2012 Comprehensive Annual Financial Report - the City of Tukwila

CITY OF TUKWILA: 2012 CAFRNOTES TO THE FINANCIAL STATEMENTSRisk Management and Risk RetentionIt is the City of Tukwila’s policy to self-insure for unemployment benefits because of the insignificantliability. Medical and dental self-insurance coverage is also provided for employees. All buildings, Cityequipment, and City vehicles are insured by carriers for property coverage at replacement value.The City of Tukwila is a member of the Washington Cities Insurance Authority (WCIA) as of January 1,1984. The WCIA is an organization of Washington municipal entities numbering 153 as of December31, 2012. WCIA provides pooled self-insurance coverage for general liability, vehicle liability, falsearrest, and errors and omissions. See Note 15 for additional information on risk management.Operating Revenues and ExpensesOperating revenues are generated directly from the primary activity of the proprietary funds. For theCity, these revenues are charges for services for the use of the golf course and the internal use ofvehicles, computers and facilities. Operating expenses are necessary costs incurred to provide thegood or service that are the primary activity of each fund. All other revenues and expenses areclassified as non-operating including investment earnings, interest expense and the gain or loss on thedisposition of capital assets.Contributions of CapitalContributions of capital in proprietary fund financial statement arise from outside contributions of capitalassets, for example, developers, and grants or outside contributions of resources restricted to capitalacquisition and construction.Interfund ActivityExchange transactions between funds are reported as revenues in the seller funds and asexpenditures/expenses in the purchaser funds. On the government-wide statement of activities, theexchange transactions between the internal service funds and the user funds are eliminated. Flows ofcash or goods from one fund to another without a requirement for repayment are reported as interfundtransfers. Interfund transfers are reported as other financing sources/uses in governmental funds andafter non-operating revenues/expenses section in proprietary funds.Transfers between governmental and business-type activities on the government-wide statement ofactivities are reported separately after general revenues. Transfers between funds reported in thegovernmental activities column are eliminated. Transfers between funds reported in the business typeactivities column are eliminated.EstimatesThe preparation of the financial statements in conformity with GAAP requires management to makeestimates and assumptions that affect the amounts reported in the financial statements andaccompanying notes. Actual results may differ from those estimates.H. Changes in Accounting StandardsThe City implemented the following Government Accounting Standards Board (GASB) statement in2012:GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained inPre-November 30, 1989 FASB and AICPA Pronouncements. The objective of this Statement is toincorporate into the GASB’s authoritative literature certain accounting and financial reporting guidance63