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Annual Report of the Comptroller, 1987
Volume 351, Page 36   View pdf image (33K)
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Workers' compensation claims are recognized as expenses in the period incurred. Annually, the consulting
actuary for the State Accident Fund estimates the liability for injuries incurred but not reported, the future
liability on claims before the commission, and permanent awards. These liabilities are reported as accrued
insurance losses. Beginning with fiscal year 1987, the liability for anticipated claims and claims expenses has
been discounted to present value. The liability was not discounted in prior years. The cumulative effect of this
accounting change, as of July 1, 1986, was $46,111,000.

Inventories:

Inventories of the Maryland Transportation Authority, Maryland State Lottery, State Use Industries
and the nonexpendable trust fund are stated at the lower of cost, using the first-in, first-cut method, or
market.

Enterprise Funds Reserved Retained Earnings:

Retained earnings of the Maryland Transportation Authority in the amount of $161,460,000 are reserved
for the payment of debt service related to the revenue bonds, major project maintenance, project requirements
and improvements, betterments, enlargements, or capital additions.

Retained earnings of the Maryland State Lottery in the amount of $9,759,000 are reserved for the
payment of unclaimed prizes.

Retained earnings of the Maryland Environmental Service in the the amount of $77,000 are reserved for
furtherance of program development activities.

Nonexpendable and Pension Trust Fund Balances:

Fund balances of nonexpendable and pension trust funds are restricted to the purpose of the fund.

D. Higher Education Fund:
Basis of Accounting:

The accounts of the higher education institutions are maintained and reported on the accrual basis of
accounting.

Fund Accounting:

The financial activities of the higher education institutions are recorded in funds which classify the
various transactions by specified activities or objectives. Fund balances of such funds are reported as
reserved for higher education programs and higher education general endowment and similar funds.

Unrestricted revenue is accounted for in the current unrestricted fund. Restricted gifts, grants,
endowment income and other restricted resources are accounted for in the current restricted fund, loan funds,
endowment and similar funds and plant funds. Revenue and expenses are reported in the current restricted
fund when financial resources are used for the current operating purposes for which they have been provided.
Transactions related to the various student loan programs operated by the educational institutions are
accounted for in loan funds. Resources dedicated to the acquisition and investment in property, plant and
equipment are accounted for in the plant funds. To the extent current funds are used to finance plant assets,
the amounts so provided are accounted for as (1) expenses, in the case of normal replacement of movable
equipment and library books; (2) mandatory transfers, in the case of required provisions for debt repayment
and interest, and equipment renewals and replacements; and (3) transfers of a nonmandatory nature in all
other cases.

General endowment funds are subject to the restrictions of gift instruments requiring the principal be
invested in perpetuity and the income only be utilized. Term endowment funds are similar to general
endowment funds except, upon the passage of a stated period of time or the occurrence of a particular event,
all or part of the principal may be expended. Quasi-endowment funds have been established for the same
purpose as general endowment funds, except any portion of quasi-endowment funds may be expended. The
balances of the fund groups which comprise the endowment and similar funds are general endowment
$29,921,000, term endowments $66,000, and quasi-endowments $5,251,000.

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Annual Report of the Comptroller, 1987
Volume 351, Page 36   View pdf image (33K)
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