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Finance

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What does a Department of Finance do?

By Ken Black
Updated: May 17, 2024

The role of a department of finance, as it applies to state government, varies depending on the state in question. Finance is a broad area covering many different aspects of monetary policy and various states see the duties assigned to that division somewhat differently. Generally, a state department of finance may be responsible for things such as tax collections, state accounting services and oversight of private financial institutions.

In some cases, the department of finance may be combined with the duties of another office, department or division. For example, in the state of Georgia, the department is called banking and finance. In New York, it is referred to as the department of taxation and finance. In Arkansas, it is given the moniker of finance and administration.

One of the key duties many departments of finance perform is to provide an oversight of private financial institutions. This is true in the case of both Georgia and Idaho, both of which have regulatory oversight as their primary missions. In this capacity, these departments take a careful look at the laws of the state, and then provide audits and possibly even investigative services to ensure those laws are being followed at banks, credit unions and other institutions that deal with money and investing. This provides a safeguard for state residents against unscrupulous business practices.

Occasionally, a department of finance may also be responsible for tax collections, which is the case in the state of New York, for example. There, the state collects all state taxes, such as sales tax, income tax, fuel taxes and any other taxes levied. The department then deposits those funds into the appropriate accounts, making sure accurate records are kept. The department of finance may also be responsible for issuing taxpayer refunds in the event of an overpayment.

Sometimes, the department of finance of a state may provide some accounting services for the state. This includes keeping track of all major business transactions for each department, or at least ensuring that those departments stay within their allotted budget for the year. Providing accounting services should not be confused with providing auditing services, which should be handled by a different state department. Rather than simply reviewing what has been done, as is the case with an audit, the department actually is the one doing the work and likely could be subject to an audit.

In addition to these responsibilities, some departments may have various other jobs as well. In California, the department of finance serves as an adviser to the governor. In Delaware, it is also responsible for making sure the lottery is operating properly and efficiently.

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