Financial Management and Accounting Procedures

TULARE COUNTY ASSOCIATION OF GOVERNMENTS

(TCAG)

TULARE COUNTY TRANSPORTATION AUTHORITY

(TCTA)

TULARE COUNTY LOCAL AGENCY FORMATION COMMISSION

(LAFCO)

FINANCIAL MANAGEMENT AND ACCOUNTING PROCEDURES

Introduction

The Organization

Reporting Entity

Fund Accounting

TCAG Fund Types

Explanation of Fiduciary Fund Type

Explanation of Governmental Fund

Measurement Focus and Basis of Accounting

Owp and Budget Principles

Snapshot of the Accounting Calendar

Financial Management and Accounting

Organization of the Account System

General

Measurement Focus

Basis of Accounting

Funds and Accounting Groups

Internal Controls

Records and Reports

Purchasing

Responsibility and Control

General Responsibility

Expenditure Control

Requisition, Purchasing, Procurement, and Contracting Procedures

Purchase Orders and Requisition of Supplies

Bidding Procedures

Professional Consultant Selection Procedure

Contract Preparation and Administration

Disadvantaged Business Enterprise Program (DBE)

Policy Statement

Establishment of Goal

Contract procedure

Selection Criteria for Projects with DBE Goal

Set – Asides

Counting DEB Participants

Records and Reports

Complaints

Challenges

Costs of Administration of Policy

Fixed Assets

General

Cost Allocation

Cost Allocation Plan

Agency Trust Funds – Transportation Development Act

Designation

Basis of Tax Revenue Apportionments

Apportionment of Fund Tax Revenues

Apportionment of Fund Interest Revenues

Disbursement of Fund Assets

Grant Tracking

Grant Activities

Revenues

Fee and Charges

Loans

Invoicing and Accounts Receivable

Deposits

Processing Deposits from Customers/Clients/Agencies

Recording and Tracking Payments

Mail Reciepts

Over the Counter Receipts

Expenses

Manual Warrant Procedures

Payroll

Benefits

Travel Reimbursement

Accounts Payable Processing

Measure R

Measure R Administration Procedures

Preliminary Review/ General Requirements

Project Initiation

Reimbursement Requests

Supplemental Amendments and Change Orders

Project Completion/Close Out

Work Plan

Agreements

Ledgers

Quarterly Reports

Audits

TDA

LTF and STA processing

LTF

STA

AVA

COS (transit)

Reconciliations and Reporting

Monthly

FHWA

Quarterly

FHWA

Lobbying Report

Annually

Audits

Year End Processing

General Ledger Reconciliation

Reporting

Audit Preparation and Reporting

OWP and Budget Administration

Purpose

Mandate

Organization

Contents

Fiscal Year

Cycle

Preparation, Review and Adoption

General Participation

Preparation

Adoption

Expenditure Control, Transfers, and Supplemental Requests

Expenditure Control

Budgetary Transfers

Supplemental Requests

Introduction

The management of the Tulare County Association of Governments (TCAG) is responsible forestablishing and maintaining a system of internal accounting control and that transactions are executed in accordance withgenerally accepted accounting principles. The Tulare County Association of Governments also sits as the Tulare County Transportation Authority (TCTA) and staffs the Tulare County Local Agency Formation Commission (LAFCO).

The Accounting Procedures Manual is intended to be a guide for the fiscal procedures of TCAG. The manual will serve both the management and the accounting staff to maintain goodinternal accounting and administrative controls, assist in the expected flow of accountingdocumentation, and to establish a uniform and systematic accumulation of information andstatistical data necessary to fulfill the financial and accounting requirements of TCAG, TCTA and LAFCO.

Annual audits of the Tulare County Association of Governments by an Independent Certified Public Accountant will be performedin accordance with the State of California audit requirements. The California Legislation hasmandated the performance of financial audits for all local governmental entities in the State ofCalifornia.

A single audit report is also prepared in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and in conformance with OMBCircular A-133.

TCAG’s annual audit is routinely filed with each member government, the California State Controller’s Office and the U.S. Department ofTransportation.

TCAG incurs costs which must be borne by specific projects. These costs can beidentified as either direct or indirect costs. Direct costs (i.e., payroll, contractual and items purchased for a specific project) can be identified specifically with a particular project. Indirect Costs (i.e., telecommunications, postage,office supplies, depreciation, building maintenance, utilities, and risk insurance) cannot be easily identified specifically with aparticular project. These costs are designated as such and are not reimbursable from any state or federal funds.

TCAG’scost accounting system for labor (WINCAMS) provides for identification of all labor costs directed to a particular project or work element. Indirect labor costs are calculated each pay period and appropriately allocated to work elements. TulareCounty’s Financial accounting system (AFIN) provides the means for payment of invoices, staff salaries, and interdepartmental charges and tracking of deposits.AFIN provides a General Ledger, balance sheet, and trial balance.

The Organization

The Tulare County Association of Governments is a Joint Powers Agency created on the 4th day of May, 1971 by the County of Tulare and the Cities of Dinuba, Exeter, Farmersville, Lindsay, Porterville, Tulare, Visalia and Woodlake. The role of the Tulare County Association ofGovernments is to serve the functions designated by the signatories to the agreement.Generically, TCAG’s role is to foster intergovernmental coordination both within TulareCounty as well as with neighboring jurisdictions, the other regional agencies in the SanJoaquinValley, the state of California and various Federal agencies.

The Tulare County Association of Governments is directed by a sixteen member board composed of the locally elected officials and three members-at-large. The Board has five members of the TulareCounty Board of Supervisors and one member from each of its incorporated cities. The members-at-large are appointed by a majority of the members on the current board. The Tulare County Association of Governments minus the members-at-large sit as the Tulare County Transportation Authority. The activities of TCAG are carried out bya professional staff. The professional staff is comprised of County of Tulare employees hired for TCAG. As of 07/01/2010,TCAG staff began staffing theTulare County Local Agency Formation Commission.

