Page 157 - Haltom City Budget FY21
P. 157

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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