The Town utilizes fund accounting to record and
report its various activities. A fund represents both a legal and an
accounting entity which segregates the transaction of specific programs
in accordance with special regulations, restrictions or limitations.
There are three basic fund types:
1– governmental funds that are used to account for basic services and
capital projects;
2– propriety funds that account for operations of a commercial nature;
and
3– fiduciary funds that account for assets held in a trustee capacity.
Account groups, which do not represent funds, are used to record fixed
assets and long-term obligations that are not accounted for in a
specific fund.
The Town presently maintains the following governmental funds: General
Fund, Special Grant Funds, Highway Fund, Debt Service Funds, Special
Revenue Funds and the Capital Project Funds. Proprietary funds consist
of Internal Service Funds and the Self Insurance Funds. Fiduciary funds
consist of the Trust & Agency Fund & Expendable Trust Funds. Account
groups are maintained for fixed assets and long term debt.
The Town’s governmental funds are currently accounted for on a modified
accrual basis. A modified accrual basis of accounting recognizes
increases and decreases in financial resources only to the extent that
they reflect new-term inflows or outflows of cash. Amounts are
recognized as revenues when earned, only as long as they are collectible
within the period or soon enough afterwards to be used to pay
liabilities of the current period. Similarly, debt payments and a number
of specific accrued liabilities (judgments and claims, compensated
absences, landfill closure and post closure costs, operating, leases
etc.) are only recognized as expenditures when payment is due.
The Town’s proprietary funds are accounted for on a full accrual basis.
A full accrual basis of accounting recognizes increases and decreases in
economic resources as soon as the underlying event or transaction
occurs. Thus, revenues are recognized as soon as they are earned and
expenses are recognized as soon as a liability is incurred, regardless
of the timing of related cash inflows or outflows.
The Town’s fiduciary funds are accounted for on a cash basis. A cash
basis of accounting recognizes expenses only when paid and revenues only
when received.
