SIGNIFICANT ACCOUNTING POLICIES
The financial statements for the City conform with GAAP as applicable to governments. The most significant of the City’s accounting policies are described
below.
A.
Reporting Entity
The City of Livermore was incorporated April 1, 1876. The City operates under the Council-Manager form of government and provides the following
services: public safety (police and fire); highways and streets; sewer; water; public improvements; planning and zoning; general administration services
and housing services.
The Livermore Capital Projects Financing Authority provides financing assistance to the City and has been included in the financial plan document as the
Livermore Capital Projects Financing Authority Debt Service Funds and as part of the Airport Enterprise Fund, the Sewer Enterprise Fund and the Las
Positas Golf Course Enterprise Fund. The Authority is controlled by the City and has the same governing body as the City, which also performs all
accounting and administrative functions for the Authority.
B.
Basis of Accounting
The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the full accrual basis.
Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this
method, revenues are recognized when measurable and available. Measurable means the amount of the transaction can be determined and available
means the amount is collectible within the current period or soon enough thereafter (sixty days in the City's case) to be used to pay liabilities of the
current period.
Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include: taxes, grants,
entitlements and donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed. Revenue
from grants, entitlements and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
Other revenues susceptible to accrual are property taxes, sales taxes, interest revenue and charges for services. Fines, license and permit revenues are not
susceptible to accrual because they are generally not measurable until received in cash.
Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability has matured. An exception to this
general rule is principal and interest on governmental funds' long-term debt, which is recognized when due. Financial resources usually are appropriated in
other funds for transfer to a debt service fund in the period in which maturing debt principal and interest must be paid. Such amounts are thus not current
liabilities of the debt service fund, as their settlement will not require expenditure of existing fund assets.
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The City follows Statements and Interpretations of the Financial Accounting Standards Board statements and its predecessors issued on or before November
30, 1989, in accounting for its business-type activities, unless they conflict with GASB pronouncements. As such, the City may fund certain programs
with a combination of cost-reimbursement grants, categorical block grants and general revenues. Thus, both restricted and unrestricted net assets may
be available to finance program expenditures. When multiple categories of fund balance are available for expenditure, the City will spend the most
restricted funds first before moving down to the next category with available funds in the following order: 1) Restricted, 2) Committed, 3) Assigned and 4)
Unassigned. Certain indirect costs are included in program expenses, reported for individual functions and activities.
C.
Fund Accounting
The City uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to
aid financial management by segregating transactions related to certain City functions or activities. A fund is an accounting entity with a self-balancing
set of accounts established to record the financial position and results of operations of a specific activity. The City maintains the following fund types:
Governmental Fund Types
x
x
x
x
General Fund: The General Fund is the government’s primary operating fund. It accounts for all financial resources of the general
government, except those required to be accounted for in another fund.
Special Revenue Funds: Special Revenue Funds account for the proceeds of specific revenue sources (other than special assessments,
expendable trusts or capital projects) that are restricted by law or administrative action to expenditures for specified purposes.
Debt Service Funds: Debt Service Funds account for the accumulation of resources for, and the payment of, long-term debt principal,
interest and related costs.
Capital Project Funds: Capital Project Funds account for the acquisition and construction of major capital facilities not financed by
Proprietary Funds.
Proprietary Fund Types
x
x
Enterprise Funds: Enterprise Funds account for operations in a manner similar to private business enterprises where the intent is for the
costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis to be financed or recovered
primarily through user charges.
Internal Service Funds: Internal Service Funds account for the financing of goods or services provided by one department or agency to other
departments or agencies of the City or to other governmental units, on a cost-reimbursement basis.
Fiduciary Fund Types
x
Agency Funds: Agency Funds account for assets held by the City as trustee or agent for individuals, private organizations, or other
governmental units and/or other funds. These funds are custodial in nature (assets correspond with liabilities) and do not involve measurement
of results of operations.
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