Audit and Finance Committee

REGULAR MEETING OF THE AUDIT AND FINANCE COMMITTEE DATE: MONDAY, AUGUST 5, 2019 – 5:30 p.m. MEETING TO BE HELD AT THE POLICE FACILITY 200 HIGHLANDS BOULEVARD DRIVE 2nd floor AGENDA 1. Call to Order: 2. Roll Call and Statement of Quorum 3. Establishment of Order of Items on the Agenda A. Approval of the June 10, 2019 Minutes B. 2019-Six Month Financial Report ending June 30, 2019 C. Draft Internal Controls Policy D. Investment Report-holdings at July 31, 2019 E. Update on Tax Increment and Transportation Refunding Revenue Bonds (Highway 141/Manchester Road Project), Series 2010. F. Schedule future meeting 4. Adjournment Note: All meeting agendas should be considered tentative. Posted 8-2-2019 Note: While the members of the Board of Aldermen have been invited to and may attend along with members of the public, the Board of Aldermen will not be meeting or taking any action. Memo To: Mayor and Board of Aldermen From: Donald Yucuis, Director of Finance CC: Lawrence Perney, City Administrator, Senior Staff, Audit and Finance Committee Date: July 22, 2019 Re: 2019 Financial Report – Six Months through June 30, 2019 I am providing the 2019 six month financial report for All Funds for the period ending June 30, 2019. The charts below include: • The Year to Date (YTD) Activity for the six months ended June 30, 2018, • the 2019 Budget, • the Year to Date (YTD) Activity for the six months ended June 30, 2019, • the 2019 Budget Remaining, and • the 2019 % YTD Activity Rec’d or Spent to Budget • Included is beginning and ending fund balance GENERAL FUND (GF) - Overall, FY 2019 six month revenues totaled $5,502,347 and expenses totaled $4,893,391 or a $608,956 surplus before transfers in/out and a $418,962 surplus after transfers out of $189,994 to the Tax Increment Financing District. 2019 revenues totaled $5,502,347 or 55.5% of budget and higher than the basic 50% at the end of the first six months, so good news. 2019 revenue is approximately $70,000 more than 2018 for the same six month time period. The $70,000 difference from year to year revenue is mainly due to: • slightly lower Taxes revenue -$49,000, • slightly lower Inter-governmental revenue -$8,000, • more Licenses and Permits revenue +$106,000, and • more Municipal Court revenue +$20,000. 2019 expenses totaled $4,893,391 or 49.4% of budget and $532,000 more than 2018. The $532,000 increase in 2019 compared to 2018 is due directly to: • the retirement payouts of $44,313 to former Police Chief Walsh and Eileen Collins of $31,000; • overall increased wages and benefit costs including the new 2% retirement contribution; • closer to full staffing in the Police Department; • the two new part-time staff in Finance; and • increased workers compensation insurance costs. 2019 Transfer in totaled $0 and Transfers out totaled $189,994 which was for the 25% of TIF Property Tax revenue received in the first six months. 2018 Transfer in totaled $0 and Transfers out totaled $421,866 which was for the 25% of TIF Property Tax revenue received in the first six months or $352,000 and moving by transfer out of $69,700 to Asset Forfeiture Fund from the General Fund into a separate Special Accounts Fund. Page 1 2019 Three Month Financial Report at March 31, 2019 The General Fund detail of 2019 and 2018 through June 30, 2019 is itemized for comparison purposes. Larry Perney and I will continue to monitor all 2019 revenue to make certain there no negative trends. 2019 % YTD Activity YTD thru Current YTD thru Budget Rec'd or Spent Fund Category/ Description June 30, 2018 2019 Budget June 30, 2019 Remaining to Budget Fund: 10 - GENERAL FUND Revenue 510 - Taxes 1Cent Sales Tax 2,183,356 4,000,000 2,151,480 1,848,520 53.8% 1/4 Cent Sales Tax 425,025 800,000 413,766 386,234 51.7% Prop P Sales Tax 465,513 925,000 500,486 424,514 54.1% Ameren UE- Gross Receipts 330,157 730,000 268,210 461,790 36.7% Laclede Gas - Gross Receipts 199,159 280,000 198,703 81,297 71.0% Southwestern Bell - Gross Receipts 139,622 260,000 98,194 161,806 37.8% Missouri-American Water - Gross Receipts 64,088 140,000 72,457 67,543 51.8% Charter Cable - Gross Receipts 118,889 225,000 114,880 110,120 51.1% Property Taxes 21,505 140,000 68,022 71,978 48.6% Railroad/Utility Tax 10,024 20,500 22,605 (2,105) 110.3% 510 - Taxes Total 3,957,338 7,520,500 3,908,804 3,611,696 52.0% 520 - Inter-governmental Gasoline Tax 232,068 480,000 234,025 245,975 48.8% Vehicle Sales Tax 82,207 165,000 74,724 90,276 45.3% Vehicle Fee Increases 43,454 80,000 42,849 37,151 53.6% Cigarette Tax 19,816 40,000 17,892 22,108 44.7% Road & Bridge Tax 163,949 335,000 155,987 179,013 46.6% Grants/Reimbursements 69,969 125,000 77,548 47,452 62.0% 520 - Inter-governmental Total 611,462 1,225,000 603,025 621,975 49.2% 530 - Licenses & Permits 369,309 471,950 476,136 (4,186) 100.9% 540 - Municipal Court 130,035 230,000 150,318 79,682 65.4% 550 - Investments 14,384 41,800 8,895 32,905 21.3% 560 - Aquatic Center 178,832 275,000 151,155 123,845 55.0% 561 - Park Services 81,351 90,000 107,641 (17,641) 119.6% 562 - Manchester Arts - 3,924 - 3,924 0.0% 570 - Miscellanous 89,464 48,000 96,373 (48,373) 200.8% 530 thru 570 Totals 863,375 1,160,674 990,518 170,156 85.3% General Fund Revenue Total 5,432,175 9,906,174 5,502,347 4,403,827 55.5% Expense 410 - Mayor & Board 26,704 63,625 27,074 36,551 42.6% 420 - Administration 277,982 619,964 296,983 322,981 47.9% 425 - MIS 156,657 282,050 180,067 101,983 63.8% 430 - Finance 329,673 622,656 425,220 197,436 68.3% 440 - Police 1,645,053 3,986,275 1,860,740 2,125,535 46.7% 450 - Aquatic Center 91,976 347,600 63,091 284,509 18.2% 460 - Park 413,267 911,347 497,996 413,351 54.6% 470 - Public Works 1,167,879 2,470,955 1,239,959 1,230,996 50.2% 475 - Planning & Zoning 134,898 319,032 175,699 143,333 55.1% 480 - Legal 109,421 254,155 120,661 133,494 47.5% 485 - Manchester Arts 7,727 28,515 5,901 22,614 20.7% General Fund Expense Total 4,361,238 9,906,174 4,893,391 5,012,783 49.4% GENERAL FUND Revenue less (Expenses) before transfers 1,070,937 - 608,956 (608,956) 600 - Operating Transfers in 500,000 - 500,000 0.0% 600 - Operating Transfers out (421,866) (370,000) (189,994) (180,006) 51.3% Net Transfer in/out (421,866) 130,000 (189,994) 319,994 GENERAL FUND Revenue less (Expenses) and transfers 649,071 130,000 418,962 Beginning Fund Balance January 1 2,468,618 3,029,567 3,029,567 Ending Fund Balance June 30 3,117,689 3,159,567 3,448,529 Page 2 2019 Six Month Financial Report at June 30, 2019 Debt Service Fund accounts for the 2019 General Obligation Bond (Prop S Bonds for streets) property tax revenue levied to pay the principal and interest payments on the bonds as they come due. The 2018 revenue and expenses reflect property tax received and expenses to pay off the 2012 General Obligation Bonds. 