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OVERVIEW OF THE BASIC FINANCIAL STATEMENTS <br />Management's Discussion and Analysis gives an introduction to the City's basic financial statements. The <br />City's basic financial statements are comprised of three components: I) government-wide financial <br />statements, 2) fund financial statements, and 3) notes to the financial statements. The repo1i also contains <br />other supplementary information in addition to the basic financial statements. <br />Government-Wide Financial Statements <br />The government-wide financial statements are designed to provide readers a broad overview of the City's <br />finances in a manner similar to statements of a private-sector business. The Statements are comprised of <br />the Statement of Net Position and Statement of Activities and Changes in Net Position. <br />The Statement of Net Position presents information on all of the City's assets and liabilities, with the <br />difference between the two reported as net position. Over a period of time, increases or decreases in net <br />position may serve as a useful indicator of changes in the City's financial reporting. <br />The Statement of Activities and Changes in Net Position presents information showing how the <br />government's net position changed during the fiscal year. All changes in net position are reported as soon <br />as the underlying event giving rise to the change occurs, regardless of the timing of the related cash <br />flows. Thus, revenues and expenses are rep01ied in this statement for some items that will only result in <br />cash flows in future fiscal periods ( e.g. uncollected taxes, earned but unused vacation leave, and other <br />compensated absences). <br />The government-wide financial statements distinguish functions of the City that are principally supp01ied <br />by taxes and intergovernmental revenue (governmental activities) from other functions that are intended <br />to recover all or a significant portion of their costs through user fees and charges (business-type activities). <br />Both of the above financial statements have separate sections for two different types of programs or <br />activities. These two types of activities are: <br />Governmental Activities -The activities in this section are mostly supp01ied by taxes and charges for <br />services. The governmental activities of the City include General Government (City Council, City <br />Manager, City Clerk, Human Resources, Information Technologies, and Finance), Public Safety (Police <br />and Fire), Engineering & Transportation (includes Public Works), Recreation and Culture (includes <br />Library), and Community Development. <br />Business-Type Activities -These functions normally are intended to recover all or a significant portion <br />of their costs through user fees and charges to external users of goods and services. The business-type <br />activities of the City include the Water Pollution Control Plant, Environmental Services, Shoreline <br />Enterprise, and Storm Water Utility. <br />Fund Financial Statements <br />A fund is a grouping of related accounts that is used to maintain control over resources that have been <br />segregated for specific activities or objectives. The City, like other state and local governments, uses fund <br />accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the <br />funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary <br />funds. <br />6 471