City of Fairfax, MN
Renville County
By using eCode360 you agree to be legally bound by the Terms of Use. If you do not agree to the Terms of Use, please do not use eCode360.
Table of Contents
Table of Contents
[HISTORY: Adopted by the City Council of the City of Fairfax 5-8-1990. Amendments noted where applicable.]
The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures, or expenses, as appropriate. Government resources are allocated to and accounted for individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped in the financial statements into two generic fund types and three fund categories as follows:
Governmental funds.
General Fund. The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund.
Special revenue funds. Special revenue funds are used to account for the proceeds of specific revenue sources that are restricted to expenditures for specified purposes.
Proprietary funds.
Enterprise funds. Enterprise funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes.
The City follows these procedures in establishing the budgetary data reflected in the financial statements:
The City Clerk-Treasurer submits to the City Council a proposed operating budget for the fiscal year commencing the following January 1. The operation budget includes proposed expenditures and the means of financing them.
The budget is legally enacted through passage of a resolution.
The City Council may authorize transfer of budgeted amounts between departments within any fund.
Formal budgetary integration is employed as a management control device during the year for the General Fund.
The budget for the General Fund is adopted on a basis consistent with generally accepted accounting principles (GAAP).
Budgetary control is maintained at the object of expenditure category level within each activity. Also inherent in this controlling function is the management philosophy that the existence of a particular item or appropriation in the approved budget does not automatically mean that it will be spent. The budget process has flexibility in that where need has been properly demonstrated, an adjustment can be made within the department budget by the City Clerk-Treasurer, or between departments by the City Council. Therefore, there is a constant review process and expenditures are not approved until it has been determined that: (1) adequate funds were appropriated; (2) the expenditure is still necessary; and (3) funds are available.
Budget amounts are as originally adopted, or as amended by the City Council. Budgeted expenditure appropriations lapse at year end.
Governmental funds are accounted for using the modified accrual basis of accounting. The revenues are recognized when they become measurable and available.
Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred.
Proprietary funds are accounted for using the accrual basis of accounting. Revenues are recognized when they are earned, and expenses are recognized when they are incurred.
Cash balances from all funds are combined and invested to the extent available in allowable securities. Earnings from such investments are allocated to the respective funds on the basis of applicable cash balance participation by each fund.
Investments are carried at cost. The market value of the investments at December 31 is the same as cost.
Inventory is valued at the lower of FIFO cost or market.
Property and equipment in general fixed assets are stated at values found in insurance records. Generally accepted accounting principles require that such assets be recorded at historical value. Records of some historical costs on fixed assets have not been located. Proprietary fund fixed assets are stated at cost. Major repairs or improvements are capitalized. Assets sold, retired, or otherwise disposed of are removed from the asset and accumulated depreciation accounts and any gain or loss thereon is reflected on operations. Depreciation is computed on the straight basis at the following rates:
33.3 to 40
10 to 22