2019 % YTD Activity YTD thru Current YTD thru Budget Rec'd or Spent Fund Category/ Description June 30, 2018 2019 Budget June 30, 2019 Remaining to Budget Fund 20 - DEBT SERVICE FUND Revenue 510 - Taxes Personal Property Taxes 85,917 1,054,632 443,278 611,354 42.0% 510 - Taxes Total 85,917 1,054,632 443,278 611,354 42.0% Revenue Total 85,917 1,054,632 443,278 611,354 42.0% Expense 420 - Administration Professional Fees 809 4,100 - 4,100 0.0% Principal Payment 570,000 585,000 585,000 - 100.0% Interest Payment 5,700 324,733 181,555 143,178 55.9% 420 - Administration Total 576,509 913,833 766,555 147,278 83.9% Expense Total 576,509 913,833 766,555 147,278 83.9% Fund 20 - DEBT SERVICE FUND Revenue less (Expenses) (490,593) 140,799 (323,278) Beginning Fund Balance January 1 508,127 863,513 863,513 Ending Fund Balance June 30 17,534 1,004,312 540,235 Special Accounts Fund is a new separate Fund in 2018 per requirements of the US Department of Justice to account for Asset Forfeiture revenues and expenses. No activity has occurred in 2019. 2019 % YTD Activity YTD thru Current YTD thru Budget Rec'd or Spent Fund Category/ Description June 30, 2018 2019 Budget June 30, 2019 Remaining to Budget Fund 40 - SPECIAL ACCOUNTS Revenue 520 - Inter-governmental DOJ-Asset Forfeiture Revenue - - - - 0.0% Revenue Total - - - - 0.0% Expense Treasury-Asset Forfeiture Expense - - - - 0.0% DOJ-Asset Forfeiture Expense 56,766 - - - 0.0% Expense Total 56,766 - - - 0.0% Fund 40 - SPECIAL ACCOUNTS Revenue less (Expenses) (56,766) - - - 0.0% Beginning Fund Balance January 1 69,709 16,698 16,698 Ending Fund Balance June 30 12,943 16,698 16,698 Page 3 2019 Six Month Financial Report at June 30, 2019 Tax Increment Financing Fund 2019 Revenues exceeded expenses by $667,904. 2019 revenues including transfer in from the General Fund totaled $4,331,675 or 63% of budget and approximately $173,598 less than the same time period in 2018. The difference is almost all attributable to timing of transfer-in from revenue. The 2019 transfer in will catch up to 2018 in the next quarter. 2019 expenses total $3663,771 or 53% of budget. 2019 debt service payments of $3,438,340 included mandatory principal of $2,280,000 and interest of $1,158,340. 2019 % YTD Activity YTD thru Current YTD thru Budget Rec'd or Spent Fund Category/ Description June 30, 2018 2019 Budget June 30, 2019 Remaining to Budget Fund 30 - TAX INCREMENT FINANCING (TIF) FUND Revenue 510 - Taxes 1Cent Sales Tax 666,625 1,256,000 523,874 732,126 41.7% 1/2 Cent Transportation Sales Tax 311,698 606,000 323,922 282,078 53.5% 1/4 Cent Sales Tax 155,554 303,000 161,961 141,039 53.5% Metro Tax 38,551 74,000 38,581 35,419 52.1% ECC Tax 40,380 76,000 40,409 35,591 53.2% CSF Tax 160,125 307,000 166,532 140,468 54.2% Property Taxes 1,341,435 1,250,000 1,234,900 15,100 98.8% Pool,Park,Storm Water Sales Tax 394,388 570,000 328,578 241,422 57.6% TDD EATS 792,228 1,067,000 774,504 292,496 72.6% Capital Improvement Tax 261,664 561,000 452,547 108,453 80.7% TIF/TDD Transfer - 350,000 - 350,000 0.0% Interest Income (9,531) 65,000 95,873 (30,873) 147.5% Transfer in 352,156 360,000 189,994 170,006 52.8% TIF Fund Revenue Total 4,505,273 6,845,000 4,331,675 2,513,325 63.3% Expense 430 - Finance TIF Bond Redemption 2,145,000 4,000,000 2,280,000 1,720,000 57.0% TIF Bond Interest 1,278,641 2,515,000 1,158,341 1,356,659 46.1% Tax Increment Financing - PILOTS 252,527 360,000 214,789 145,211 #DIV/0! Professional Fees 100 19,660 10,642 9,018 54.1% Expense Total 3,676,268 6,894,660 3,663,771 3,230,889 53.1% Fund 30 - TAX INCREMENT FINANCING (TIF) FUND Revenue less (Expenses) 829,005 (49,660) 667,904 Beginning Fund Balance January 1 8,535,795 8,396,562 8,396,562 Ending Fund Balance June 30 9,364,800 8,346,902 9,064,466 Page 4 2019 Six Month Financial Report at June 30, 2019 Capital Projects Fund 2019 Revenues exceeded expenses by $994,833. 2019 Revenue through six months totaled $1.231.051 or 60% of budget and $331,662 more than 2018 and all due to more one-time grant revenue in 2019 than 2018. 2019 Expenses through six months totaled $236,2018 or 11.6 of budget and $16,431 more than 2018. Projects in Progress: • Police Vehicles/equipment ordered, $120,000. • Bridge Repair/Replacement: Spring Meadows Bridge is finishing up; Howard George Bridge and Lindy Blvd. Bridge Deck are out for bid and moving to construction-$508,000. • Building & Site Improvements: Storage Building Fabric Cover-$25,000-in progress; City Hall Exterior Balcony-$125,000 bid documents being prepared; and Police Facility- $25,000 will be later in the calendar year. • Street Improvements: Concrete Streets-$100,000 is being spent as needed; Dougherty Ferry-$70,000-design is in progress; Right of way Trees-$40,000 on-going throughout the year; and GIS mapping-$5,000 has been spent. • Concrete Sidewalks will be done throughout the year-$200,000. • Machinery and Equipment-$217,000: Medium Dump-$135,000 will be purchased; Concrete Saws purchased-$54,000; Fleet Software-30,000 to be purchased. • Transfer out-$500,000 is to General Fund and will occur later in the year. 2019 % YTD Activity YTD thru Current YTD thru Budget Rec'd or Spent Fund Category/ Description June 30, 2018 2019 Budget June 30, 2019 Remaining to Budget Fund 50 - CAPITAL IMPROVEMENT FUND Revenue 1/2 Cent Sales Tax 757,752 1,550,000 775,171 774,829 50.0% Grants/Reimbursements 137,882 462,000 445,820 16,180 96.5% Gain on Sale of Equipment 3,755 - 10,060 (10,060) #DIV/0! Miscellaneous - 35,000 - 35,000 0.0% Revenue Total 899,389 2,047,000 1,231,051 815,949 60.1% Expense MIS Equipment/ Software 24,892 25,542 15,292 10,250 59.9% Police Vehicles and Equipment 58,335 120,000 - 120,000 0.0% Public Works Staff Time 24,366 - 3,506 (3,506) #DIV/0! Professional Fees 15,216 - 588 (588) #DIV/0! Capital Improvement - - 773 (773) #DIV/0! Bridge Repair/Replacement - 508,000 79,043 428,957 15.6% Building & Site Improvements 42,210 175,000 22,131 152,869 12.6% Concrete Street Replacement 12,265 215,000 32,504 182,496 15.1% Concrete Sidewalk Replacement 280 200,000 19,133 180,867 9.6% Machinery and Equipment 5,746 217,000 60,910 156,090 28.1% Vehicles 24,869 30,000 2,337 27,663 7.8% Street Light Installation or Repair 11,609 37,500 - 37,500 0.0% Transfer in/ out 500,000 - 500,000 0.0% Expense Total 219,787 2,028,042 236,218 1,791,824 11.6% Fund 50 - CAPITAL IMPROVEMENT FUND Revenue less (Expenses) 679,602 18,958 994,833 Beginning Fund Balance January 1 38,076 (22,397) (22,397) Ending Fund Balance June 30 717,678 (3,439) 972,436 Page 5 2019 Six Month Financial Report at June 30, 2019 Parks and Storm Water Fund 2019 Revenues exceeded expenses by $667,050. 2019 Revenue for the six months totaled $911,966 or 39% of budget and $74,000 more than 2018. The $700,000 in grants/reimbursement is from MSD and related to the Chadwick Brookvale project. 