By Jennifer Maguire, Director, Department of FISCal

In July 2023, the Governor signed Assembly Bill (AB) 127 into law, which establishes a date for the FI$Cal system to become the accounting book of record for statewide reconciliation, transaction processing and year-end close processes.

Specifically, AB 127 establishes July 1, 2026, as the date the State Controller’s Office (SCO) will transition the state’s accounting book of record to FI$Cal. AB 127 also establishes a December 31, 2023 deadline for SCO to provide FI$Cal with the necessary system and interface requirements and to work with FI$Cal to develop a timeline for completing the accounting book of record functionality.

You may recall that on June 25, 2021, FI$Cal successfully deployed the final technical functionality of the FI$Cal project. Implementation of this functionality made it possible for the FI$Cal system to interface with SCO’s legacy systems and capture the information required to generate a parallel Budgetary/Legal Basis Annual Report (BLBAR) and a parallel Annual Comprehensive Financial Report (ACFR), the state’s key financial reports. This functionality also allows the reporting balances to be validated by SCO, so they can ensure that the data captured in FI$Cal aligns with their legacy systems before transitioning the accounting book of record to FI$Cal and generating BLBAR and ACFR from FI$Cal data.

Currently, departments using the FI$Cal system must compare transactions recorded in both the FI$Cal system and in various SCO legacy systems, and then address any discrepancies that are found. Historically, departments have expressed concern with clean-up efforts and mid-year process changes related to this reconciliation process, which can cause delays in their ability to meet critical deadlines as part of financial reporting.

In response to these concerns, FI$Cal and SCO teams support departments through these reconciliation efforts. At FI$Cal, we offer online system training via the FI$Cal Learning Center and ongoing customer support with transacting in the system through the FI$Cal Service Center. We also call on our partner agencies to offer assistance when departments encounter issues with their budgeting, accounting, cash management or procurement activities as it relates to state policies and procedures.

As we move forward to address these challenges, we are proud to acknowledge that through this on-going support, we have seen departments continuously improve in closing their books and completing their statements using the FI$Cal system. By early September 2023, 74 percent of FI$Cal departments have submitted financial statements for fiscal year 2022-23, as compared to 67 percent for fiscal year 2021-22 and 47 percent for fiscal year 2020-21.

With the passage of AB 156 and the addition of the revised timeline set forth in AB 127, we continue to shift in the way the department approaches its work, moving from project milestones to ongoing enhancements and improvements. Once the FI$Cal system becomes the accounting book of record for the state of California, it will create efficiencies that will have positive downstream impacts on departments’ abilities to submit timely financial statements. We remain committed to our collaboration efforts with SCO in developing a schedule for this transition and look forward to becoming the official accounting book of record for the state of California.