FIN 2018-02-21 Item 2B - Discussion - Financial Definitions

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2017 - 2018 Biennial Budget City of Tukwila, Washington amounts would be a violation of law. The legal level of budgetary control is at the fund level. LEVEL OF BUDGETARY CONTROL. One of the three possible levels of budgetary control and authority to which organizations, programs, activities and functions may be subject. These levels of budgetary control are (a) appropriated budget, (b) legally authorized non -appropriated budget process or (c) non - budgeted financial activities, which are not subject to the appropriated budget and the appropriation process or to any legally authorized non -appropriated budget review and approval process, but still are relevant for sound financial management and oversight. LEVY. (1) (Verb) To impose taxes, special assessments or service charges for the support of government activities. (2) (Noun) The total amount of taxes, special assessments or service charges imposed by a government. MODIFIED ACCRUAL BASIS. The basis of accounting associated with the governmental fund -type measurement focus. Under it, revenues and other financial resources are recognized when they become susceptible to accrual, that is when they become both "measurable" and "available" to finance expenditures of the current period. Expenditures are recognized when the fund liability is incurred except for inventories of materials and supplies that may be considered expenditures either when purchased or when used. All governmental funds, expendable trust funds and agency funds are accounted for using the modified accrual basis of accounting. OBJECT DESCRIPTION. The classification of expenditures on the basis of categories called line -items or objects -of -expenditure (e.g., 10 -Salaries & Wages, 20 -Personnel Benefits, 40 -Other Services & Charges, 60 -Capital Outlay, etc.) and within each category more detailed line -items (e.g., salaries, travel, telephone expense, etc.). OPERATING BUDGET. Plans of current expenditures and the proposed means of financing them. The annual operating budget is the primary means by which most of the financing, acquisition, spending and service delivery activities of a government are controlled. The use of annual operating budgets is usually required by law. Even when not required by law, however, annual operating budgets are essential to sound financial management and should be adopted by every government. OPERATING TRANSFERS. All interfund transfers other than residual equity transfers (e.g., legally authorized transfers from a fund receiving revenue to the fund through which the resources are to be expended). PROGRAM BUDGET. A budget wherein expenditures are based primarily on programs of work and secondarily on character and object class. PROPRIETARY FUND TYPES. Sometimes referred to as income determination or commercial -type funds, the classification used to account for a government's ongoing organizations and activities that are similar to those often found in the private sector. The GAAP used are generally those applicable to similar businesses in the private sector and the measurement focus is on determination of net income, financial position and changes in financial position. REVENUES. (1) Increases in the net current assets of a governmental fund type from other than expenditure refunds and residual equity transfers. Also, general long-term debt proceeds and operating transfers in are classified as "other financing sources" rather than as revenues. (2) Increases in the net total assets of a proprietary fund type from other than expense refunds, capital contributions and residual 406 14