2019 Expenses for the six months totaled $244,916 or 5.9% of budget. Projects in Progress: Aquatic Center: • Building and site improvements- budget of $81,000-Pool Pumps and Pipes-expensed $33,769 to date and work is in progress. • Furniture, Fixtures-budget of $13,052-expensed $5,180 to date and purchases are in progress. • Machinery and Equipment-budget of $10,000- expensed $4,250 to date and purchases are in progress. Parks: • Building and Site Improvements-budget of $247,500, expensed $18,193 to date, Schroeder Park Asphalt Seal/Overlay $175,000 will occur in the fall, all other line items are or will be in progress. • Machinery and Equipment-budget of $36,150 and $53,087 spent to date includes $41,000 spent to date on a generator plus an additional $33,000 to be spent for electrical. This was planned to be spent in 2018 but was not. The mower and Bobcat have been purchased totaling $12,000. Staff will meet soon to evaluate the 2019 Budget to see if other budgeted line items can be moved to cover the Generator expenses or a budget amendment may be needed. • Vehicles- light duty dump truck-$70,000 will be purchased; and utility vehicle-$14,000 budget was purchased for $13,562. Public Works • storm water projects-budget of $3,637,000: Pontoison Dr.-$120,000 out to bid; Channel J- $230,000 and Chadwick Brookvale-$3,000,000 to be constructed; storm inlets-$125,000 and Cloverleaf Lane-both in design. 2019 % YTD Activity YTD thru Current YTD thru Budget Rec'd or Spent Fund Category/ Description June 30, 2018 2019 Budget June 30, 2019 Remaining to Budget Fund 60 - PARKS & STORM WATER PROJECTS FUND Revenue Pool,Park,Storm Water Sales Tax 837,190 1,625,000 911,966 713,034 56.1% Grants/Reimbursements 700,000 - 700,000 0.0% Revenue Total 837,190 2,325,000 911,966 1,413,034 39.2% Expense 450 - Aquatic Center Building & Site Improvements 103,315 96,650 33,769 62,881 34.9% Furniture, Fixtures, & Office Equip. - 13,052 5,180 7,872 39.7% Machinery and Equipment - 10,000 4,250 5,750 42.5% 450 - Aquatic Center Total 103,315 119,702 43,200 76,502 36.1% 460 - Park Parks Staff Time - 1,351 (1,351) 0.0% Building & Site Improvements 160,369 247,500 18,193 229,307 7.4% Furniture, Fixtures, & Office Equip. 385 - 3,289 (3,289) #DIV/0! Machinery and Equipment 2,590 36,150 53,087 (16,937) 146.9% Vehicles 84,000 13,562 70,438 16.1% 460 - Park Total 163,343 367,650 89,483 278,167 24.3% 470 - Public Works Storm Water Projects 327,284 3,637,000 112,233 3,524,767 3.1% 470 - Public Works Total 327,284 3,637,000 112,233 3,524,767 3.1% Expense Total 593,942 4,124,352 244,916 3,879,436 5.9% Fund 60 - PARKS & STORM WATER PROJECTS FUND Revenue less (Expenses) 243,249 (1,799,352) 667,050 Beginning Fund Balance January 1 1,964,804 2,920,219 2,920,219 Ending Fund Balance June 30 2,208,053 1,120,867 3,587,269 Page 6 2019 Six Month Financial Report at June 30, 2019 Prop S Capital Fund 2019 Revenue budget is from investment income. 2019 Expense budget is $3,592,680 and $1,900,924 or 52.9% has been spent to date. Concrete Streets are the main component of the budgeted expenses and are in progress. Staff will be monitoring expenses throughout the year to determine if a budget amendment is warranted as approximately $700,000 of 2018 work will be completed in 2019. If all of the 2019 concrete street projects get completed then an amendment will be justified later in the year. 2019 % YTD Activity YTD thru Current YTD thru Budget Rec'd or Spent Fund Category/ Description June 30, 2018 2019 Budget June 30, 2019 Remaining to Budget Fund 80 - PROP S-CAPITAL IMPROVEMENTS Revenue Investment Income - 150,000 79,755 70,245 53.2% Revenue Total - 150,000 79,755 70,245 53.2% Expense 470 - Public Works Public Works Staff Time 87,680 48,777 38,903 55.6% Professional Fees 10,298 255,000 16,613 238,387 6.5% Concrete Streets - 3,250,000 1,835,533 1,414,467 56.5% 470 - Public Works Total 10,298 3,592,680 1,900,924 1,691,756 52.9% Expense Total 10,298 3,592,680 1,900,924 1,691,756 52.9% Fund 80 - PROP S-CAPITAL IMPROVEMENTS Revenue less (Expenses) (10,298) (3,442,680) (1,821,169) Beginning Fund Balance January 1 - 8,443,028 8,443,028 Ending Fund Balance June 30 (10,298) 5,000,348 6,621,859 Sanitary Sewer Repair Fund 2019 Expenses exceeded revenues by $56,257. 2019 Revenue for the six months totaled $74,501 or 29% of budget and $12,131 more than 2018. 2019 Expenses for the six months totaled $130,758 or 50% of budget and $42,899 more than 2018. 2019 % YTD Activity YTD thru Current YTD thru Budget Rec'd or Spent Fund Category/ Description June 30, 2018 2019 Budget June 30, 2019 Remaining to Budget Fund 70 - SANITARY SEWER REPAIR FUND Revenue 510 - Taxes Sewer Lateral Fee 49,220 167,000 48,899 118,101 29.3% Sewer Lateral Fee/Resident 13,150 35,000 25,602 9,398 73.1% 570 - Miscellanous Total 13,150 35,000 25,602 9,398 73.1% Revenue Total 62,370 202,000 74,501 127,499 36.9% Expense 470 - Public Works Salaries 43,264 80,290 46,129 34,162 57.5% Capital Improvement 44,325 180,000 84,630 95,370 47.0% Expense Total 87,589 260,290 130,758 129,532 50.2% Fund 70 - SANITARY SEWER REPAIR FUND Revenue less (Expenses) (25,219) (58,290) (56,257) Beginning Fund Balance January 1 177,984 190,196 190,196 Ending Fund Balance June 30 152,765 131,906 133,939 Page 7 2019 Six Month Financial Report at June 30, 2019 Homecoming Fund very little activity has occurred in the first six months related to homecoming revenue and expense. 2019 % YTD Activity YTD thru Current YTD thru Budget Rec'd or Spent Fund Category/ Description June 30, 2018 2019 Budget June 30, 2019 Remaining to Budget Fund 65 - HOMECOMING FUND Revenue Homecoming Booths 2,025 - 2,538 (2,538) #DIV/0! Homecoming Donation 450 500 250 250 50.0% Homecoming Sponsorships 2,100 - 2,500 (2,500) #DIV/0! Homecoming Fees - 7,000 - 7,000 0.0% Miscellaneous 22,500 - 22,500 0.0% Transfer in 10,000 - 10,000 Revenue Total 4,575 40,000 5,288 34,713 13.2% Expense Salaries - 1,500 - 1,500 0.0% Overtime Salaries - 14,750 - 14,750 0.0% Payroll Tax - 1,250 - 1,250 0.0% Uniforms & Equipment 115 150 234 (84) 156.0% Professional Fees 3,778 11,910 2,000 9,910 16.8% Public Relations 950 4,150 - 4,150 0.0% Business Lunch/Dinner 21 830 127 703 15.3% Newspaper Notices - 950 - 950 0.0% Program Supplies 20 950 - 950 0.0% Office Supplies 53 50 - 50 0.0% Field Supplies - 600 - 600 0.0% Equipment Rental 1,625 5,150 1,625 3,525 31.6% Equipment - Maintenance & Repair - 600 - 600 0.0% 465 - Homecoming Total 6,561 42,840 3,986 38,854 9.3% Expense Total 6,561 42,840 3,986 38,854 9.3% Fund 65 - HOMECOMING FUND Revenue less (Expenses) (1,986) (2,840) 1,302 Beginning Fund Balance January 1 23,335 9,662 9,662 Ending Fund Balance June 30 21,349 6,822 10,964 Page 8 2019 Six Month Financial Report at June 30, 2019 Updated by Don Yucuis and submitted to Stopp&Vanhoy on 5-3-2019 City of Manchester, Missouri Internal Control Policy Dated: 08/05/2019 -1- Updated by Don Yucuis and submitted to Stopp&Vanhoy on 5-3-2019 Internal Controls City of Manchester Bank Accounts Four cash accounts are maintained with Commerce Bank. First is the operating cash account. This account is a pooled cash account and is