TCAG prepares its financial statements in conformity with generally accepted accounting principles as applied to government units. The Governmental Accounting Standards Board(GASB)is the accepted standard setting body for establishing governmental accounting and financialreporting principles.

Reporting Entity

The Tulare County Association of Governments, the regional transportation planning agency for the County of Tulare, was created pursuant to Title 3 of Government Code Section 29532.TCAG is responsible for transportation planning activities as well as administration of theLocal Transportation Fund and the State Transit Assistance Fund in accordance with theapplicable sections of the Government Code, Public Utilities Code and Administrative Codeincluded within the Transportation Development Act. The Council also is the LocalTransportation Authority (LTA) pursuant to Section 1, Division 19 (commencing with Section180000) of the Public Utilities Code as designated by the TulareCounty board ofSupervisors. In 2006, the TulareCounty voters passed an ordinance (Measure R) resultingin a sales tax increase of one-half of one percent for transportation improvements for the next 30 years. TCAGoversees the collection and distribution of the sales tax in accordance with the Measure R Expenditure Plan as the Tulare County Transportation Authority. TCAG also serves as the census data center, operates a research and travel forecastingmodel, prepares a regional housing needs plan, staffs the Local Agency Formation Commission (LAFCO) andprovides technical assistance to local agencies and member jurisdictions as needed. Additionally, TCAG oversees the Abandon Vehicle Abatement Program (AVA) and the College of the Sequoia xxxx.

Fund Accounting

TCAG uses funds and account groups to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financialmanagement by segregating transactions related to certain government functions or activities.

Funds and account groups are organized and accounted for as separate fiscal and accountingentities with self-balancing sets of accounts. TCAG uses the fiduciary funds.

TCAG Fund Types

TCAG uses what are considered Fiduciary Funds. They include, TCAG General Fund, Measure R, Abandoned Vehicle Abatement (AVA), Local Agency Formation Commission (LAFCO), LTF funds and STA funds.

Explanation of Fiduciary Fund Type

Fiduciary fundreporting focuses on net assets and changes in net assets.. The three types of trust funds should be used to report resources held and administered by the reporting government when it is acting in a fiduciary capacity for individuals, private organizations, or other governments. These funds are distinguished from agency funds generally by the existence of a trust agreement that affects the degree of management involvement and the length of time that the resources are held. GASB 34 Paragraph 69.

TCAG Fiduciary Funds - The Trust Funds are used to account for financial resource and assets held by TCAG in a trustee capacity for individuals, private organizations, other governments, and/or other funds. These funds are considered expendable trust funds and are accounted for in essentially the same manner as the governmental fund using a modified accrual basis of accounting. TCAG’s Fiduciary Trust Funds include: TCAG General Fund, the Local Transportation Funds, State Transit Assistance Funds, Local Agency Formation Commission Fund (LAFCO) and the Measure R Fund. The Local Transportation Fund and State Transit Assistance Funds represent allocations under the Transportation Development Act whereby agencies wishing to receive funds file a claim with TCAG. The LAFCO Fund represents dues from member agencies and application fees forcoordinating logical and timely changes in local governmental boundaries, conducting special studies which review ways to reorganize, simplify, and streamline governmental structure and preparing Spheres of Influence for each city and special districts within each county. The Measure R Fund represents the additional sales tax approved for use on transportation improvements.

Explanation of Governmental Fund

Governmental funds are often referred to as "source and use" funds. These are the funds through which most governmental functions typically are financed. The fund types included in this category are general, special revenue, capital projects, debt service, and special assessment funds

TCAG Governmental Funds – Abandoned Vehicle Abatement Fund serve primarily as a pass-through fund between member agencies and TCAG.

Measurement Focus and Basis of Accounting

The accounting and financial reporting treatment applied to a fund is determined by itsmeasurement focus. All Fiduciary Fundsare accounted for using a current financial resources measurement focus. With this measurement focus, onlycurrent assets and current liabilities generally are included on the balance sheet. Operatingstatements of these funds present increases (i.e., revenues and other financing sources) anddecreases (i.e., expenditures and other financing uses) in net current assets. The modifiedaccrual basis of accounting is used by all Fiduciary Funds. Under the modified accrual basis of accounting, revenues are recognized whensusceptible to accrual (i.e., when they become both measurable and available). “Measurable”means that the amount of the transaction can be determined and “available” means collectiblewithin the current period or soon enough thereafter to be used to pay liabilities of the currentperiod. Revenues which are accrued include sales tax and interest income. Expenditures arerecognized in the accounting period in which the liability is incurred.

Owp and Budget Principles

On or before April 15, the Tulare County Association of Governments shall prepare a DRAFT budget for the ensuing fiscal year to commence on July 1, and shall submit the same for approval by the TCAG board for the carrying outof tasks within the approved work programfor the year. Any use of amendments of the budget shall be at the sole discretion of the Tulare County Association of Governments Board and submitted to Cal Trans by May 1st of the Current Fiscal Year. Operating budgets are prepared on the modified accrual basisof accounting. Budgetary control and the legal level of control are at the work element level aswell as the object level. Amendments, appropriation transfers between workelements and objects and transfers from contingencies must be approved by the Tulare County Association of Governments Board unless previously approved in the current year OWP. Supplemental appropriations financed by unanticipated revenues also must beapproved by the Board.

Snapshot of the Accounting Calendar

January

OWP preparation begins for the new Fiscal Year

Lobbying quarterly report is due to the Secretary of State (on line processing)

FHWA quarterly report is due to Caltrans (paper processing)