Page 22 - FY 2026-2027 Adopted Budget Book

Basis of Budgeting

The basis of budgeting is the same as the basis of accounting used by the City of Bedford's audited financial
statements. The modified accrual basis of accounting is used for all governmental type funds. The accrual
basis of accounting is utilized for proprietary type funds.

Modified Accrual
All governmental and special revenue funds use the modified accrual basis of accounting for both budgeting
and accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to
accrual, i.e., when they become both measurable and available. “Measurable” means that the amount of the
transaction can be determined and “available” means collectible within the current period or soon enough
thereafter to be used to pay liabilities of the current period. The City considers property taxes as available if
they are collected within 60 days after year-end.

Expenditures are recognized when the related fund liability is incurred. Principal and interest on general long-
term debt are recorded as fund liabilities when due or when amounts have been accumulated in the Debt
Service Fund for payments to be made early in the following year.

Revenues susceptible to accrual are property taxes, sales taxes, franchise taxes, special assessments,
interest and charges for services. Fines and permits are not susceptible to accrual because generally they are
not measurable until received in cash.

Deferred revenues arise when potential revenue does not meet both the “measurable” and “available” criteria
for recognition in the current period. Deferred revenues also arise when the City receives resources before it
has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In
subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the
resources, the liability for deferred revenue is removed from the combined balance sheet and revenue is
recognized.

Accrual
The proprietary type funds, which includes the Water & Sewer Fund and the Stormwater Fund, use the accrual
basis of accounting for both budgeting and accounting. Under this method, revenues are recognized when
earned and expenses are recognized at the time the liabilities are incurred. The City's policy is to apply all
Financial Accounting Standards Board standards to its proprietary funds unless they conflict with
Governmental Accounting Standards Board (GASB) guidance.

FY 2026-2027 Adopted Budget Book · September 15, 2026 18