reconciled and accounted in the City’s general ledger under Fund 98 and account number 98-100-1110. Fund 98 was set up to accommodate our pooled cash management and the accounting system used to track the transactions. Our Pooled Cash (Bank) account is used to maintain cash for all of the City’s ongoing operations and as accounted in all of our various Funds. Cash transactions are recorded to this (G/L) account and the amounts attributable to each fund is recorded in a “Claim on Cash” (G/L) account. Accounts payable is handled in a similar manner as it crossed funds and is tied closely with cash transactions. The operating account is reconciled periodically, by the Director of Finance, or by the Accountant if unavailable. The daily reconciliations are kept on file. Periodically the Director of Finance reconciles the individual Fund cash balances in object code 1111 with the Fund 98-100-1110 account and then to the bank statement balance as a final reconciliation. The second bank account is a Court Bond Account. The transactions are controlled by the Court Administrator and reconciled by the Finance department. This account is controlled by a unique general ledger account and is not part of the pooled cash. The third bank account is the Cash-Contingency Reserve account. This bank account is meant to accompany the Investment-Contingency Reserve account. Investment cash transactions (buying- selling, interest income) are recorded in this account. Transactions to this bank account are recorded and reconciled by the Finance department. This account is controlled by a unique general ledger account and is not part of the pooled cash. The last two accounts are reconciled periodically throughout the month by the Accountant and a final reconciliation at the end of the month will be reviewed and signed off by the Director of Finance. Petty Cash/ Cash Drawers Petty cash is the total of all petty cash amounts and the cash drawer banks around the Cities facilities. Cash drawers are counted each day as a part of the deposit preparation. Petty cash boxes are counted periodically and then finally at the end of the calendar year. Requests for petty cash are documented on a slip which documents approval and coding. As deemed necessary by the department head holding the petty cash, the outstanding slips are totaled and sent to the Finance Department with a check request, signed by the Department Head for replenishment funds. The check requests are processed as accounts payable. A check is made out to the department head who then cashes the check and replenishes the petty cash box. Petty cash drawers normally run a balance of $50 to $100. The Finance Director ($100) and the Public Works Director ($50) have petty cash drawers, Cash drawers are located at City Hall, Parks Administration, Pool when opened, Municipal Court, and Police Clerk. -2- Updated by Don Yucuis and submitted to Stopp&Vanhoy on 5-3-2019 Investments 1. A formal investment policy was reviewed with the new Audit and Finance Committee on May 13, 2019. The final Investment Policy was presented to the Board of Alderman for approval on June 17, 2019 by resolution R-19-0681. 2. The Director of Finance is authorized to purchase investment instruments for the City. 3. All securities purchased are held by a third party custodian designated by the Director of Finance and evidenced by safekeeping receipts. 4. All investments and cash balances in excess of the financial institution's insurance are secured through eligible collateral and a monthly report of collateral is sent by Commerce Bank to the Director of Finance. The report is saved in the shared directory, Commerce Bank folder, Collateralization Reports. 5. Only one signature, Director of Finance, is necessary to authorize the release of a security from safekeeping. 6. All securities are held in the name of the City of Manchester. 7. Detailed records are kept by the City that include the date of acquisition and purchase cost, the physical location of the investment, interest/dividend/income rates and accrual/receipt dates, and ownership by fund. All decisions to sell or buy investments are handled by the Director of Finance with approval of the City Administrator. The City Council is not involved in these decisions. The Audit and Finance Committee quarterly reviews an investment report prepared by the Director of Finance. Revenue, Accounts Receivables, Cash Receipts 1. Mail is sorted and distributed to the appropriate department by the Administrative Secretary, who does not have access to cash receipts or accounts receivable. Mail with Accounts Payable invoices or cash receipts (checks) are routed to Finance. Court receipts are directed to the Municipal Court. All other mail is reviewed by the Accountant and then routed to the correct department and person. 2. Cash receipts (pre-numbered) – City Hall are prepared at the customer service center by the Administrative Assistant when payments are received for fees and permits. The customers’ remittance data and other support are processed by the Administrative Assistant, all documents are attached when the day is closed after being balanced and prepares a deposit slip for the bank. Finance uses this info to update the General Ledger info in the accounting system, files the documents with the Journal Entry (JN) processed and the daily bank report. 3. Court fine remittances are entered in the NEW Court module Show ME Courts, totaled at the end of the day and a separate bank deposit is prepared with account summary totals provided to the Accountant for posting to the General Ledger. One court clerk balances all remittances and a second court clerk verifies. Police Clerk remittances are balanced and verified by a second person, a police officer. 4. Court and Police Clerk receipts are deposited intact during the week by a Police Officer and collection documentation totals are compared by the Accountant to bank deposits and to the provided cash receipts information. 5. Adequate physical controls exist over cash receipts from time of mail opening until time of bank deposit locked in the Accountants desk drawer. 6. The cashier function is segregated from the general ledger and subsidiary ledger functions. Finance employees with ledger access on very rare occasions work at the front desk (i.e. when more than one City Hall staffer is absent), however, this does not appear to be a reportable condition and could be difficult to eliminate this issue, due to the small size of the department staff. -3- Updated by Don Yucuis and submitted to Stopp&Vanhoy on 5-3-2019 7. A separate deposit is prepared and sent in its own bank bag with other City deposits to the depository bank via a police officer. 8. Deposits from City Hall are taken to the bank by the Director of Finance or Accountant. 9. Deposits from the Park are taken to the bank by the Park Administrative Assistant. 