Comprehensive Annual Financial Report (CAFR) - Johnson City

CITY OF JOHNSON CITY 1 TENNESSEENOTES TO THE FINANCIAL STATEMENTSFor the Fiscal Year Ended June 30, 20111. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):D. Assets, liabilities and net assets or equity (continued)11. ConcentrationThe City depends upon financial resources flowing from, or associated with, both the FederalGovernment and the State of Tennessee. Because of this dependency, the City is subject tochanges in specific flows of intergovernmental revenues based on modifications to Federal andState laws and Federal and State appropriations.12. Accounting ChangeProvisions of Governmental Accounting Standards Board (GASB) Statement No. 54, FundBalance Reporting and Governmental Fund Type Definitions became effective for the yearended June 30, 2011.GASB Statement No. 54 establishes fund balance classifications that comprise a hierarchy basedprimarily on the extent to which a government is bound to observe constraints imposed upon theuse of the resources reported in governmental funds. These classifications includenonspendable, restricted, committed, assigned, and unassigned and are based on the relativestrength of the constraints that control how specific amounts can be spent. Also, Statement No.54 clarified the definitions of the General Fund and the Special Revenue, Capital Projects, Debt.Service, and Permanent Fund types. The City has implemented provisions of this statement inthe fmancial statements of this report for their governmental funds.52