Page 157 - Haltom City Budget FY21

CITY OF HALTOM CITY aNNUAL BUDGET, FY2021 SUPPLEMENTAL INFORMATION

CITY OF HALTOM CITY
ACCOUNTING SYSTEM AND BUDGETARY CONTROL

Haltom City’s accounting and financial reporting system follows the principles established by the Gov-
ernmental Accounting Standards Board. An annual audit of the City’s system is performed by an in-
dependent public accounting firm with the subsequent issuance of a comprehensive annual financial
report.

The accounts of the City are organized on the basis of funds or accounts groups, each of which is
considered to be a separate accounting entity. The operations of each fund are accounted for with a
separate set of self-balancing accounts, which comprise its assets, liabilities, retained earnings/fund
balance, revenues and expenses/expenditures. The various funds are grouped by type in the finan-
cial statements. The City’s accounting records for the Water and Sewer Fund and the Drainage Fund
are maintained on an accrual basis whereby revenues and expenses are recorded in the accounting
period in which they are earned or incurred. The remainder of the City’s funds are maintained on the
modified accrual basis whereby revenue is recorded when measurable and available and expendi-
tures are recorded when the liability is incurred except for interest on general long-term debt.

One of the objectives of the City’s financial accounting system is to provide internal controls. Internal
controls are designed to provide reasonable, but not absolute, assurance regarding the safeguarding
of assets against loss from unauthorized use or disposition and the reliability of financial records for
preparing financial statements and maintaining accountability for assets. The concept of reasonable
assurance recognizes that the cost of a control should not exceed the benefits likely to be derived and
the evaluation of costs and benefits requires estimates and judgment by management.

Budgetary Control is accomplished by the adoption of an annual operating budget for various funds
of the City. Detail control is accomplished by maintaining appropriations and expended balances by
line item account within each operating department within each budgeted fund. Purchase orders or
payments that would result in an over expenditure of a line item account are not processed without the
approval of the Finance Director or the City Manager.

BASIS OF BUDGETING

The financial data throughout this document, for all funds, is presented by using a cash basis of
budgeting. This means that expenditures and revenues are measured and forecasted on an inflow,
outflow basis for the 12 months that comprise the budget year. Capital outlay and debt service are
included in the Water and Sewer Fund budget as a budgetary control of cash expenditures. Under
Generally Accepted Accounting Principles (GAAP), these items will be reported as additions to capi-
talized assets and as a reduction of a liability, respectively. Certain accounting adjustments based on
GAAP will be applied when the City closes its books for the year but these types of adjustments are
not part of the budget presentation. The application of GAAP forms the basis of accounting for the city

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