10. All deposit receipts are matched to the appropriate daily deposit report and entered into the General Ledger by the Accountant and matched with the daily bank reconciliation and the JN prepared is reviewed, printed, approved and updated by the Director of Finance in the Tyler Incode system. The Accountant reviews JN’s prepared by the Director of Finance, approves and updates. In both cases the Accountant and Director of Finance initial and provide the date and time Property and Equipment Proper accounting for the cost of capital assets requires that a distinction be made between expenditures, which should be classified as maintenance expenses, and expenditures that should be capitalized (charged to the capital assets accounts). In order to facilitate this distinction, the following policies should be followed: 1. All capital assets should be valued at cost or estimated cost if actual cost is not available. Donated capital assets should be valued at their fair market value on the date donated. 2. Capital assets acquired under lease/purchase agreements should be capitalized 3. Land held for development should be recorded at the lower of cost or net realizable value. 4. All capital assets are recorded in the Capital Improvement Fund or the Park and Stormwater Fund. Only items of $2,000 or greater should be included on the property records and accounted for as a capital asset item. Lots or groups of items should not be included when individual items cost less than $2,000. Any item of property that is readily separable, and separately useful from a larger assembly of which it forms a part, should be treated as a separate item. The cost of replacing any property item smaller than $2,000 should be accounted for, except for any substantial betterment involved, by charging such cost to maintenance expense. “Betterment” is defined as an addition made to, or change made in, a capital asset that is expected to prolong its life or to increase its efficiency over and above that arising from maintenance. Therefore, the cost of which should be added to the property records as a separate item. Betterments should have a cost of $2,000 or greater to be included as a capital asset. Minor items of property should include all parts or elements that make up a unit of property. If a minor item is retired and not replaced, no entry should be made until the retirement of the unit itself. If a minor item is replaced, the cost of replacement should be charged as maintenance expense, unless the entry should be made on the property record. Minor items may include building roofs, built-in air conditioning systems, or other elements that make up larger items. “Equipment” is defined as all tangible property except land, structures, and improvements. If the fund constructs part of its own equipment, all the items in connection with the construction of equipment, including labor and materials, should be added in order to arrive at the cost of such -4- Updated by Don Yucuis and submitted to Stopp&Vanhoy on 5-3-2019 equipment. If equipment is purchased, the cost includes, in addition to the purchase price, transportation expenses and cost of installation. Tools are distinguished from equipment by being defined as having a relatively small unit value, less than $2,000 each. Tools are expensed by the department that purchases them in the General Fund In accordance with GASB Statement No. 34, general government infrastructure assets (streets, bridges, sidewalks, easements, right-of-way, etc.) are being capitalized prospectively beginning in the year 2005 at historical cost. The costs of normal maintenance and repairs that do not enhance infrastructure functionality or materially extend the life of an asset are not capitalized. Capitalized assets are depreciated using the straight-line method over the following estimated useful lives: Asset Years • Buildings 40 • Building Improvements 40 • Improvements, other than buildings 15 • Machinery and equipment 10 • Furniture and fixtures 7 • Vehicles 5 • Police Vehicles 5 • Computer/data handling equipment 3 • Land, easements, and right-of-way- None • Infrastructure: Culverts and bridges, concrete 20 Parking lots, concrete 20 Culverts and bridges, metal 20 Streets and sidewalks, concrete 20 Traffic signals, street lights 20 Property and equipment are purchased only with proper authorization as described in the Purchasing policy. Detailed property and equipment ledgers are to be maintained and periodically reconciled to general ledger control accounts. Detailed ledgers are to be periodically reconciled to a physical inspection of property and equipment For property and equipment readily susceptible to theft or damage, the following safeguarding measures may be followed: a. Locks changed periodically and keys signed for, with keys on hand and signed out reconciled to total b. Exposed property secured (bolted, chained, etc.) and weather protected c. Employees with access bonded d. Adequacy of insurance coverage regularly reviewed e. Pass system (approved written document) in use for physical movement of assets off premises, for books, digital cameras, etc. Other Assets The City does not maintain any other assets. The only other recorded assets are the sales, property and gross receipts tax receivables recorded after the beginning of the year. The -5- Updated by Don Yucuis and submitted to Stopp&Vanhoy on 5-3-2019 receivables are recorded to adjust the financial statements to a modified accrual basis for government reporting. Through the year, the City operates on a cash basis and the receivables are left in place until the next year when the entries are reversed and current receivables are recorded. Purchasing, Accounts Payable, Cash Disbursements, Payroll 1. All spending for any fiscal year is anticipated in the budget for that year, which is prepared by the City Administrator with the assistance of the Director of Finance. The Budget is enacted by the Board of Aldermen through the passing of an ordinance. This ordinance authorizes appropriations for the fiscal year. 2. Disbursements are primarily made by check. - Payroll-Staff has a Payroll Checklist - Payroll: All employees receive direct deposits for payroll without exception. The ACH transfers for employee deposits are prepared by the Accountant, HR Manager or Director of Finance by uploading the ACH file from payroll system to the bank after approval by the City Administrator and Director of Finance. The retirement plan contributions and other like payroll payables are made via ACH transfer prepared by the Accountant, HR Manager or Director of Finance and approved by the Director of Finance in the balancing and posting of payroll transactions. TIF payments, Section 125 plan reimbursements, HRA deductible reimbursement are made via an ACH transfer prepared by the Accountant and approved by the Director of Finance. A/P Clerk has a procedure for Accounts Payable - - A/P-Payable Register: The A/P Clerk