Internal Control Structure
The Statewide Accounting and Reporting System (STARS) is the State's
budgetary-basis operating accounting system. This double-entry system, installed in
1981-82, processes cash and budgetary transactions and maintains records for all
budgeted funds and some unbudgeted funds. The State's higher education institutions
and most of the enterprise entities maintain separate accrual-basis accounting
systems.
An automated system in the Comptroller General's Office designed to allow
reporting in accordance with generally accepted accounting principles (GAAP)
converts budgetary-basis STARS data into the format presented in this report. State
agencies that use STARS complete forms at year-end to adjust the budgetary-basis
balances to conform with GAAP. The Comptroller General's Office enters data into
the GAAP reporting system from these forms as well as from audited financial
statements for the higher education institutions, component units, and most State
enterprise entities.
The State's internal control structure provides reasonable, but not absolute,
assurance that:
- Assets are safeguarded against loss from unauthorized use or
disposition,
- Transactions are executed in accordance with management's
authorization, and
- Transactions are recorded properly to permit the preparation of general
purpose financial statements in accordance with generally accepted
accounting principles.
The concept of reasonable assurance recognizes that the cost of a control
should not exceed the resulting benefits.