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x FINANCIAL INFORMATION City Budget & Budgetary Controls The City Council is required to adopt a final budget by passing a budget resolution no later than June 30th, following a public hearing process. This annual budget serves as the foundation for the City’s financial planning and control. The budget is prepared by fund, function (Public Safety), and department (Police). The legal level of budgetary control is at the fund level. The City Manager is authorized to transfer budgeted amounts between departments and line items within any fund. Any revisions that alter the total expenditures of any fund must be approved by the City Council. Transfers between funds must be approved by the City Council. At the end of the fiscal year, encumbered appropriations are carried forward and become part of the following year’s budget while appropriations that have not been encumbered lapse, unless otherwise authorized by the City Council and the City Manager. Accounting System The City’s accounting records for general government operations are maintained on a modified accrual basis, with revenues recorded when measurable and available. Expenditures are recorded when the services or goods are received and the liabilities incurred. Accounting records for the City’s proprietary activities are maintained on the full accrual basis, with revenues recorded when earned and expenses when incurred. In maintaining the City’s accounting system, consideration is given to the adequacy of internal controls. Internal controls are designed to provide reasonable assurance regarding the safeguarding of assets and to ensure the reliability of financial records and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of control should not exceed the benefits likely to be derived. The evaluation of costs and benefits requires continuing estimates and judgments by City management. The City’s system of internal accounting controls continues to adequately safeguard assets and provide reasonable assurance that financial transactions are properly recorded. Risk Management The City maintains commercial insurance combined with self-insurance for all its governmental operations. The City is a member of the Local Agency Workers’ Compensation Excess Joint Powers Authority (LAWCX). The City is also a member of California Joint Powers Risk Management Authority (CJPRMA), providing general liability coverage in an aggregate up to $40 million. Additional information on the City’s risk management activity can be found in Note 11 to the basic financial statements. OTHER INFORMATION Certificate of Achievement The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its CAFR for the year ended June 30, 2020. The City received this award for 24th consecutive years - because of staffing transitions, the City did not apply for the GFOA award for the fiscal year 2018-19 CAFR. The City is planning to apply for the award for the fiscal year 2020-21 CAFR. 255