receives all approved invoices from Departments and any received through the mail are routed to the appropriate department. The A/P Clerk makes certain that the invoices are properly approved by the Department with a General Ledger (GL) account number. The invoices are entered and a Payable Register is processed that is reviewed by the Accountant and Director of Finance for accuracy of vendor and GL accounts. Once the review is completed, the Accountant approves that the Payable Register process in Tyler Incode. - - A/P-Payment Register: When a check run is to be processed for invoices, the A/P Clerk generates a Payment Register that is reviewed by the Accountant and Director of Finance. The Director of Finance or designee approves the Payment Register in Tyler Incode and initials and dates the register. The printed report is brought to the City Administrator, reviewed, signed and dated. The City Administrator or designee approves the Payment Register in Tyler Incode and initials and dates the register. - - AP-Check Printing: After the Payment Register is approved, the AP Clerk prints checks, processes for mailing thought the postage meter and places in the outgoing mail bin or delivers to the Department if requested. Invoices are attached to the checks in check order and the Director of Finance reviews each check prior to filing by the AP Clerk. - AP-Board of Alderman: A list of Bills is provided at each Board of Aldermen Agenda and presented by the City Administrator. No formal action is taken. -6- Updated by Don Yucuis and submitted to Stopp&Vanhoy on 5-3-2019 3. All checks must be signed by two check signers. The signatures of the Director of Finance, and the City Administrator, are generated electronically when the checks are run, after they approve the Payment Register expenses (invoices). 4. Accounts payable checks have system generated numbers. Checks are printed out of the Tyler Incode software system. The signatures are printed as part of the check processing. There are accounting controls that restrict access to the system and the printing of check signatures. All check stock is pre-numbered and the system matches the check numbers to the check stock. Account number and routing number are preprinted. The check amount, payee and signatures are printed when the checks are run. The check signature is password protected. The Director of Finance, and the City Administrator have the password. The ability to approve and sign the checks can be assigned to a designee by the Director of Finance in case of absence. 5. Purchase orders are prepared for purchases in excess of $5,000. If the purchase exceeds $5,000, the purchase will be approved (in the computer system) by the Director of Finance and purchases exceeding $10,000 will be approved by a resolution of the Board of Aldermen. After the goods or services are received, the department approved the shipping document, which functions as a payment authorization and forwards same to the Accountant and after October 2018 to the part-time AP Clerk. The Accountant and after October 2018 the part- time AP Clerk performs a three way match --- purchase order, invoice and receiving ticket --- then enters the package into the AP system in preparation for payment and check printing. There is a weekly check run, typically on Thursday. The Accountant and Director of Finance reviews the payment package (PO, Invoice, receiver, etc.) and approves by initialing the package, effectively canceling the invoice to help prevent it from being presented for payment twice. Also the software will not allow duplicate payments on the same invoice number to the same vendor. The Accountant does not have any approval authority. The Accountant reviews the checks for accuracy as does the Director of Finance when they review the final package (consisting of a copy of the check, the invoice, the receiving ticket and the purchase order). 6. The general ledger system is automatically updated as checks are prepared for both payroll and A/P once the checks are approved and processed in the system. 7. The Accountant is responsible for issuing a stop payment if needed. The Accountant maintains the voided checks. 8. Disbursements are regularly compared to budgeted amounts. The Department Head is responsible for their specific budget control area and the Director of Finance sends a Revenue and Expense report (called Income Statement Report in Tyler Incode) for the month to date within the first ten business days of the next month. Purchase orders which are entered against an account group which is already over budget or the purchase order causes the account group to be over budget, requires an over budget approval from the Director of Finance which is usually verbal and documented in the payment approval. The Accountant upon entering the purchase order and determines the over budget condition notifies their department head who requests over budget approval. 9. The ACH transfer process with Commerce Bank is a two person approval process. Final approval of the ACH in Commerce Connections cannot be made by the initiator. Commerce has an additional security level when the ACH is submitted for final approval. An automated call from Commerce Banks enhance security system is made to the final approval submitter to confirm that an ACH has been submitted and then enters his Commerce Bank enhanced security pin. Once confirmed, the ACH’s are approved for delivery on the date selected. 10. All ACH’s outside of payroll are initiated in the Commerce Bank on-line Commerce Connections system by the City Administrator, Accountant, Director of Finance or HR Manager. As long as it is not the initiator, the Director of Finance, City Administrator, -7- Updated by Don Yucuis and submitted to Stopp&Vanhoy on 5-3-2019 Accountant or HR Manager may approve the transaction(s). The largest ACH transfer is made to the UMB Trustee for Tax Increment Finance related activity and General Obligation Bond remittances. Any one time ACH transfer over $500,000 needs special approval by Commerce Bank. Debt/Bonds The City will limit long-term debt to only those capital improvements or projects that cannot be financed from current revenues. The maturity date for any debt will not exceed the reasonably expected useful life of the project to be financed. Except where determined by specific redevelopment projects, debt repayment will be structured based on the projected available funds to retire the debt. As a general approach, the City will use debt financing for construction of capital improvements and acquisition of capital equipment too large to be financed from current revenues. Proceeds from long term debt should only be used for construction project costs, acquisition of other fixed assets, bond issuance costs, debt service reserve requirements and refunding of outstanding bond issues. The City will not use debt for the financing of current, ongoing