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ACCOUNTING & FINANCIAL REPORTING

The Town will establish and maintain an accounting system according to the North Carolina Local Budget

and Fiscal Control Act, generally accepted accounting principles (GAAP), standard of the Governmental

Accounting Standards Board (GASB), and the Government Finance Officers Association (GFOA).

Comprehensive Annual Financial Report (CAFR):

The Town’s CAFR will be submitted to the GFOA Certification of Achievement for Excellence in Financial

Report Program. The financial report should be in conformity with GAAP, demonstrate compliance with

finance related legal and contractual provisions, disclose thoroughness and detail sufficiency, and minimize

ambiguities and potentials for misleading inference. The audit opinion will be included with the Town’s CAFR.

The Long-range forecast are updated post audit with new historical information produced by the annual audit

for the purposes of future forecasting analysis.

Internal Controls:

Financial systems will maintain internal controls to monitor revenues, expenditures, and program

performance on an ongoing basis.

Note: The Town maintains a number of internal policies defining procedural internal controls. The Town Manager

approves such policies.

Fiscal Monitoring:

Quarterly financial reports will present actual expenditures vs. budget on a monthly and cumulative basis.

Major revenue sources will be monitored on a monthly basis, noting the status of each revenue as compared

to budget.

Basis of Accounting:

For financial reporting purposes, the governmental funds use the modified accrual basis of accounting, under

which revenues considered to be both measurable and available for funding current appropriations are

recognized when earned. All other revenues are recognized when received in cash, except that revenues of

material amounts that have not been received at the normal time of receipt are accrued, and any revenues in

advance are deferred. Expenditures are recorded at the time liabilities are incurred except for accumulated

sick leave, which is treated as an expenditure when paid.

Proprietary funds use the accrual basis of accounting under which revenues are recognized when earned, and

expenses are recorded when liabilities are incurred.

Basis of Budgeting:

The Town prepares and adopts annually a budget using the modified accrual basis whereby revenues are

recognized when measurable and available, and expenditures are recognized when liability is incurred.

Expenditures may not legally exceed appropriations at the department al level for all annually budgeted

funds.