What happens if a municipality does not maintain a general ledger accounting system for the current fund?

When a municipality fails to maintain a general ledger accounting system for its current fund, it affects its eligibility for local examination of its budget. A general ledger is crucial in ensuring accurate financial reporting and accountability. It serves as the record for all financial transactions, which are necessary for proper fiscal oversight. Without a functioning system, it becomes challenging to provide the transparency and reliability needed for budget reviews.

Local examination processes require municipalities to demonstrate sound fiscal practices, including maintaining accurate and comprehensive accounting records. If a municipality lacks a general ledger, it raises concerns about its financial management and can lead to a determination that the municipality is ineligible for local examination. This can hinder the ability to scrutinize the budget effectively, ultimately impacting the municipality's financial health and public trust.