operations General Obligation, property tax-supported bonding should be used to finance only those capital improvements and long term assets which have been determined to be essential to the maintenance or development of the City. The City shall maintain a General Debt and Interest Fund balance which is at least 40% of the next calendar year’s debt service. The Finance Department should continually monitor outstanding debt issues to verify compliance with debt covenants and a third party may be contracted to file annual debt compliance reports. The City may prepay debt obligations when the Director of Finance, after receiving advice from the City’s financial advisor, determines it is advantageous for the City to do so. Prepaying an indebtedness requires Board Of Aldermen approval to proceed, the City’s Director of Finance shall report the determination to prepay the indebtedness to the Board of Aldermen and obtain formal Board of Aldermen approval. The City may accumulate funds in its debt service fund to legally defease outstanding obligations. Any action to defease debt will be based on an analysis of the comparative benefits and costs of such action, including the capacity to repay other future obligation. Other Liabilities Accrued compensated absences are reconciled and adjusted at the end of every year for financial accounting purposes. The court bond payable is reconciled monthly. Accrued payroll accounts are typically zero-balance accounts. Payment flows through with recorded payroll. The balances recorded at year end are calculated and reconciled at year-end to reflect mid-pay period expenses that match the reporting year. -8- Updated by Don Yucuis and submitted to Stopp&Vanhoy on 5-3-2019 Net Assets/Fund Balance In government-wide financial statements net assets are reported in three categories: net investment in capital assets; restricted; and unrestricted. Net investment in capital assets represents capital assets less accumulated depreciation less outstanding principal on related debt. Net investment in capital assets does not include the unspent proceeds of capital debt. Restricted net position represents amounts restricted by parties outside of the City (such as creditors, grantors, contributors, laws and regulations of other governments) and includes unspent proceeds of bonds issued to acquire or construct capital assets. All remaining net position is considered unrestricted. When both restricted and unrestricted sources are available for use, it is the City’s policy to use restricted first, then unrestricted resources as they are needed. Fund Balance Classification - The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows: • Nonspendable - Resources which cannot be spent because they are either a) not in spendable form or; b) legally or contractually required to be maintained intact. • Restricted - Resources with constraints placed on the use of resources are either a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or b) imposed by law through constitutional provisions or enabling legislation. • Committed - Resources which are subject to limitations the government imposes upon itself passing a resolution, and that remain binding unless removed in the same manner. • Assigned - Resources neither restricted nor committed for which a government has a stated intended use as established by the Board of Aldermen or an official to which the Board of Aldermen has delegated the authority to assign amounts for specific purposes. • Unassigned - Resources which cannot be properly classified in one of the other four categories. The General Fund is the only fund that reports a positive unassigned fund balance amount. Unassigned balances also include negative balances in the governmental funds reporting resources restricted for specific programs. The City would typically use Restricted fund balances first, followed by Committed resources and Assigned resources, as appropriate opportunities arise, but reserves the right to selectively spend Unassigned resources first. It is the City’s policy to maintain a Committed fund balance in the General Fund. The Commitment is adjusted annually with the adoption of the annual budget and is calculated as 20% of the General Fund appropriation (not including transfers to other Funds. -9- Updated by Don Yucuis and submitted to Stopp&Vanhoy on 5-3-2019 Human Resources Processes Hiring process • Work directly with Department Directors to determine open positions and creating corresponding job descriptions • Post open positions to company website as well as external websites i.e.: Indeed, college job boards, etc. • Develop interview questions for specific jobs • Review all applications for all open positions • Discuss salary information with City Administrator and Department Directors • Fill out Personnel Action Form for any changes to salary, benefit information, new hire, termination Termination process • Establish date of last day of employment with Department Head and employee • Send an Acceptance Letter to employee verifying last day of employment • Schedule exit interview or send exit interview questionnaire to employee to fill out and return to HR Other processes • Revising Personnel Manual in cooperation with City Administrator and City Attorney • Created new Personnel Action Form to reflect any change to employee information • Updating Excel sheets for health, dental, and life insurance enrollees • Coordinating with consulting firms to bid for health, dental, and life insurance • Partner with consultants for supplemental insurance and protection – Aflac and Legal Shield Payroll Processing Most of the City’s employees work a 40-hour 5-day work week. The Police Department has employees on varying shifts: five 8-hour days, four 10-hour days or a 12-hour shift, four days on, four days off. The Police department is fully scheduled in advance and the payroll is based on that schedule. All part-time and seasonal employees are scheduled. Employees earn vacation time which is accrued monthly. The accrual is calculated in the finance system, based on the employee’s length of service and time is added to the employee’s accrual balance. Sick time is accrued based on hours worked (to a maximum of 40 hours per week). This time is calculated and applied to the employee’s accrual balance with the calculation of payroll for the pay period. Compensatory time is recorded as earned, up to 24 hours accrued. All time off is scheduled in advance (except sick time) and approved by the department head. Payroll is processed bi-weekly. Employees maintain their own timesheet and turn them in to their supervisors who approve with their signature, turn into the Department Head who reviews, submits and brings the time sheets to the Finance. Employees time is either entered individually or by a designated person in a department into the Tyler ESS on-line time sheet program, submits for approval and is reviewed