Title
Consider/Discuss/Act on a Resolution Adopting the Financial Policy
Summary
MEETING DATE: December 6, 2011
DEPARTMENT: Finance
CONTACT: Rodney Rhoades, Finance Director
RECOMMENDED CITY COUNCIL ACTION:
· Adopt the Financial policy.
ITEM SUMMARY:
· The Governmental Accounting Standards Board (GASB) has issued Statement No. 54, Fund Balance Reporting and Governmental Definitions (GASB-54). This standard improves fund balance information by providing clear classifications. GASB-54 abandons the reserved, unreserved, and designated classifications of fund balance and replaces them with five classifications: non-spendable, restricted, committed, assigned, and unassigned. The requirements of this statement are effective for the City’s financial statements for fiscal year ending September 30, 2011. These requirements have been included in the recommended policy.
BACKGROUND INFORMATION:
· The City of McKinney adopts financial policies each year. Part of this policy requires that sufficient funds be retained to provide a stable financial base at all times. The City will also maintain a fund balance sufficient to fund all cash flows of the City.
· GASB-54 requires local governments to focus on the constraints imposed upon resources when reporting fund balance. The five new classifications serve to inform readers of the financial statements how resources can be spent and identify the constraints.
o Non-spendable fund balance: contractually required to be maintained as an endowment
o Restricted fund balance: spent only on specific purposes stipulated by law
o Committed fund balance: self-imposed limitations used for specific purposes as determined and approved by city Council
o Assigned fund balance: intended to be used for a specific purpose but without formal approval action.
o Unassigned fund balance: spendable amounts not contained within the other classifications
FINANCIAL SUMMARY: N/A
BOARD OR COMMISSION RECOMMENDATION: N/A...
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