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HomeMy WebLinkAbout22253 1 ORDINANCE NO. 22,253 2 3 AN ORDINANCE TO AMEND LITTLE ROCK, ARK., REV. CODE 4 ARTICLE VI, DIVISION 5 (1988), FINANCIAL REPORTING 5 STANDARDS, TO UPDATE THE FINANCIAL REPORTING 6 ORDINANCES SO THAT THEY CONFORM TO CURRENT 7 GOVERNMENTAL REPORTING STANDARDS, PRACTICES, 8 TERMINOLOGY AND DEFINITIONS; TO DECLARE AN EMERGENCY; 9 AND FOR OTHER PURPOSES. 10 11 WHEREAS, the City of Little Rock's ("City") Board of Directors ("Board") desires to amend the 12 City's Financial Reporting Standards Ordinances so that they conform to current governmental reporting 13 standards, practices,terminology,and definitions; and, 14 WHEREAS, the City has an Annual Operating Budget that is in excess of Three Hundred Million 15 Dollars($300,000,000); and, 16 WHEREAS, the assets and deferred outflows of resources included in the City of Little Rock, 17 Arkansas' Annual Comprehensive Financial Report Government Wide Statement of Net Position for the 18 year ending December 31, 2021, including the primary government and component units, is Two Billion, 19 Seven Hundred Thirty-Nine Million, Three Hundred Eighty-One Thousand, Eight Hundred Dollars 20 ($2,739,381.800); and, 21 WHEREAS, the Board believes that financial reporting for a public sector entity such as the City 22 should conform to all relevant State Laws,as well as the Governmental Accounting,Auditing,and Financial 23 Reporting standards as set out by the Government Finance Officers Association, and should also be in a 24 format that is clearly recognizable to the members of the Board, as well as to the members of the public; 25 and, 26 WHEREAS, the Board has concluded that it is appropriate to adopt a uniform method of reporting 27 financial information to be used by the City Manager,the Chief Financial Officer and the staff of the City 28 Finance Department. 29 NOW, THEREFORE,BE IT ORDAINED BY THE BOARD OF DIRECTORS OF THE CITY 30 OF LITTLE ROCK,ARKANSAS: 31 Section 1. The Code of Ordinances for the City of Little Rock, Arkansas, Article VI, Financial 32 Reporting, Division 5, Financial Reporting Standards, is hereby amended to update the following sections: 33 Section 2-246-Definitions. 34 [Page I of 71 1 Accrual Basis of Accounting means a basis of accounting that recognizes the financial effect 2 of transactions, events, and interfund activities when they occur, regardless of the timing of 3 related cash flows. 4 Basis of Accounting means the method used to capture the timing of recognition,that is,when 5 the effects of transactions or events should be recognized for financial reporting purposes. For 6 example,the effects of transactions or events can be recognized on an accrual basis(i.e., when the 7 transaction or event takes place, or on a cash basis, i.e., when cash is received or paid). Basis of 8 accounting is an essential part of measurement focus because a particular timing of recognition is 9 necessary to accomplish a particular measurement focus. The cash basis of accounting shall not be 10 used by the city except to account for miscellaneous cash revenues such as fines,permits, licenses, 11 and fees that are not accrued,or for other items not practicably measured until cash is received. 12 Board of Directors means the Mayor and members of the Board of Directors of the City of 13 Little Rock, Arkansas. 14 City means the City of Little Rock,Arkansas. 15 City Clerk means the City Clerk, or designated representative, of the City, or if no one is 16 officially serving in the position,the Acting City Clerk, or designated representative. 17 City Manager means the City Manager, or designated representative, of the city, or if no one 18 is officially serving in the position, the Acting City Manager, or designated representative, which 19 may include an Assistant City Manager. 20 Cash Basis of Accounting means a basis of accounting that recognizes transactions or events 21 when related cash amounts are received or disbursed. 22 Chief Financial Officer means the Chief Financial Officer, or designated representative, or 23 if no one is serving in the position,the Acting Chief Financial Officer. 24 Consistency means the principle according to which once an accounting principle or 25 reporting method is adopted, it will be used for all similar transactions and events. 26 Expenditures means decreases in net financial resources under the current financial resources 27 measurement focus and pertains to payment of normal operating payments and encumbrances. 