HomeMy WebLinkAboutNC Comprehensive Report (Finance) (39)CITY OF NATIONAL CITY
Notes to the Basic Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies, (Continued)
M. Fund Balances — Nonspendable and Spendable
Fund balances are reported in the fund statements in the following classifications:
Nonspendable Fund Balance
Nonspendable Fund Balance — this includes amounts that cannot be spent because
they are either not spendable in form (such as inventory) or legally or
contractually required to be maintained intact (such as endowments).
Spendable Fund Balance
Restricted Fund Balance — this includes amounts that can be spent only for
specific purposes stipulated by constitution, external resource providers, or
through enabling legislation. If the Council action limiting the use of funds is
included in the same action (legislation) that created (enables) the funding source,
then it is restricted.
Committed Fund Balance — this includes amounts that can be used only for the
specific purposes determined by a formal action of the Council. It includes
legislation (Council action) that can only be overturned by new legislation
requiring the same type of voting consensus that created the original action.
Therefore, if the Council action limiting the use of the funds is separate from the
action (legislation) that created (enables) the funding source, then it is committed,
not restricted. The City considers a resolution to constitute a formal action of
City Council for the `purposes of establishing committed fund balance.
Assigned Fund Balance — this includes amounts that are designated or expressed
by the Council, but does not require a formal action like a resolution or ordinance.
The Council may delegate the ability of an employee or committee to assign uses
of specific funds, for specific purposes. Such delegation of authority has been
granted to the City Manager.
Unassigned Fund Balance — this includes the remaining spendable amounts which
are not included in one of the other classifications.
It is the City's policy that restricted resources will be applied first, followed by (in
order of application) committed, assigned, and unassigned resources, in the
absence of a formal policy adopted by the Council.
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