03-23-15 Fiscal Affairs Committee Meeting

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CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 1 - Summary of Significant Accounting Policies (continued) Assets, liabilities deferred outflows/inflows of resources and net position/fund balance (continued 10.Fund Balance In compliance with GASB No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, in the fund financial statements, governmental funds report the following classifications of fund balance: Nonspendable – includes amounts that are not in spendable form or are required to be maintained intact. As such, the inventory items have been properly classified in the Governmental Funds Balance Sheet. Restricted – includes amounts that can be spent only for specific purposes because of local, state or federal laws, or externally imposed conditions by grantors or creditors. Restrictions for retirement of fund indebtedness and other state restrictions have been properly classified in the Governmental Funds Balance Sheet. Committed – includes amounts that can only be used for specific purposes. Fund balances are committed by formal action of the City Council. Amendments or modifications to the committed fund balance must be approved by formal action of the City Council. Formal action shall be by resolution or majority vote. Committed fund balance will not lapse at year end. Commitments for Construction Projects and Health initiatives have been properly classified in the Governmental Funds Balance Sheet. Assigned – includes amounts that the City intends to use for a specific purpose, but do not meet the definition of restricted or committed fund balance. Under City Council’s adopted policy, amounts may be assigned by the City Manager under the authorization of the Fiscal Affairs Committee. Unassigned – includes amounts that have not been assigned to other funds or restricted, committed or assigned to a specific purpose within the General Fund. The General Fund is the only fund that is allowed to have a positive amount reported in this category. For the purposes of fund balance classification, expenditures incurred in the unrestricted fund balances shall be reduced first from the committed fund balance, then from the assigned fund balance and lastly, the unassigned fund balance. The City strives to maintain a minimum reserve balance of 90 to 120 days for the General Fund and Utility Fund, and 60 to 90 days of operating expenditures in all other funds as outlined in the City’s Financial Management Policies as adopted by City Council by resolution. 11.Revenues and Expenditures/Expenses Revenues and Expenditures/Expenses Revenues and Expenditures/Expenses 3/5/2015 Revenues and Expenditures/Expenses Revenues and Expenditures/Expenses Draft In the fund financial statements revenues for governmental funds are recorded when they are In the fund financial statements revenues for goveIn the fund financial statements revenues for goveIn the fund financial statements revenues for goveIn the fund financial statements revenues for governmental funds are recorded when they are rnmental funds are recorded when they are determined to be both measurable and available. Generally, tax revenues, fees and non-tax determined to be both measurable and availabldetermined to be both measurable and availabldetermined to be both measurable and availabldetermined to be both measurable and available. Generally, tax revenues, fees and non-tax e. Generally, tax revenues, fees and non-tax revenues are recognized when received. Grants from other governments are recognized when qualifying expenditures are incurred. Expenditures for governmental funds are recorded when the related liability is incurred. Revenues and expenses in the Government-Wide Statement of Activities are recognized in essentially the same manner as used in commercial accounting. 31