28 Expenditures are measured in governmental fund accounting. 29 Expenses mean the cost of doing business in a proprietary organization and can be either 30 outflows or the using up of assets(cost expiration)such as the depreciation of fixed assets. Within 31 the context of this division,"proprietary organization"or"proprietary fund"refers only to a method 32 of accounting and is not used as any reference to whether the enterprise is conducted in a 33 governmental or proprietary manner as that term is understood in Arkansas State Law. The City 34 shall operate all enterprises referred to in this division in its governmental capacity. (Page 2 of 7i 1 Fund Balance and Net Position mean the difference between fund assets plus deferred 2 outflows of resources and liabilities plus deferred inflows of resources reflected on the balance 3 sheet or statement of net position. 4 Generally Accepted Accounting Principles (GAAP) means the conventions, rules and 5 procedures that serve as the norm for the fair presentation of financial statements.Cash basis and 6 income tax basis are not considered to be in accordance with GAAP. 7 Government Fund type means funds generally used to account for tax-supported activities. 8 There are five (5) different types of Governmental Funds: the General Fund; Special Revenue 9 Funds; Debt Service Funds; Capital Project Funds: and Permanent Funds. 10 Modified Accrual Basis of Accounting means a basis of accounting according to which 1) 11 revenues are recognized in the accounting period in which they become available and 12 measurable; and 2) expenditures are recognized in the accounting period in which the fund 13 liability is incurred, if measurable, except for unmatured interest on general long-term debt and 14 certain similar accrued obligations, which should be recognized when due. 15 Month-End Close means one month following the month reported.Up to two(2)weeks shall 16 be allowed for the preparation of reports and variance analysis. 17 Proprietary Fund Type means funds that focus on the determination of operating income, 18 changes in net assets, or cost recovery, financial position, and cash flows. There are two (2) 19 different types of proprietary funds: Enterprise Funds and Internal Service Funds. Within the 20 context of this division,"proprietary organization,"or"Proprietary Fund"refers only to a method 21 of accounting and is not used as any reference to whether the enterprise is conducted in a 22 governmental or proprietary manner as that term is understood in Arkansas State Law. The City 23 operates all enterprises referred to in this division in its governmental capacity. 24 Retained Earnings means the excess of revenue or expenditures that has accumulated since the 25 inception of a proprietary fund. 26 Revenue(s) means: 27 (1) Increases in the net current assets of a governmental fund type from other than 28 expenditure refunds and residual equity transfers, but does not include any general 29 long-term debt proceeds and operating transfers in (which are classified as "other 30 financing sources") unless these constitute a reservation of fund balances for 31 encumbrances carried forward from the prior year and the expenditure for which the 32 fund balance was created has also been carried forward; or, 33 (2) Increases in the net total assets of a proprietary fund type from other than expense 34 refunds, capital contributions and residual equity transfers, but does not include 35 operating transfer in which are classified separately from revenues unless these [Page 3 of 7] 1 constitute a reservation of fund balances for encumbrances carried forward from the 2 prior year and the expense for which the fund balance was created has also been carried 3 forward. 4 Section 2-248- Monthly Financial Report. 5 The Board of Directors shall receive a monthly financial report as follows: 6 (a) Budget comparison reports for budgeted funds shall be prepared and submitted to the Board 7 of Directors by the City Manager and Chief Financial Officer within a reasonable time after 8 the month-end close as follows: 9 (1) A Monthly Financial Report, governmental fund type, which is an unaudited 10 statement of revenues, expenditures, and changes in fund balances which also 11 shows a comparison of budgeted to actual amounts. 12 (2)A Monthly Financial Report,proprietary fund type,which is an unaudited statement 13 of revenues, expenses and changes in net position which also shows a comparison 14 of budgeted to actual amounts. 