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City of Redwood City 7.1.A. - Page 65 <br /> Notes to the Basic Financial Statements <br /> For the year ended June 30, 2014 <br /> NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br /> Fiduciary funds — These funds are used to account for assets held by the City in a trustee capacity or as <br /> an agent for individuals, private organizations, other governmental units, and /or other funds. The City <br /> maintains one private purpose trust fund to account for activities of the Successor Agency to the former <br /> Redevelopment Agency. <br /> The City also maintains four agency funds - Employee Benefit Plans Fund, Pacific Shores Community <br /> Facilities District Fund, the Shores Transportation Improvement District Fund, and the One Marina <br /> Community Facilities District Fund - as an agent of the bondholders or City employees. <br /> D. Basis of Accounting <br /> The government -wide and proprietary fund financial statements are reported using the economic <br /> resources measurement focus and the full accrual basis of accounting. Revenues are recorded when <br /> earned and expenses are recorded at the time liabilities are incurred, regardless of when the related <br /> cash flows take place. <br /> Governmental funds are reported using the current financial resources measurement focus and the <br /> modified accrual basis of accounting. Under this method, revenues are recognized when measurable <br /> and available. The City considers all revenues reported in the governmental funds to be available if the <br /> revenues are collected within 90 days after year -end. <br /> The City's fiduciary funds consist of one private purpose trust fund and agency funds which use the <br /> accrual basis of accounting. The private purpose trust fund uses the economic resources measurement <br /> focus, whereas the agency funds do not have a measurement focus. <br /> During fiscal year 2004/05, the State of California changed the distribution method of the City's sales <br /> tax allocation under a program called the "Triple Flip." Under the "Triple Flip," 25% of the City's <br /> share of sales tax is now distributed from property tax receipts, with remittance of the sales tax <br /> to the City coinciding with the semiannual collection of property tax receipts from property owners in <br /> December and April. To recognize the sales tax revenue earned as of June 30, the City has changed its <br /> availability period for sales tax revenue from 90 days after year -end to seven months after year -end. <br /> The change in the availability period for sales tax will enable the City to accurately reflect sales tax <br /> earned in the reporting period. <br /> Expenditures are recorded when the related fund liability is incurred, except for principal and interest <br /> on general long -term debt, claims and judgments, and compensated absences, which are recognized <br /> as expenditures to the extent they have matured. <br /> General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of <br /> general long -term debt and acquisitions under capital leases are reported as other financing sources. <br /> Non - exchange transactions, in which the City gives or receives value without directly receiving or giving <br /> equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual <br /> 37 <br />