City of La Porte Operating Budget 1996-1997

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The City Manager must approve changes within a department, which is the legal level of control. City Council approves changes between departments as well as amends the budget during the year as may be required. The legal level for expenditure (expense) budget control is the Fund level. Each Department Director is responsible for the budget in their respective departments. Formal budgetary integration is employed as a management control device during the year for the General Fund and Enterprise Funds. ' Formal budgetary integration is not employed for the Debt Service and Capital Projects Funds because effective budgetary control is alternatively achieved through bond indenture provisions and legally binding construction contracts, respectively. FUND ACCOUNTING In accordance with Generally Accepted Accounting Principles (GAAP) , the accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. Government resources are allocated to and accounted for in individual funds based on the purpose for which they are to be spent and the means by which spending activities are controlled. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. It divides our reporting responsibility into several functional types as well as classifications. A brief explanation will facilitate your usage of this document. The minimum number of funds are maintained consistent with legal and managerial requirements. Governmental fund types are used to account for the city's general government activities and include the General, Debt Service and Capital Project Funds. Governmental fund types use the flow of current financial resources measurement focus and the modified accrual basis of accounting. Proprietary type funds are used to account for operations that provide services to other City departments or that are operated in a manner similar to private business and include both Enterprise and-Internal Service Funds. Additional information on Fund types is available in the Organization of Funds section on page 1-19. ACCOUNTING CODE STRUCTURE Our Accounting Code Structure is designed to function with a 14-digit code which is further divided into 5 sections. A Fund is a speCific purpose classification, with a self-balancing set of accounts. A Department is an organization~1 or functional unit and may cross fund lines. Divisions are sub-units of a department. Activity denotes a distinguishable service performed by an organizational component. The Object is the final detail identification within the Account Number. Departments and divisions are not specified on the Revenue side; revenues are grouped by type instead of Activity and object is the final detail identification. 1-16 I I I I I I I I I I I I I I I I I I I