2001 Comprehensive Annual Financial Report

Home Browse Search

applicable laws and regulations related to those programs. This internal control structure is subj ect to periodic evaluation by management of the City. As part of the City's single audit described earlier, tests are performed to determine the adequacy of the internal control structure, including that portion related to federal f nancial assistance programs, as well as to determine that the City has complied with applicable laws and regulations. The results of the City's single audit for the year ended December 31, 201 disclosed no instances of significant material weaknesses in the internal control structure and no significant violations of applicable laws and regulations. Bud eta Controls. In accordance with Indiana statutes, the City maintains budgetary controls integrated within the accounting system. The obj ective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget prepared on a cash basis} which is adopted by the City Council and then reviewed and approved by the Indiana State Board of Tax Commissioners. Activities of the general fund, certain special revenue and capital projects funds and the debt service funds are included in the annual budget. The level of budgetary control tthat is, the level at which expenditures cannot legally exceed the appropriated amount} is established by major budget classification within funds. The City Council may transfer appropriations from one maj or budget classification to another within a department by ordinance as long as the total appropriations for that department are not exceeded. Transfers fram one department to another, or additional appropriations in excess of the original budget, must be submitted to and approved by the State Board of Tax Commissioners after these appropriations have been approved by the City Council, The City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control, Encumbered amounts do not lapse at year end and are carried over to the subsequent year as a part of the subsequent year's budget. Prop,ert~Tax Controls. In addition to budgetary and other controls established by Indiana statute, the City must operate within specific and rigid controls governing the amount of property tax it may levy. The property tax control program, which began in 1973, limits the amount of property taxes that maybe levied by each unit of government in its legally budgeted funds. Indiana law prescribes a maximum property tax levy, which is calculated as a 5 % increase over the previous year's maximum levy. However, if a local government has experienced growth in assessed valuation in excess of 5%, the municipality may use a percentage equal to that growth, up to a maximum of 1 ~%. Growth is calculated as the average growth in assessed valuation over the last three years, not counting a year of reassessment. In addition, if the governmental unit finds that it cannot maintain basic governmental services for its residents within the property tax "freeze," it may appeal to the State Local Government Tax Control Board for an "excess levy" in certain specific instances. As a part of the property tax control program, the state transfers an amount generally equal to 20% of the total property tax levy except for debt service Levies as described below} to the County Auditor to be distributed to each taxing unit as a replacement for 2Q% of the property taxes levied. This "property tax replacement" is funded through the state sales tax. The levy for Debt Service funds is controlled via a review and approval process by the State Local Government Tax Control Board with a subsequent review and approval by the State xi