2012 Comprehensive Annual Financial Report - the City of Tukwila

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CITY OF TUKWILA: 2012 CAFRNOTES TO THE FINANCIAL STATEMENTSDiscretely presented Component UnitThe Metropolitan Park District (District) was formed on August 16, 2011. The City Council of the City ofTukwila is authorized pursuant to RCW 35.61.050 to serve in an ex-officio capacity as the Board ofMetropolitan Park Commissioners. Through this shared governance, it is a component unit of the City.The Metropolitan Park District provides a benefit to the citizens of Tukwila serving the community as amultigenerational facility that provides health and recreation benefits to all ages. Component units arelegally separate entities but so closely related to the City through shared governance that theirexclusion would cause the City’s financials to be misleading or incomplete.The District is a component unit of the City of Tukwila, which operates parks and recreation programswithin the City and the District. Financial data for the District is included in the City’s financialstatements by discrete presentation. Requests for the District’s separately issued financial statementsmay be addressed to the Finance Director, City of Tukwila, 6200 Southcenter Blvd., Tukwila, WA98188-2544.B. Basis of PresentationThe City’s basic financial statements consist of government-wide statements, including a statement ofnet position and a statement of activities, and fund financial statements which provide a more detailedlevel of financial information.Government-wide Financial StatementsThe statement of net position and the statement of activities display information about the City and itscomponent unit. These statements include the financial activities of the government, except for fiduciaryfunds. The activity of the internal service funds is eliminated to avoid “doubling up” revenues andexpenses.The statements distinguish between governmental activities and business-type activities.The statement of net position presents the financial condition of the governmental and business-typeactivities of the City at year-end. The statement of activities presents a comparison between directexpenses and program activity of the City. Direct expenses are those specifically associated with aservice, program or department and therefore clearly identifiable to a particular function. Indirect costsare included in the program expense reported for individual functions and activities.The statement of activities reports the expenses of a given function offset by program revenues directlyconnected with the functional program. A function is an assembly of similar activities and may includeportions of a fund or summarize more than one fund to capture the expenses and program revenuesassociated with a distinct functional activity. Program revenues include charges paid by the recipient ofthe goods or services offered by the program, grants and contributions that are restricted to meeting theoperational or capital requirements of a particular program and interest earned on grants that isrequired to be used to support a particular program.For identifying to which function program revenue pertains, the determining factor for charges forservices is which function generates the revenue. For grants and contributions, the determining factor isto which functions the revenues are restricted.Revenues which are not classified as program revenues are presented as general revenues of the City,and certain limited exceptions. The comparison of direct expenses with program revenues identifies theextent to which each business segment or governmental function is self-financing or draws from thegeneral revenues of the City.52
CITY OF TUKWILA: 2012 CAFRNOTES TO THE FINANCIAL STATEMENTSFund Financial StatementsDuring the year, the City segregates transactions related to certain City functions or activities inseparate funds in order to aid financial management and to demonstrate legal compliance. Fundfinancial statements are designed to present financial information of the City at this more detailed level.The focus of governmental and enterprise fund financial statements is on major funds. Each major fundis presented in a separate column. Non-major funds are aggregated and presented in a single column.Internal service funds are combined and the totals are presented in a single column on the face of theproprietary fund statements. Fiduciary funds are reported by type. While fiduciary funds are excludedfrom the government-wide statements, they are included in the fund financial statements.C. Fund AccountingThe accounts of the City are organized on the basis of funds each of which is considered a separateaccounting entity. Each fund is accounted for with a separate set of self-balancing accounts thatcomprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. TheCity’s resources are allocated to and accounted for in individual funds according to the purpose forwhich they are spent and how they are controlled. There are three categories of funds: governmental,proprietary and fiduciary.Governmental FundsAll governmental funds are accounted for on a “flow of current financial resources” measurement focus.This means only current assets and current liabilities are generally included on their balance sheets.Their reported fund balance (net current assets) is considered a measure of “available spendableresources.” Governmental fund operating statements focus on measuring changes in financial position,rather than net income; they present increases (revenues and other financing sources) and decreases(expenditures and other financing uses) in net current assets. The following are the City’s majorgovernmental funds:The General Fund is the general operating fund of the City. It accounts for allfinancial resources and transactions except those required to be accounted for inanother fund.The Arterial Street Fund, a special revenue fund, is established in accordance withRCW 82.36.020 for the administration of the State-levied motor vehicle half-centgasoline tax distributed to Tukwila.The Land Acquisition, Recreation and Park Development Fund is used to account forfinancial resources to be used for the acquisition of land, development of land, andconstruction of park facilities.The other governmental funds of the City, which are Special Revenue Funds, account for the proceedsof specific revenue sources that are segregated to ensure that expenditures are made exclusively forqualified purposes.Proprietary FundsProprietary Funds are accounted for on a “flow of economic resources” measurement focus. Thismeans all assets and all liabilities (whether current or noncurrent) associated with their activity areincluded on their balance sheets. Proprietary fund operating statements present increases (revenuesand gains) and decreases (expenses and losses) in net total assets. Proprietary funds measurementfocus is based upon determination of net income, financial position, and cash flows.53
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2012 Comprehensive Annual Financial Report - the City of Tukwila

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