Page 74 - 2018 Comprehensive Annual Financial Report - City of Winston-Salem

Notes to the Financial Statements

June 30, 2018

1. Summary of Significant Accounting Policies

Accounting policies conform to generally accepted principles applicable to governmental units. The following paragraphs
summarize signi cant policies:

A. The Reporting Entity

The City of Winston-Salem, North Carolina, a municipal corporation, is governed by an elected mayor and an eight member City
Council. This report presents the nancial position and results of operations of the City and two legally separate component
units that have signi cant nancial relationships because they provide services only to the City. Other criteria used to determine
component units under generally accepted accounting principles include appointment of a voting majority of the governing
board and/or imposition of will or nancial bene t/burden, scal dependency, or other signi cant operational and nancial
relationships. The nancial statements of the nonpro t corporations are included in this report as blended component units.
Risk Acceptance Management Corporation administers auto liability, general liability, workers’ compensation claims which
exceed the sum of $250,000, health care claims which exceed the sum of $250,000, and certain tort claims made against the
City. The nancial statements of the corporation are included as an internal service fund in the City’s nancial statements.
North Carolina Municipal Leasing Corporation assists the City by nancing certain real and personal property under
contractual lease agreements. The assets and related long-term lease obligations are reported in the related governmental and
business-type funds.

B. Government-wide and Fund Financial Statements

Government-wide Financial Statements, the statement of net position and the statement of activities, report information on
all of the non- duciary activities of the primary government and its component units. Interfund activity has been eliminated
from these statements; however, interfund services provided and used are not eliminated in the process of consolidation.
Governmental activities, taxes and intergovernmental revenues are reported separately for business-type activities, which are
normally supported by user charges and fees.

The statement of activities presents a comparison between direct expenses and program revenues for governmental and
business types of the City’s activities. Direct expenses are those that are clearly identi able with a speci c governmental function
or business segment. Program revenues include 1) fees or charges for services paid by customers or recipients of goods or
services and 2) grants and contributions that are restricted to meet the operational or capital requirements of a particular
function or segment. Taxes and other revenues not included among program revenues are reported as general revenues.
Fund Financial Statements are presented for governmental funds, proprietary funds, and duciary funds, even though the
latter are excluded from the government-wide nancial statements. Emphasis in these statements is placed on major
governmental and enterprise funds with each major individual fund displayed in a separate column. The City’s determination of
reporting major funds considered the criteria prescribed by GASB and consistency of presentation from year to year. All
remaining governmental and enterprise funds are aggregated and shown as non-major funds.
Proprietary Funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses
generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal
ongoing operations. Operating expenses for enterprise funds and internal service funds include the cost of sales and services,
administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this de nition are reported
as non-operating revenues and expenses.
The City reports the following major governmental funds:
The General Fund is the primary operating fund of the City and accounts for the provision of governmental services. The
general fund summarizes the nancial transactions of governmental services, except for those more appropriately recorded in
other funds.
The Debt Service Fund accumulates resources to pay maturing principal and interest on long-term general obligations and
capital lease charges for governmental capital projects. General, revenue, and special obligations issued for water and sewer
utilities, solid waste disposal, stormwater, parking facilities, and public assembly facilities plus related debt service, are recorded
in the respective enterprise funds.
The Capital Projects Fund accounts for resources to acquire or construct major capital improvements, other than those
nanced by proprietary funds. Principal resources include intergovernmental revenues, proceeds of general obligation bonds,
capital leases, and transfers from other funds.

68 2018 AN NUAL R E P O R T