FY2023 Adopted Operating and Capital Budget

FY2023 Adopted Budget Budget and Finance Policy Basis of Budgeting Governmental Funds

Budgets for governmental funds are prepared usin g the modified accrua l basis which combines the cash method and full accrual method o f accounting. The modified accrual basis is widely used by government agencies to focus on curren t year obligations an d to confir m that current revenues are sufficient to cover th e obligations. However , this method is at variance ZLWK *HQHUDOO\ $FFHSWHG $FFRXQWLQJ 3ULQFLSOHV *$$3 7KH &RXQW\¶ s budgetar y basis differs from GAAP as follows: x Encumbrances o Budgetary Basis recorded as expenditures in th e year the funds are obligated and are the n backed out fro m expenditures in the year the funds are paid o GAAP ± classified as a reservatio n of fund balance x Principal payments on debt o Budgetary Basis ± budgeted and recorded as expenditure s o GAAP ± recorded as a reduction to liabilitie s x Inventories and capital assets o Budgetary Basis ± budgeted and recorded as expenditures at the time of purchase o GAAP ± recorded as an increas e to assets at the time of purchase x 7KH XVH RI SULRU \HDUV¶ IXQG EDODQFH o Budgetary Basis budgeted as revenu e (other financing source/budgeted use of fund balance) o GAAP ± LV QRW UHFRUGHG DQG LV XOWLPDWHO\ D FRPSRQHQW RI ³QHW FKDQJH LQ IXQG EDODQFHV´ x Depreciatio n Also there is one difference between the figures presente d in this document a s actual and the actual ³EXGJHWDU\ EDVLV´ figures reported i n the Comprehensive Annual Financial Report. I n WKH &RXQW\¶V financial system, all encumbrance s at year end are re appropriated and expensed in the following year , when th e item/service i s received. However , budgetar y basis has alread y recorde d these encumbrances in th e prior year. Therefore , these transactions are backe d out whe n reporting the actual expenditures for budgetary basis in th e budget documents. Proprietary Funds Budgets for proprietar y fund s (enterprise and internal service ) are prepared in compliance wit h GAAP, using the ful l accrual basis , excep t fo r capital asset purchases an d th e use o f prior years ¶ IXQG EDODQFH . Whe n reporting actuals , the budge t documents will reflect full accrual basis with no exceptions. x Capital assets o Budgetary Basis ± budgeted as expenditure s o GAAP ± recorded as an increas e to assets at the time of purchase x Th e u VH RI SULRU \HDUV¶ IXQG EDODQFH o Budgetary Basis not appropriated o GAAP ± recorded as an expense for

o Budgetary Basis budgeted as revenue (other financin g source/budgeted us e of fun d balance) o GAAP ± is not recorded and LV XOWLPDWHO\ D FRPSRQHQW RI ³QHW FKDQJH LQ IXQG EDODQFHV´

Revenue Recognition Revenues are recognize d as soon as they are bot h measurabl e an d available. Revenues are considere d to b e availabl e when they are collectible withi n th e current period or soo n enoug h thereafte r t o pay liabilities of the current period. For this purpose, th e government considers revenues to be available i f they are collecte d within 3 1 days of th e end of the curren t fiscal period.

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