Comprehensive Annual Financial Report June 30, 2011 - Western ...

Relevant Financial Policies
Accounting System & Budget Control
The Authority’s accounting records are maintained on an accrual basis under which revenues are
recognized when earned and expenses are recognized when incurred. Accounting functions are
separated to the extent possible for a small - sized staff. The County of Roanoke, under the
Operating Agreement between the City of Roanoke and County of Roanoke provides fleet and fuel
management services to the Authority. Under the same agreement, the City of Roanoke provides
information services support to the Authority.
Under the Water and Waste Authorities Act, the Authority is not required to adopt a legal budget,
but under its bylaws and bond covenants, the Authority’s Board of Directors must adopt an annual
budget before the first day of each fiscal year. The budget is prepared by the finance and
administration divisions and serves as a framework for the Authority’s financial planning for the
year. The Executive Directors have authorization from the Board to move funds within the line item
budget without additional Board approval. A report of revenues and expenses is presented to the
Board each month at the public meeting.
The annual budget process includes the use of rate modeling to prepare a five year plan which is
used to assure that short and long term financial objectives are being met. A five year Operational
and Maintenance forecast and a five year Capital Improvement Plan are prepared annually in the
budget process.
The Authority’s finances are organized into two funds, Water and Water Pollution Control. The
Water fund fully supports debt incurred for water facilities and the water capital improvement
plan, as well as fully funding the water operations division and 50% of field operations, engineering
services, finance and administration, and utility internal services.
The WPC Fund supports debt incurred for wastewater facilities, the wastewater and water pollution
control plant capital improvement plans, the operations of the water pollution control division, and
50% of field operations, engineering services, finance and administration, and billing and collection
services.
The Authority has in place a fiscal policy as a component of its financial strategic plan that will
preserve and improve the sound financial condition of the Authority. The policy outlines the
targeted levels and timeframe to fund several reserve funds including contingency and emergency
operating reserve funds. These funds will accumulate to reach an appropriate level over a 10 to 15
year period. During the year ended June 30, 2011 the scheduled annual funding to each reserve was
accomplished.
Risk Management
The Authority relies on several techniques to minimize risk: safety training for employees, proper
maintenance of equipment and facilities, continued observation for potential hazards, and prompt
response upon discovery of a problem. Not only do these actions reduce potential risks to the Water
Authority, they are also sound business practices that improve customer service and overall
organizational performance. Worker’s compensation, property, vehicle, equipment and liability
insurance services are carried by Virginia Municipal League. Note 8 of the Notes to Financial
Statements provide additional information on risk management.
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