Item 10 - Fiscal Year 2024-25 Annual Reports

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CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND NOTES TO FINANCIAL STATEMENTS JUNE 30, 2025 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Budgetary Accounting (Continued) The legal standard for budgetary control is set at the department level. Throughout the fiscal year, all budget actions and amendments are carried out in accordance with the City Charter, relevant laws, and best financial management practices. The City legally adopts annual budgets for the Air Quality Improvement Special Revenue Fund. The budgetary control for the Special Revenue Fund is under the department in charge. The Public Works Agency is responsible for the budget of the Air Quality Improvement Special Revenue Fund. Budgets are prepared using a modified accrual basis. Encumbrances, such as purchase orders and contracts, that remain outstanding at year-end are reported as restricted or assigned fund balances since they are not considered expenditures or liabilities. All other annual appropriations expire at the end of the fiscal year if they have not been spent or legally encumbered. Expenditures may not legally exceed appropriations at the department level. Budgetary Compliance. 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