A new employee I just entered is not showing up when I calculate a payroll. What did I miss?

You missed setting up the employee’s income tax information. Go to Add/Edit Employee Income tax Specs and enter both the Federal and State income tax specifications by clicking on the respective radio button. Note: this can be done while in the middle of the payroll run. Once completed, re-calculate the payroll and the new employee will show up.

North Carolina Fund Accounting | Enhanced Business Systems

Understanding Fund Accounting

Fund accounting is the financial accounting system used by non-profit organizations and government entities—ranging from small towns to massive state governments. Unlike corporate accounting, which is designed to measure profitability and maximize shareholder value, fund accounting is entirely focused on accountability.

When a state collects taxes, receives federal grants, or issues bonds, that money is usually legally restricted to specific purposes. Fund accounting ensures that these restrictions are honored by dividing the government’s finances into separate, self-balancing sets of accounts called “funds.”

The Three Main Categories of Funds

To understand how a state manages its money, it helps to look at the three primary buckets (fund types) established by the Governmental Accounting Standards Board (GASB):

Governmental Funds: These track the basic services of the government. This includes the General Fund (for everyday operating expenses like state police and administration), Special Revenue Funds (money restricted for specific purposes, like a gas tax meant only for roads), and Capital Projects Funds (money for building schools or bridges).
Proprietary Funds: These operate like traditional businesses where the state charges a fee for a service. Examples include state-run toll roads, public public utilities, or state lotteries.
Fiduciary Funds: These account for assets the government holds in trust for others. The most common example is the state employee pension system. The state manages this money, but it belongs to the employees, so it cannot be used to pave roads or fund public schools.

Why Fund Accounting is Crucial for North Carolina

For a state as large and economically diverse as North Carolina, North Carolina fund accounting is not just a best practice—it is a legal necessity. With an annual budget measured in the tens of billions of dollars, North Carolina relies on fund accounting to manage complex revenue streams and maintain public trust.

Here is why this system is so vital to the state:

1. Preventing the Commingling of Restricted Assets

North Carolina receives billions in federal funding for specific programs like Medicaid, disaster relief (such as recovery funds following major hurricanes), and education. Federal law mandates that these dollars be tracked down to the cent. Fund accounting creates “firewalls” between different revenue streams. If the state receives a federal grant to improve coastal resilience, a dedicated fund ensures those dollars cannot be accidentally spent on administrative salaries in Raleigh.

2. Ensuring Constitutional and Statutory Compliance

The North Carolina State Constitution and the General Assembly impose strict rules on how certain revenues can be spent. For example:

The Highway Trust Fund: Gas taxes and DMV fees in North Carolina are legally designated for transportation infrastructure. Fund accounting ensures this money is locked away from the General Fund and used strictly for maintaining interstates, paving state roads, and funding the Department of Transportation.
The NC Education Lottery: By law, lottery proceeds must go toward education (school construction, pre-K programs, and scholarships). A specific Special Revenue Fund is used to guarantee total transparency, allowing auditors and citizens to verify that every dollar of lottery profit actually made it to the education sector.

3. Transparent Budgeting and Financial Reporting

Every year, North Carolina must publish an Annual Comprehensive Financial Report (ACFR). This massive document relies entirely on fund accounting to show bond rating agencies, investors, and taxpayers exactly how healthy the state’s finances are. Because fund accounting segregates money into specific categories, rating agencies (like Moody’s or Standard & Poor’s) can accurately assess the state’s ability to pay back its debt. This transparency is a major reason why North Carolina has historically maintained a coveted AAA bond rating, which saves taxpayers millions in interest payments when the state borrows money for capital projects.

4. Demonstrating Stewardship to Taxpayers

At its core, a state government is a steward of public resources. Citizens want to know that their income taxes, sales taxes, and property taxes are being used appropriately. Fund accounting provides the granular tracking necessary to prove to the public that the government is operating efficiently, legally, and ethically. It shifts the financial question from “Did we make a profit?” to “Did we spend the public’s money exactly how we promised we would?”