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Accordingly, all assets and liabilities are included in their respective balance sheets, and the reported fund <br /> equity (total reported assets, less total reported liabilities)provides an indication of the economic net worth of <br /> the fund. Operating statements for proprietary fund types (on an income determination measurement focus) <br /> report increases (revenues) and decreases (expenses) in determining total economic net worth. Under this <br /> determination, unbilled service receivables are recorded at year-end. <br /> This report has been prepared in conformance with Generally Accepted Accounting Principles(GAAP) <br /> as promulgated by the Governmental Accounting Standards Board (GASB). <br /> City Budget <br /> The City follows these procedures in establishing the budgetary data reflected in the financial <br /> statements: <br /> 1. The annual budget is adopted by the City Council after the holding of a hearing and provides <br /> for the general operation of the City. The operating budget includes proposed expenditures <br /> and the means of financing them. <br /> 2. The City Council approves total budgeted appropriations and any amendments to.appropriations <br /> throughout the year. This "appropriated budget" (as defined by GASH Cod. Section 2400.109) <br /> covers City expenditures in all governmental funds, except for debt service and capital <br /> improvement projects carried forward from prior years. <br /> The City Manager is authorized to transfer budgeted amounts between departments. Actual <br /> expenditures may not exceed budgeted appropriations at the fund level. Budget figures used <br /> in the accompanying financial statements are the final adjusted amounts. <br /> 3. Formal budgetary integration is employed as a management control device during the year. <br /> Commitments for materials and services, such as purchase orders and contracts, are recorded <br /> as encumbrances to assist in controlling expenditures. Encumbrances at year end carry <br /> forward, and are added to the following year's budgeted appropriations. However, <br /> encumbrances at year end are reported as reservations of fund balance, as allowed by GASB <br /> Cod. Section 1700.129d. Also, unencumbered appropriations lapse at year end. <br /> 4. Annual budgets are adopted for the General and Special Revenue Funds on a basis substantially <br /> consistent with generally accepted accounting principles (GAAP). Accordingly, actual <br /> revenues and expenditures can be compared with related budgeted amounts without any <br /> significant reconciling items. Revisions to the originally adopted budget were made during the <br /> year and have been incorporated into budgetary amounts presented within these financial <br /> statements. No budgetary comparisons are presented for the Capital Projects, Debt Service and <br /> Proprietary Funds, as the City is not legally required to adopt budgets for these fund types. <br /> Direct and Overlapping Bonded Debt <br /> The following table contains information on Tustin's direct and overlapping bonded indebtedness as <br /> of June 30, 1996. <br /> B-107 <br />