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CITY OF SAN LEANDRO <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />For The Year Ended June 30, 2016 <br /> <br /> <br />NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued) <br /> <br />B. Government–Wide Financial Statements <br /> <br />The government-wide financial statements (i.e., the statement of net position and the statement of <br />activities) report information on all of the non-fiduciary activities of the primary government and its <br />components units. For the most part, the effect of interfund activity has been removed from these <br />statements except in the case of interfund services provided and used, which are not eliminated in the <br />consolidation process. Governmental activities, which normally are supported by taxes and <br />intergovernmental revenues, are reported separately from business-type activities, which rely to a <br />significant extent on fees and charges for support. Likewise, the primary government is reported <br />separately from certain legally separate component units for which the primary government is financially <br />accountable. <br /> <br />The statement of activities demonstrates the degree to which the direct expenses of a given function or <br />segments are offset by program revenues. Direct expenses are those that are clearly identifiable with a <br />specific function or segment. Our policy is to allocate indirect costs to a specific function or segment. <br />Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit <br />from goods, services, or privileges provided by a given function or segment and 2) grants and <br />contributions that are restricted to meeting the operational or capital requirements or a particular function <br />or segment. Taxes and other items not properly included among program revenues are reported instead as <br />general revenues. <br /> <br />Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary <br />funds, even though the latter are excluded from the government-wide financial statements. Major <br />individual governmental funds and major individual enterprise funds are reported as separate columns in <br />the fund financial statements. <br /> <br />C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation <br /> <br />The government–wide financial statements are reported using the economic resources measurement focus <br />and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. <br />Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of <br />the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are <br />levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed <br />by the provider have been met. <br /> <br />Governmental fund financial statements are reported using the current financial resources measurement <br />focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both <br />measurable and available. Revenues are considered to be available when they are collectible within the <br />current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City <br />considers revenues to be available if they are collected within 30 days of the end of the current fiscal <br />period. The City considers sales taxes and property taxes as available if they are collected within 60 days <br />after year end. Expenditures generally are recorded when a liability is incurred, as under accrual <br />accounting. However, debt service expenditures, as well as expenditures related to compensated absences <br />and claims and judgments, are recorded only when payment is due. <br /> <br />44