Budget and Financial Planning

Phone: 913-715-0605

111 S Cherry, Suite 2300, Olathe, KS 66061

Financial Policies: Section 100 - Overview

Financial policies serve as the guiding principles for the County’s financial management and annual budgetary process. Generally, financial policies are desirable in order to maintain or improve an entity’s financial position, financial management and credit rating(s). The County’s financial policies will comply with applicable state statutes.

It is the policy of the Board of County Commissioners (BOCC) that all financial transactions conducted by or on behalf of Johnson County, its agencies, departments, officials and authorized agents shall be made in a manner and method that efficiently and effectively utilizes available financial resources and demonstrates good stewardship in the management of public funds and resources according to established financial management practices, accounting standards, and auditing requirements.

Policy 100.2 Applicability of Financial Policies

The financial policies adopted by the BOCC shall apply to all elected officials, employees, agencies, departments, boards, commissions, representatives, and authorized agents in the performance of their official duties for or on behalf of Johnson County Government.

Policy 100.3 Fiscal Year, Generally Accepted Accounting Principles and Financial Reporting

The County’s fiscal year is January 1st to December 31st.

It is the policy of the BOCC that:

the County will follow accounting principles generally accepted in the United States of America applicable to governmental units (GAAP), as promulgated by the Governmental Accounting Standards Board (GASB), in the preparation of the County’s annual audited financial statements.
the County will submit to an annual audit by an independent certified public accountant.
the County will employ an internal auditor to complete an annual audit plan approved by the BOCC.
the County will prepare a Comprehensive Annual Financial Report (CAFR).
the County will follow the standards of full disclosure in all financial reporting and debt offering statements.

For financial reporting purposes according to generally accepted accounting principles, all unencumbered appropriations lapse at the end of the year.

Responsibilities:

The Director of Treasury and Financial Management is responsible for establishing a solicitation and selection process for securing professional auditing services from an independent certified public accountant. Goals of the solicitation and selection process shall include encouraging participation from qualified service providers and securing services at competitive prices.

Policy 100.4 Establishment of Financial Procedures

It is the policy of the BOCC that the County Manager shall establish and maintain financial procedures. These procedures shall be consistent with existing financial policies and will comply with applicable state statutes. In addition, these procedures shall apply to all elected officials, employees, agencies, departments, boards, commissions, representatives and authorized agents in the performance of their official duties.

Policy 100.5 Process for Amending Financial Policies

The BOCC may initiate changes to the existing financial policies at any time. In addition, the County Manager shall review the County’s existing financial policies on a periodic basis. If changes to the existing financial policies appear to be necessary and appropriate, the County Manager shall submit a recommendation to the BOCC for consideration and action.

Policy 100.6 Explanation of Basis of Accounting

The basis of accounting used for preparation of the County’s annual operating budget and CIP is different from the basis of accounting used to prepare the County’s annual audited financial statements.

Definitions:

The term “basis of accounting” is used to describe the timing of recognition for financial transactions—i.e., when the effects of transactions or events should be recognized. The basis of accounting used for purposes of financial reporting in accordance with GAAP is not necessarily the same basis used in preparing the annual operating budget document.

Basis of Accounting for Financial Statements

The modified accrual basis of accounting is used for governmental funds. Under this basis of accounting, revenues are recognized when the revenues are both measurable and available to finance expenditures of the current fiscal period. “Measurable” means the amount of the transaction can be determined, and “available” means collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures are generally recognized in the accounting period in which the fund liability is incurred, except for unmatured interest on general long-term debt, which is recognized when due.

The accrual basis of accounting is used for proprietary funds. Under this basis of accounting, revenues are recognized when earned and expenses are recognized when liabilities are incurred.

Basis of Accounting for Annual Operating Budget

The modified accrual basis of accounting is used for governmental funds, with the following exceptions:

operating transfers in are classified as revenues and operating transfers out are classified as expenditures in the annual operating budget.
changes in the fair value of investments are not treated as adjustments to revenues in the annual operating budget.

The accrual basis of accounting is used for proprietary funds, with the following exceptions:

property tax revenues are recognized as revenue in the year collected, and not the year billed, in the annual operating budget.
operating transfers in are classified as revenues and operating transfers out are classified as expenses in the annual operating budget.
changes in the fair value of investments are not treated as adjustments to revenues in the annual operating budget.
accrued vacation and sick pay benefits are not recognized as proprietary fund expenses in the annual operating budget.
debt service and capital lease principal payments are treated as expenses in the annual operating budget.
debt service interest costs are recognized when due, and not when incurred, in the annual operating budget.
depreciation expense is not recognized in the annual operating budget.
capital purchases are recognized as expenses in the annual operating budget.

Open encumbrances for outstanding purchase orders do not lapse at the end of the fiscal year and continue as an obligation of the prior year budget.

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Financial Policies: Section 100 - Overview