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CITY OF ROSEVIILE NOTES TO F]NANCIAL STATEMENTS DECEMBER 31, 1993 Note 7- Surtmarv of Si9nificant Accountina Policies (Continued) [nternat Service funds - Internal Service funds are used to account for the financing of goods or services provided 6y one department or agency to other departments or agencies of the City. The City has tuo Internal Servire Funds, they are: Yorkers' Compensation Setf-[nsurance FurW uhich accounts for the City's uorkers' compensation claims, and the Risk Mana9ement Fund uhich accounts for all of the City's general insurance costs. FIDUCIARY FUNDS Agency funds - Agency Furds are used to account for the assets held by the City in a trustee capacity or as an agent tor individuals, private organizations, other governments, and/or other funds. The City�s Agency Funds are custodiat in nature (assets equal liabilities) and do not involve measurement ot resutts of operations. C. MeasuremeM Focus The accounting and reporting treatment applied to tne fixed assets and long-term liabitities associated uith a fund are determined by its measurement focus. Governmental funds and Expendable Trust funds are accounted tor on a spending or "financial flou" measurement focus. This means that only current assets and current liabitities are generally included on their balance sheets. Their reported fund balance is considered a measure of available spendable resources. GovernmentaL fund operating statements present increases (revenues and other financing sources) and decreases <expenditures and other financing uses) in net current assets. Accordingly they are said to present a sumnary af sources and uses of avaitable spendable resources during a period. Fixed assets used in goverronental fund type operations (general fixed assets) are accounted for in the General Fixed Assets Account Group rather than in Governmentat Funds. Pubic domain generat fixed assets consisting of certain improvements other than buiLdings including roads bridges curbs and gutters streets and sideuatks and lighting systems are capitalized along uith other generat fixed assets. No depreciation has been provided on generaL fixed assets. Long-term liabilities expected to be financed from governmentaL funds are accounted for in the General Lon9 Term Debt Account Group not in the governmental funds. The account groups differ fran "funds�� in that they are not invotved uith measurement of operations. They are concerned only with the measurement of financial position. Noncurrent portions of long-term receivables due to govermnental funds are reported on their batance sheets in spite of their measurement focus. However speciat reporting treatments are used to indicate in a governmental funds that they should not be considered "available spendabte resources" since they do not represent net current assets. Recognition of revenues in these funds represented by noncurrent receivables are deferred untit they become current receivabLes. Because of their spending measurement focus, expenditures recognition for governmental fund types exclude amounts represented by noncurrent liabilities. Since they do not affect net current assets such ton9 term amounts ere not recognized as governmental fund type expenditures or fund liabilities. They are instead reported as liabiLities in the Generel Long-term Debt Account Group. Vroprietary funds are accounted for on a cost of alL assets, incl�ding fixed assets, ard alt activity, are inctuded on their balance sheets. and retained earnings components.:The operating (expenses) in net total assets. D. Basis of Accounting services or "capital maintenance" measurement focus. This means Yhat liabitities, including long-term liabilities associated uith their Their reported fund equity is segregated into contributed capital statements of the funds present increases (revenues) and decreases The modified accrual basis of accounting is used by a goverrvnental fund types, and egency funds. Under the modified accrual basis of accounting, revenues are recognized uhen susceptibte to accrual (ie., uhen they become both measurable and available). "Measurabte" means the amount of the transaction can be determined and '�avaitable" means collectible uithin the current period or soon enough thereafter to be used to pay liabiities of the current period. The city considers property taxes as available if they are collected uithin 60 days after year end. Expenditures are recorded when the related fund liabiity is incurred. Principal and interest on general long-term debt are recorded as fund liabiities when due or uhen amounts have been accunulated in the debt service fund for payments to be made early in the foltouing year. Those revenues susceptible to accrual are property taxes, special assessments, licenses, interest revenue and charges for services. State aids held by the state at year-end on behalf of the goverrrment also are recognized as revenue. fines and permits are not susceptible to accrual because generally they are not measurable until received in cash. The accruat basis ot accounting is utilized by proprietary fund types. Under this method, revenues are recorded when earned and expenses are recorded at the time Liabilities are incurred. UnbiLted utitity service receivabLes are recorded at year end. 32