2012 Comprehensive Annual Financial Report - the City of Tukwila

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CITY OF TUKWILA: 2012 CAFRNOTES TO THE FINANCIAL STATEMENTSOther Revenue SourcesRevenue sources which are not considered to meet the measurable and available criteria for revenuerecognition include licenses and permits, fines and forfeitures, and other miscellaneous revenues sincethey are generally not measurable until received.Under the modified accrual basis, expenditures are recorded when the fund liability is incurred, exceptfor principal and interest on general long-term debt and vacation and sick pay which are recorded whenpaid.As a general rule the effect of interfund activity has been eliminated via the process of consolidationfrom the government-wide financial statements. Internal service fund and similar internal activity hasbeen eliminated from the government-wide statement of activities so expenses are not reported twice.Exceptions to this general rule are payments for interfund services provided and used, such as betweenthe City’s water, sewer, and surface water functions and various other functions of the City, which arenot eliminated in the process of consolidation. Elimination of these charges would distort the directcosts and program revenues reported for the various functions concerned. Amounts reported on thegovernment-wide statements as program revenues include, charges to customers or applicants forgoods, operating grants and contributions, and capital grants and contributions. General revenuesinclude all taxes. The accrual basis of accounting is followed in all proprietary funds. Under the accrualbasis of accounting, revenues are recognized when earned and expenses are recorded when incurred.All assets and liabilities are recorded in the fund.F. Budgets and Budgetary AccountingThe City of Tukwila budgets its funds in accordance with the Revised Code of Washington 35A.33. Incompliance with the code, biennial budgets are adopted for the general fund and special revenue funds.For governmental funds, there are no substantial differences between the budgetary basis andgenerally accepted accounting principles. Budgetary accounts are integrated in fund ledgers for allbudgeted funds, but the financial statements include budgetary comparisons for biennially budgetedgovernmental funds only. Budgets established for proprietary and fiduciary funds are “managementbudgets” and are not legally required to be reported and, as such, are not reported in the CAFR.The biennial appropriated budgets are adopted at the fund level and the budgets constitute the legalauthority for expenditures at that level. Subsidiary revenue and expenditure records are used tocompare the budgeted amounts with actual revenues and expenditures. As a management controldevice, the subsidiary ledgers monitor expenditures for individual functions and activities by objectclass. Any unexpended appropriation balances lapse at the end of the biennium.The City of Tukwila’s budget procedures are mandated by RCW 35A.33. The steps in the budgetprocess are as follows:1) Prior to November 1 on even numbered years, the Mayor submits a proposed budgetto the City Council. This budget is based on priorities established by the Council andestimates provided by the City departments during the preceding months, andbalanced with revenue estimates made by the Mayor.2) The City Council conducts public hearings on the proposed budget in November andDecember.3) The Council makes its adjustments to the proposed budget and adopts by ordinancea final balanced budget no later than December 31.56
CITY OF TUKWILA: 2012 CAFRNOTES TO THE FINANCIAL STATEMENTS4) The final operating budget as adopted is published and distributed within the firstmonth of the following year. Copies of the budget are made available to the public.The City Council must approve by ordinance any amendments that increase the total for the fund.Budget amounts presented in the basic financial statements include both the original amounts and thefinal amended budget as approved by the City Council.Expenditure CategoriesGeneral GovernmentPublic SafetyPhysical EnvironmentTransportationEconomic EnvironmentCulture and RecreationIncludes administration, finance, municipal court, attorney, andcity clerk activities.Includes all police and fire activities.Includes expenditures for the public works activities notchargeable to the enterprise funds.Includes all street and arterial street maintenance andconstruction.Reflects the planning and building inspection activities.Includes the parks and recreation activities.G. Assets, Liabilities and Fund EquityCash and Cash EquivalentsAll cash and cash equivalents, restricted and unrestricted, consists of cash balances in the checkingaccount, imprest funds, and the State Treasurer’s Local Government Investment Pool. All funds in thecare of other institutions are considered investments. Cash equivalents are short-term, highly liquidinvestments that are readily convertible to known amounts of cash.InvestmentsInvestments are held separately by each of the funds with interest earned directly for the benefit of eachfund. Investments are reported on the financial statements at fair value, cost or amortized cost,depending on the type and maturity length of each investment as required by GASB Statement 31.Washington State statutes provide for the City to hold investments consisting of obligations of theFederal Government, repurchase agreements, prime banker’s acceptances, and time certificates ofdeposit. Additional deposit and investment information is presented in Note 3.Due from Component UnitThe City has advanced funds to the Metropolitan Park District in the form of an operating loan. Theadvance earns interest at 2% per annum and will be repaid over a 10 year period with the first paymentdue June 1, 2013.Notes ReceivableNotes receivable in the enterprise funds consists of sewer connection fees due from customers to theutility.57
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2012 Comprehensive Annual Financial Report - the City of Tukwila

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