Item 10 - File Fiscal Year 2021-22 Annual Comprehensive Financial Report

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CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Budgetary Accounting (Continued) The City legally adopts annual budgets for the Special Revenue Funds including the Air Quality Improvement Special Revenue Fund. The budgetary control for the Special Revenue Funds is under the department in charge. The Air Quality Improvement Special Revenue Fund is managed by the Public Works Agency. Monthly budgetary reports are prepared to effect control through fiscal management. The City Council approved supplemental appropriations during the year, but they were not considered material. Budgets are prepared on a modified accrual basis. Encumbrances (e.g., purchase orders, contracts) outstanding at year-end are reported as restrictions of fund balances since they do not constitute expenditures or liabilities. All other annual appropriations lapse at fiscal year-end to the extent that they have not been expended or lawfully encumbered. During the fiscal year, the total Fund's expenditures were within the legal prescribed limits as approved by the City Council. D. Deferred Inflows of Resources In addition to liabilities, the balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of fund balance that applies to a future period and will not be recognized as an inflow of resources (revenue) until that time. The AQMD fund has one item that qualifies for reporting in this category, which is unavailable revenues from intergovernmental revenues and interest receivable. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. E. Fund Balance AQMD's fund balance is reported based on the extent to which the City is bound to observe constraints on the use of the AQMD's resources. AQMD's fund balance is classified under restricted, which include amounts which are constrained for specific purposes that are 1) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or 2) imposed by law through enabling legislation. AQMD's fund balance is restricted for programs initiated for the purpose of implementing the California Clean Air Act. Information regarding the fund balance reporting policy adopted by the City is described in Note 1 to the City of Santa Ana's Annual Comprehensive Financial Report. on