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38c
The government-wide financial statements and the fund financial statements report the City’s operational and fiscal
accountability. Operational accountability refers to the reporting of efficiency and effectiveness of achieved operating
objectives using all resources available for that purpose, and whether additional objectives can be met in the foreseeable
future. Fiscal accountability is demonstrated through additional fund information detailing compliance with finance-related
legal and contractual provisions.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the
economic resources measurement focus
and the
accrual
basis of accounting
, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned
and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are
recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as
all eligibility requirements imposed by the provider have been met. All assets and liabilities (whether current or non-current)
associated with these activities are included in the government-wide financial statements, resulting in net position.
Governmental fund financial statements are reported using the
current financial resources measurement focus
and the
modified accrual basis of accounting
. Revenues are recognized when they are measurable and available, or when susceptible
to accrual. “Measurable” means the amount of the transaction can be determined and “available” means collectible within
the current period or soon enough thereafter to pay liabilities of the current period. The City considers sales taxes and state-
shared revenues and reimbursements to be available if they are collected within 90 days after year-end and ad valorem taxes
and profit distributions from the ABC Board to be available if collected within 60 days after year-end. Certain
intergovernmental revenues, licenses and permits, fines and forfeitures, and charges for current services are recognized when
cash is received, unless they are subject to deferral to a future period.
Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is
incurred. Exceptions to this general rule include accumulated unpaid sick pay which is not accrued and debt service on
general long-term debt and claims and judgments which are recognized when the liability is normally expected to be
liquidated with available financial resources.
Only current assets and current liabilities are generally included on the balance sheets of the governmental funds. Operating
statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in
net current position. Accordingly, the reported fund balance presents a summary of sources and uses of “available spendable
resources” during a period. Since the governmental fund statements are presented on a different measurement focus and
basis of accounting than the governmental activities column in the government-wide statements, a reconciliation is presented
on the page following each statement, which briefly explains the adjustments necessary to transform the fund-based financial
statements into the governmental activities column of the government-wide presentation.
Proprietary funds distinguish operating revenues and expenses from non-operating items. It is the City’s policy that
operating revenues and expenses generally result from providing services and producing and delivering goods in connection
with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Enterprise Funds and of the
government’s Internal Service Funds are charges to customers for sales and services. Operating expenses for Enterprise
Funds and Internal Service Funds include the cost of sales and services, administrative expenses, claims payments, and
depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues
and expenses.
The government reports the following major governmental funds:
General Fund
- The General Fund is the primary operating fund of the City. It is used to account for all financial resources
of the general government, except those required to be accounted for in another fund.
Debt Service Fund
- The Debt Service Fund is used to account for and report financial resources that are restricted,
committed or assigned to the accumulation of resources for, and the payment of, general long-term debt principal, interest
and related costs.