2012 Comprehensive Annual Financial Report - the City of Tukwila

CITY OF TUKWILA: 2012 CAFRMANAGEMENT’S DISCUSSION AND ANALYSISOverview of the Financial StatementsThe City’s basic financial statements are presented in three parts:1) Government-wide financial statements2) Fund financial statements3) Notes to the financial statementsOther supplementary information, in addition to the basic financial statements, is also contained inthis report. This section of the Management’s Discussion and Analysis is intended to introduce andexplain the basic financial statements.Government-wide Financial StatementsThe government-wide financial statements are designed to be corporate-like in that all governmentaland business-type activities are consolidated into columns which add to a total for the City. Thefocus of the Statement of Net Position is designed to be similar to bottom-line results for the City andits governmental and business-type activities. This statement combines and consolidatesgovernmental funds’ current financial resources (short-term spendable resources) with capital assetsand long-term obligations. Over time, increases or decreases in net assets may be one indicator ofimprovement or deterioration in the City’s overall financial health.The Statement of Activities is focused on both the gross and net cost of various functions, includingboth governmental and business-type activities, which are supported by the City’s general tax andother revenues. This is intended to summarize and simplify the user’s analysis of the cost of variousgovernmental services and/or subsidy to various business-type activities. The revenue generated bythe specific functions (charges for services, grants, and contributions) is compared to the expensesfor those functions to show how much each function either supports itself or relies on taxes and othergeneral funding sources for support. All activity on this statement is reported on the accrual basis ofaccounting, requiring that revenues are reported when they are earned and expenses are reportedwhen they are incurred, regardless of when cash is received or disbursed.Governmental activities of the City include general government (executive, finance, legal, humanresources, court), public safety, physical environment, economic environment, transportation, mentaland physical health, and culture and recreation. The City’s business-type activities include a waterand sanitary sewer utility, surface water utility, and a municipal golf course. Governmental activitiesare primarily supported by taxes, charges for services, and grants while business-type activities areself-supporting through user fees and charges.Fund Financial StatementsThe fund financial statements are the traditional reporting format for governments. A fund is a fiscaland accounting entity with a self-balancing set of accounts used to account for specific activities ormeet certain objectives. While the government-wide statements present the City’s finances basedon the type of activity (general government vs. business type), the Fund Financial Statements arepresented by fund type, such as the general fund, special revenue funds and proprietary funds, withthe focus on major funds.Governmental FundsGovernmental funds are used to account for essentially the same functions that are reported asgovernmental activities in the government-wide financial statements. The governmental major fundpresentation is used, utilizing the “sources and uses of resources” basis. This is the manner in whichthe budget is typically developed. The basis of accounting is different between the governmentalfund statements and the government-wide financial statements. The governmental fund statements16