) posting cash and cash equivalents transactions / events in the General Ledger of each
account (details of objects);
 3) prepare financial reports, consisting of Budget Realization Reports (LRA), Operational
Reports (LO), SAL Change Reports (LPSAL), Changes in Equity Reports (LPE), Cash Flow
Statements (LAK), Balance Sheet and Notes on Financial Statements ( CaLK).
b. PPKD Receipt Treasurer
In the cash and cash equivalent accounting system, the PPKD Receipt Treasurer has the task
of preparing and submitting documents for transactions related to the process of
implementing the cash and cash equivalent accounting system to the PPKD accounting
function (PPK-PPKD).
c. PPKD Expenditure Treasurer
In the cash and cash equivalents accounting system, the PPKD Expenditure Treasurer has the
task of preparing and submitting documents for transactions related to the process of
implementing the cash and cash equivalent accounting system to the PPKD accounting
function (PPK-PPKD). In the cash and cash equivalents accounting system, PPKD has the
following duties:
1) signing the PPKD financial report before submitting it in the merger / consolidation
process carried out by the PPKD Accounting Function (PPK-PPKD)
2) signed a statement of PPKD responsibility.