15 (b) For purposes of this section, a "reasonable time after month-end close" shall, except for 16 the months of the first quarter and December, mean two(2) calendar weeks after month- 1 7 end close unless the Chief Financial Officer, prior to that time, notifies the Board of 18 Directors in writing that the time frame cannot be met because of circumstances beyond 19 the City's control and, provided that the report(s) will be published to the Board of 20 Directors in accordance with this division as soon as reasonably possible which shall be 21 within a time period not to exceed thirty (30) calendar days from the initial due date for 22 the report(s). 23 (1) For purposes of this section, a"reasonable time after month-end close" shall, for 24 the months of the first quarter and December, mean four(4) calendar weeks after 25 month-end close unless the Chief Financial Officer,prior to that time, notifies the 26 board of directors in writing that the time frame cannot be met because of 27 circumstances beyond the city's control and, provided that the report(s) will be 28 published to the board of directors in accordance with this division as soon as 29 reasonably possible which shall be within a time period not to exceed thirty (30) 30 calendar days from the initial due date for the report(s). 31 (c) For purposes of this section, any report issued shall also contain a written explanation of 32 significant variances of actual revenues and expenditures or actual revenues and 33 expenses. The definition of a significant variance for any Fiscal Year shall be determined 34 by the Board of Directors and shall be defined in a section of the Annual Budget 35 Ordinance for that Fiscal Year. [Page 4 of 7] 1 (d) Absent a signed and detailed written statement to the contrary, which may be presented 2 independently by either the City Manager or the Chief Financial Officer in the exercise of 3 their best professional judgment,the publication to the Board of Directors of any Monthly 4 Financial Report shall be deemed the equivalent of an affirmation by the City Manager and 5 the Chief Financial Officer that for the period identified in the report: 6 (1) The report has been prepared from the accounting records of the city; and 7 (2) The City Manager and the Chief Financial Officer believe the accounting records 8 accurately reflect: 9 (A) For the governmental fund type, the revenues and the expenditures and 10 the fund balances; or, 1 1 (B) For the proprietary fund type, the revenues and the expenses and the net 12 position. 13 (e) The Board shall include the receipt of the Monthly Financial Report as an agenda item at 14 the first regular meeting after its receipt. 15 (f) The format of all Monthly Financial Reports shall be in accordance with Governmental 16 Accounting Standards and shall include Annual Budget, Year-to-Date Budget, actual, 17 variance from Budget, and prior year for all budgeted funds. 18 Sec.2-251 -Publication of Financial Reports. 19 In addition to publishing reports required in this division to the Board of Directors,the City Manager, 20 Chief Financial Officer and City Clerk shall also publish them as follows: 21 (a) Monthly Financial Reports shall be made available to the public and shall be published 22 on any website the City maintains. 23 (b) Financial presentations regarding Financial Reports shall be made available on any 24 government access channel the City maintains with a cable television operator. 25 Sec. 2-253. - Destruction of Financial Records. 26 Financial Records necessary to fulfill the requirements of this division may be destroyed: 27 (a) Unless otherwise required by state statute or regulation, after the expiration of seven(7) 28 years, provided there has been an annual audit for the period covered by such records, 29 the City Manager may authorize the destruction of all records and documents pertaining 30 to the reports identified in this division if a memorandum has been prepared that 31 identifies the records and documents, the method of destruction,the date of destruction, 32 and the employee(s) who carried out the destruction; or, 33 (b) At any time that the originals of the records are no longer required for any evidentiary 34 purpose in a court of law and: (Page 5 of 7] 1 (1) The records have otherwise been retained in an electronic format or similar 2 technology; and, 3 (2) There has been an annual audit for the period covered by such records; and, 4 (3) Records retained in such a manner are accepted for accounting or evidentiary 5 purposes as true and accurate reflections of the information contained in the 6 record; and, 7 (4) There is on file an affidavit that sets forth the records that have been so retained, 8 the person or entity who placed the records in an electronic format or similar 9 technology, and a statement that the recordation is a true,accurate,and complete 10 preservation of the records; and, 11 (5) A back up copy of the records is available; and, 12 (6) The records are to be maintained in this form for at least a period of seven (7) 13 years. 