and approved by the Department Head except for the Police Department and the Public Works Department. The Police time gets entered in ESS by the Police Administrative Clerk after the approval of the Lieutenant and Chief. The Public Works - 10 - Updated by Don Yucuis and submitted to Stopp&Vanhoy on 5-3-2019 Department time is entered into ESS by the Supervisor, then goes to the Department head for approval. The Accountant, HR Manager or the Director of Finance checks the time sheets for accuracy, any exception forms, employee signature, & supervisor approval. The payroll register is reviewed by the Director of Finance and if no errors are found, approves it and gives it to the Accountant to transfer the payment to the bank for disbursement to direct deposit employee accounts after approval by the City Administrator. The Tyler Software updates attendance records, & comp time. A bi-weekly report is reviewed and retained by finance department. Payment advice is sent to each employee for their records by email. The Director of Finance reviews all g/l entries. The payroll entries are reviewed to posting. Payroll accruals are produced and recorded with the payroll processing. Payroll taxes are recorded in the general ledger as bank drafts. Retirement plan contributions are also recorded as bank drafts. Garnishments, supplemental insurance, Legal Shield, VSP Plan, and AFLAC contributions are recorded as payables. Payroll taxes are paid on-line to the IRS through EFTPS system, and to the MODOR through Collector Solutions, Inc. Starting in 2019, the Director of Finance reviews the receipt copy of the payment transfers to the IRS and MODOR, initials, dates and places in the quarterly payroll file. Retirement contributions are recorded in the ICMA-RC EZ Link website and an ACH transfer is prepared. An ACH transfer is also prepared for the employee Health Savings Account (HSA) and Paylocity Flex Benefit deposits. Those liabilities recorded as payables are paid with an ACH payment In 2019, the Accountant reconciles the ACH payments for ICMA, HSA and flex benefit to the GL right after the ACH is processed. Employees are not required to take mandatory vacations; however, restrictions are in place on how much vacation can be carried forward into each calendar year. Only half of the hours earned during the year can be carried forward to the next year unless pre-approved by the City Administrator. All employees are encouraged to use their vacation. Financial Reporting The City applies the criteria set forth in GASB Statement No. 14, The Financial Reporting Entity (GASB 14), to determine which governmental organizations should be included in the reporting entity. The City presently has no component units included within its reporting entity. Basic financial statements consist of the following:  Government-wide financial statements  Fund financial statements, and  Notes to the basic financial statements. The government-wide financial statements consist of the statement of net position and the statement of revenues, expenses, changes in net position and report information on all of the activities of the Primary Government. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges that would distort direct costs and program revenues reported for the various functions concerned. The statement of revenues, expenses and changes in net position demonstrates the degree to which the direct and indirect expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or activity. Indirect - 11 - Updated by Don Yucuis and submitted to Stopp&Vanhoy on 5-3-2019 expenses are allocated based on the annual cost allocation plan. Program revenue includes charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or activity and grants and contributions. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate fund based financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements. The major governmental funds are the General Fund, the Parks and Storm Water Projects Fund, the Capital Projects Fund, the Debt Service Fund, and the TIF Fund. GASB No. 34 sets forth minimum criteria (percentage of assets, deferred outflows, liabilities, deferred inflows, revenues or expenditures/expenses of either fund category for the governmental and enterprise combined) for the determination of major funds. The nonmajor funds are combined in a column in the fund financial statements. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned or, for property tax revenues, in the period for which levied. Expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Governmental funds financial statements are reported using the current financial resources measurement focus and the modified-accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers revenues available if they are collected within 60 days after year-end. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due. For the governmental fund financial statements, the City considers all revenues susceptible to accrual and recognizes revenue if the accrual criteria are met. Specifically, sales taxes, franchise taxes, licenses, interest, special assessments, charges for services, and other miscellaneous revenue are considered susceptible to accrual and have been recognized as revenue in the current fiscal period. The accounts of the City are organized on the basis of funds. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance related legal and contractual provisions. The City reports the following major governmental funds: The General Fund - The City’s primary operating fund, which accounts for all the financial resources and the legally authorized activities of the City except those required to be accounted for in other specialized funds. The Parks and Storm Water Projects Fund - The City uses this fund to account for sales tax revenue designated for parks and storm water projects. The Capital Projects Fund - The City uses this fund to account for sales tax revenue and proceeds from the issuance of debt designated for capital improvements. - 12 - Updated by Don Yucuis and submitted to Stopp&Vanhoy on 5-3-2019 The Debt Service Fund - The City uses this fund to account for the resources accumulated and payments made for the principal and interest on long-term general obligation debt of governmental funds. The TIF Fund - The City uses this fund to account for the activity from the Tax Increment Financing Commission for the Manchester Highlands. The other governmental funds of the City are considered nonmajor. They are special revenue funds, which account for specific revenue sources that are legally restricted to expenditures for specific purposes. IT-Access Controls All employees have unique login passwords and usernames. IT-Application Controls All employees with access the accounting system which is cloud based have unique login passwords and usernames. IT-Backup The accounting systems is cloud based on Tyler INCODE’s servers. - 13 -