(A) Accounting system.
(1) The city will establish and maintain its accounting systems per the North Carolina Local Budget and Fiscal Control Act. Financial systems will be maintained to monitor revenues and expenses monthly.
(2) The city will place emphasis on maintenance of an accounting system which provides strong budgetary and accounting controls. The system will be designed to provide reasonable assurance regarding both the safeguarding of assets against loss from unauthorized use or disposition, reliability of financial records for preparing financial statements and reports, and maintenance of accountability of assets.
(B) Basis of accounting. All records and reporting will be in accordance with generally accepted accounting principles and as follows for:
(1) Governmental funds. Governmental funds are reported using the modified accrual basis of accounting. Revenue is recognized when it becomes available and measurable. Expenditures are typically recognized in the period in which the liability is incurred except for:
(a) Significant inventories of materials and supplies that may be considered expenditures either when bought or used;
(b) Interest on general and special assessment long-term debt that is recognized on the date due; and
(c) Use of encumbrances.
(2) Enterprise funds. Enterprise funds are reported using the full accrual basis of accounting.
(C) Annual audit. An independent public accounting firm will perform an annual audit and issue an opinion on the annual financial statements and, if required, a management letter detailing areas within the financial process that need improvement. Auditing services and the auditor relationship will be evaluated annually.
(D) Fixed asset capitalization policy.
(1) The city will establish and maintain an inventory of fixed assets to account for the city's property. A fixed asset shall be any item with a useful life of at least two years and an acquisition cost equal to or greater than $5,000. Reporting of these assets and depreciation of all fixed assets will be made in accordance with current governmental accounting standards.
(2) Any items not meeting the criteria of a fixed asset shall be considered as non-capital equipment and consumable. Consumables are budgeted as departmental expenditures and will be purchased, managed and used by the respective city departments until their useful life expires. The Council shall be informed during the annual budget process of significant intended expenditures for non-capital equipment.
(Ord. passed 11-14-2016)