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City of <strong>Moreno</strong> <strong>Valley</strong>, California<br />
Community Services District<br />
Notes to <strong>Financial</strong> Statements<br />
June 30, 2011<br />
Note 1: Summary of Significant Accounting Policies<br />
a. Description of the <strong>Report</strong>ing Entity<br />
The City of <strong>Moreno</strong> <strong>Valley</strong>, California Community Services District (the District), was<br />
created by a City Council ordinance adopted on December 3, 1984. Its purpose is to act<br />
as a legal entity, separate and distinct from the City of <strong>Moreno</strong> <strong>Valley</strong> (the City), even<br />
though the City Council is currently serving as the District’s Governing Board. The<br />
District is broadly empowered to engage in the general maintenance and administration<br />
of the City’s community programs.<br />
Governmental Accounting Standards define the reporting entity as the primary<br />
government and those component units for which the primary government is financially<br />
accountable. <strong>Financial</strong> accountability is defined as appointment of a voting majority of<br />
the component unit’s board, and either: a) the primary government has the ability to<br />
impose its will, or b) the possibility that the component unit will provide a financial benefit<br />
to, or impose a financial burden on the primary government. Since the City Council of the<br />
City of <strong>Moreno</strong> <strong>Valley</strong> also serves as the Governing Board of the District, the City, in<br />
effect, has the ability to influence and control operations. Therefore, the City has<br />
oversight responsibility for the District. Accordingly, in applying the criteria of<br />
Governmental Accounting Standards, the financial statements of the District are included<br />
in the City’s Comprehensive Annual <strong>Financial</strong> <strong>Report</strong>. The District has the same fiscal<br />
year end as the City and its financial statements can be obtained from the City Clerk.<br />
b. Government-Wide and Fund <strong>Financial</strong> Statements<br />
The government-wide financial statements (i.e., the statement of net assets and the<br />
statement of activities) report information on the component unit. For the most part, the<br />
effect of interfund activity has been removed from these statements.<br />
The statement of activities demonstrates the degree to which the direct expenses of a<br />
given function or segment are offset by program revenues. Direct expenses are those<br />
that are clearly identifiable with a specific function or segment. Program revenues<br />
include: 1) charges to customers or applicants who purchase, use or directly benefit from<br />
goods, services or privileges provided by a given function or segment, and 2) grants and<br />
contributions that are restricted to meeting the operational or capital requirements of a<br />
particular function or segment. Taxes and other items not properly included among<br />
program revenues are reported instead as general revenues.<br />
Major individual governmental funds are reported as separate columns in the fund<br />
financial statements.<br />
c. Measurement Focus, Basis of Accounting and <strong>Financial</strong> Statement Presentation<br />
The government-wide financial statements are reported using the economic resources<br />
measurement focus and the accrual basis of accounting. Revenues are recorded when<br />
earned and expenses are recorded when a liability is incurred, regardless of the timing of<br />
related cash flows. Property taxes are recognized as revenues in the year for which they<br />
have been levied. Grants and similar items are recognized as revenue as soon as all<br />
eligibility requirements imposed by the provider have been met.<br />
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