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CITY OF SANTA ANA, CALIFORNIA <br />AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND <br />NOTES TO FINANCIAL STATEMENTS <br />JUNE 30, 2021 <br />NOTE1 GENERAL <br />The financial statements are intended to reflect the financial position and changes in the <br />financial position attributable to the Air Quality Improvement Special Revenue Fund (AQMD) <br />of the City of Santa Ana, California (the City). These financial statements are exclusively for <br />AQMD and do not purport to, and do not present fairly the financial position and changes in <br />the financial position for the City. <br />The South Coast Air Quality Management District (SCAQMD) is authorized under Assembly <br />Bill 2766 (AB 2766) Chapter 1705 [California Health and Safety Code (CHSC) Sections <br />44220 through 44247] to impose a motor vehicle registration fee to be used by the <br />SCAQMD and local governments specifically for programs to reduce air pollution from <br />mobile sources and related planning, monitoring, enforcement, and technical studies <br />necessary for the implementation of the California Clean Air Act of 1988. <br />The California Department of Motor Vehicles collects the vehicle registration fee and <br />subvenes it to SCAQMD. Upon receipt, the vehicle registration fee is split into segments with <br />40% of the revenue place in a special revenue fund designated as the Air Quality <br />Improvement Trust Fund for quarterly distribution to local governments. <br />CHSC Section 44243 requires cities and counties receiving the AB 2766 funds to separately <br />account for the revenues and to expend the revenues for air pollution reduction measures <br />pursuant to the California Clean Air Act of 1988 or the SCAQMD's Air Quality Management <br />Plan pursuant to Article 5 of Chapter 5.5 of Part 3 of the CHSC. <br />NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <br />A. Fund Accounting <br />The financial activity of the City is accounted for on the basis of funds, each of which is <br />considered a separate accounting entity with a self -balancing set of accounts. Monies <br />under AB 2766 are accounted for in the Air Quality Improvement Special Revenue Fund, <br />which is a special revenue fund. <br />B. Measurement Focus and Basis of Accounting <br />The accounting and financial reporting treatment is determined by the applicable <br />measurement focus and basis of accounting. Measurement focus indicates the type of <br />resources being measured such as current financial resources or economic resources. <br />The basis of accounting indicates the timing of transactions or events for recognition in <br />the financial statements. <br />Z <br />