05 Audit for FY01-02 - Laserfiche WebLink

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City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 Summary of Significant Accounting Policies (Continued) C. Assets, Liabilities and Equity (Continued) 6. Compensated Absences Vacation and sick leave benefits are accrued by City employees in accordance with guidelines suggested in the City's personnel policy. For governmental funds, the estimated current portion of accrued vacation and sick pay liability is considered immaterial and is not recorded as an expenditure or liability of the General Fund. The non-current portion of the liability is recorded in the General Long- Term Debt Account Group. Actual vacation and sick leave benefits paid during the year are recorded as expenditures in the governmental funds. For proprietary funds, vacation and sick pay are recorded as an expense and related liability in the year earned. 7. Long-Term Obligations The City reports long-term debt of governmental funds at face value in the General Long-Term Debt Account Group. Certain other govern- mental fund obligations not expected to be financed with current available financial resources are also reported in the General Long- Term Debt Account Group. Long-term debt and other obligations financed by proprietary funds are reported as liabilities in the appropriate funds. For governmental fund types, bond premiums and discounts, as well as issuance costs, are recognized during the current period. Bond proceeds are reported as an other financing source net of the applicable premium or discount. Issuance costs, even if withheld from the actual net proceeds received, are reported as debt service expenditures. For proprietary fund types, bond premiums and dis- counts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Issuance costs are reported as deferred charges. 8. Fund Equity Reservations of fund balance represent amounts that are not appro- priable or are legally segregated for a specific purpose. Reserva- tions of retained earnings are limited to outside third-party restrictions. Designations of fund balance represent tentative management plans that are subject to change. The proprietary fund's contributed capital represents equity acquired through capital grants and capital contributions from developers, customers, or other funds. 2O