14 Sec. 2-254. - Restricted Reserve Fund. 15 As a part of any City Budget,and as a part of all financial reports required by this division,there shall 16 be identified a restricted fund balance that constitutes a restricted reserve fund for the City. Any 17 changes in this fund from the most immediate prior report of a similar nature shall be noted and 18 explained by the City Manager and Chief Financial Officer. 19 Section 2-255. -Timeline for Finance Department Reporting Requirements. 20 As a part of each Annual Budget,the Board shall include a section which sets forth the timeline for 21 the receipt and reporting of information required by this division. This timeline shall be prepared by 22 the City Manager, after consultation with the Chief Financial Officer and all appropriate financial 23 institutions and shall constitute an annual guideline to assure the efficient and accurate maintenance 24 of City Fiscal Records and Reports. 25 Sec. 2-256. -Provisions in Relation to Federal and State Law. 26 (a) The provisions of this division shall be interpreted as supplemental to the provisions of 27 any Federal or State Law that addresses issues of Local Government Financial Reporting. 28 (b) The City Manager and Chief Financial Officer shall always be required to prepare and 29 publish Financial Reports in accordance with the provisions of this division. 30 (c) Notwithstanding the supplemental nature of this division, the City Manager and Chief 31 Financial Officer shall not be required to publish any financial reports otherwise required 32 by Arkansas State Law to be published if: 33 (1) The reports are duplicative to reports that are already published as required by 34 this division; and, [Page 6 of 71 1 (2) The Federal or State Law in question permits a municipality to obtain an 2 exemption from the publication provisions of the law; and, 3 (3) The City has received such an exemption. 4 Section 3. No monies donated, or otherwise provided to the City, for a specific purpose shall ever 5 be used at any time for a different purpose. 6 Section 4. Severability. In the event any title, section, paragraph, item, sentence, clause, phrase, or 7 word of this ordinance is declared or adjudged to be invalid or unconstitutional, such declaration or 8 adjudication shall not affect the remaining portions of the ordinance which shall remain in full force and 9 effect as if the portion so declared or adjudged invalid or unconstitutional was not originally a part of the 10 ordinance. 11 Section 5. Repealer. All laws,ordinances,resolutions,or parts of the same,that are inconsistent with 12 the provisions of this resolution, are hereby repealed to the extent of such inconsistency including,but not 13 limited to, Little Rock, Ark., Ordinance No. 18,605 (December 18, 2001), and the definition prior to the 14 passage of this ordinance of the term Retained earnings. 15 Section 6. Emergency Clause. It is essential to the City's public health, safety, and welfare to assure 16 that a uniform method of financial reporting be approved and in place, in order to assure that the Board of 17 Directors has all necessary and appropriate information available to it as it decides the various legislative issues it 18 faces during the Fiscal Year that are impacted by the financial condition of the City;further, the Board of 19 Directors believes that compliance with the terms and conditions of this amendment of the Financial Reporting 20 Standards Ordinances for the City of Little Rock, Arkansas; that are not already a part of the current City 21 Procedure, should begin immediately;therefore, an emergency is declared to exist and this ordinance shall be 22 in full force and effect from and after the date of this adoption. 23 PASSED: May 2, 2023 24 gillAPPROVED: 25 26 40.I 27 an '►angley, ity Clerk Frank Scott,Jr., Mayor 28 A' R• ED AS TO LEGAL FORM: 29 30 i A • .4-11.- 31 ..Ii._31 Thomas M. Carpenter, ity Attor 32 // 33 // 34 // 35 // [Page 7 of 7]