2001 Comprehensive Annual Financial Report

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CITY OF SOUTH BEND, INDIANA NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS (Continued) All proprietary funds and pension trust funds are accounted far on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associated with the operation of these funds are included in the balance sheet. Fund equity ~i.e., net tots! assets} is segregated into contributed capital and retained earnings components. Proprietary fund-type operating statements present increases ~i.e., revenues} and decreases ~i.e., expenses} in net total assets. The modified accrual basis of accounting is used by all governmenta! fund types, expendable trust funds and agency funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual ~i.e., when they become both measurable and availa- ble}. "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used tv pay liabilities of the current period. The government considers property taxes as available if they are collected within sixty days after year end. A sixty to ninety day availability period is used for revenue rec- ognitionfor all other governmental fund revenues. Expenditures are recorded when the related fund liability is incurred. Principal and interest on genera! long-term debt are recorded as fund liabilities when due or when amounts have been accumulated in the debt service fund for pay- ments to be made early in the following year. Those revenues susceptible to accrual are property taxes, licenses and permits, interest reve- nueand charges for services. Fines, permits, and parking meter revenues are not susceptible to accrual because generally they are not measurable until received in cash. The City reports deferred revenue on its combined balance sheet. Deferred revenues arise when a potential revenue does not meet both the "measurable" and "available" criteria for rec- ognition in the current period. Deferred revenues also arise when resources are received by the government before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met or when the government has a legal claim to the resources, the liability far defer- red revenue is removed from the combined balance sheet and revenue is recognized. The accrual basis of accounting is utilized by proprietary fund types and pension trust funds. Under this method, revenues, including contributions received by pension trust funds, are recorded when earned and expenses, including benefits and refunds paid by pension trust funds, are recorded at the time the liabilities are incurred. The City has elected, under GASB Statement No. 20, not to apply statements issued by the Financial Accounting Standards Board after November 30,1989. New GASB pronouncements on accounting and f nancial reporting for proprietary activities will be followed. In December 1998 and in Aprii 2000, the Governmental Accounting Standards Board GASB} issued Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions, and Statement No. 36, Recipient Reporting for Certain Shared Nvnexchange Revenues -and amendment of GASB Statemen# No. 33, respectively. These statements establish accounting and financial reporting standards for nonexchange transactions involving financial or capital resources for example, most taxes, grants, and private donations}. The City has adopted these statements for its fiscal year ended December 31, 2001 financial statements as discussed in Note 11. ]6