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CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2023 I. Summ�irA, of Sidjnifcant AccountinMW Policies (Continued) H. Revenues and Expenditures/Expenses (Continued) 3. Compensated Absences Vacation and sick leave benefits are accumulated by City employees in accordance with guidelines suggested in the City's personnel policies. 4. Proprietary Funds Operating and Nonoperating Revenues and Expenses Proprietary Funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the water and sewer enterprise fund are charges to customers for sales and services. The water and sewer fund also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds include the cost of sales and service, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. I. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. J. Recent Accounting Pronouncements Adopted During fiscal year 2023, the City adopted the following Governmental Accounting Standards Board (GASB) Statements: GASB Statement No. 94, Public -Private and Public -Public Partnerships and Availability Payment Arrangements, improves financial reporting by addressing these relationships and availability payment arrangements. The requirements of this Statement are effective for fiscal years beginning after June 15, 2022. The requirements of this Statement have no impact on the City's financial statements. GASB Statement No. 96, Subscription -Based Information Technology Arrangements (GASB 96), provides guidance on the accounting and financial reporting for subscription -based information technology arrangements (SBITAs) for government end users. This statement (1) defines a SBITA; (2) establishes that a SBITA results in a right -to -use subscription asset — an intangible asset — and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments; and (4) requires note disclosures regarding a SBITA. The requirements of this statement are effective for reporting periods beginning after June 15, 2022, with earlier application encouraged. The City has implemented this Statement in fiscal year 2023. Beginning balances of SBITAs is immaterial to the financial statements and therefore, required to restatement of prior periods. GASB Statement No. 99, Omnibus 2022, enhances comparability in accounting and financial reporting and improves the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statements and (2) accounting and financial reporting for financial guarantees. The practice issues related to clarification provision in Statement No. 87, Leases and clarification provisions in Statement No. 96, Subscription -Based Information Technology Arrangements, and all other applicable requirements of this Statement were implemented in fiscal year ended September 30, 2023. 40