10-25-04 Regular Meeting of La Porte Audit Committee

Browse Search

CITY OF LA PORTE, TEXAS Notes to the Financial Statements - Continued September 30, 2004 1. Summary of significant accounting policies - Continued Governmental funds reported deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Revenue recognition is also deferred in connection with resources that have been received, but not yet earned in the proprietary funds. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental and proprietary funds were as follows: Unavailable Unearned General Debt Service Proprietary Total Delinquent property taxes receivable 566,070 132,846 $ - $ 698,916 Charges for services and customer deposits 2,307,631 - 42,637 2,350,268 Total deferred / unearned revenue $ 2,873,701 $ 132,846 $ 42,637 $ 3,049,184 I. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenditures, and expenses during the reporting period. Actual results may differ from those estimates. J. Indirect Expense Allocations It is the policy of the City not to allocate indirect expenses to various functions in the Government -wide Statement of Activities. K. Restricted Assets The City applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. L. Inventories Inventories consist of material and supplies and are valued at cost (first -in, first -out). Inventories for all funds consist of expendable supplies held for consumption and the cost thereof is recorded as an expenditure at the time individual inventory items are issued. Reported inventories in the Governmental Funds are offset by a fund balance reserve, which indicates they are unavailable for appropriation even though they are a component of net current assets. M. Interfund Transactions Transactions Between Funds Transactions between funds that would be treated as revenues, expenditures or expenses if they involved organizations external to the governmental unit are accounted for as revenues, expenditures or expenses in the funds involved. Transactions, which constitute reimbursement to a fund for expenditures or expenses initially made from that fund,.which are properly attributable to another fund, are recorded as expenditures or expenses in the reimbursing fund and as reductions of the expenditure or expense in the fund that is reimbursed. Nonrecurring or nonroutine transfers of equity between funds are reported as additions to, or reductions of, the fund balance of Governmental Funds. Transfers of equity to Proprietary Funds are treated as contributed capital and such transfers from Proprietary Funds are reported as reductions of retained earnings or contributed capital, as is appropriate in the circumstances. All other legally authorized transfers are treated as operating transfers and are included in the results of operations of both Governmental and Proprietary Funds. 50