A User’s Guide to County Financial Statements

The following definitions will help citizens understand the terminology that is used in the county’s financial statements.

Basic Financial Statements

Lake County’s basic financial statements consists of three parts: government-wide financial statements, fund financial state­ments and notes to the financial state­ments. The management’s discussion and analysis and certain budgetary compari­son schedules are required to accompany the basic financial statements and, there­fore, are included as required supplemen­tary information.

Government-wide financial statements display information about the county’s financial reporting entity, except for its fidu­ciary activities. These statements should present separate information for the gov­ernmental and business-type activities of the county (primary government) as well as for its component units.

Fund financial statements display sepa­rate financial information for the county’s governmental, proprietary and fiduciary funds. Information for governments and enterprise proprietary funds is presented separately for major funds and the ag­gregate total for non-major funds. Internal services and fiduciary fund information is presented in aggregate by fund type.

Notes to the financial statements pro­vide additional information and disclosure for information in the financial statements.

Government activities are generally ac­tivities of the county financed through tax­es, intergovernmental revenues and other nonexchange revenues. These activities are usually reported in governmental funds and internal service funds.

Business-type activities are county ac­tivities financed in whole or in part by fees charged to external parties for goods or services. These activities are usually re­ported in enterprise funds.

Financial reporting entity consists of the primary government (county), organi­zations for which the county is financially accountable and other organizations for which the nature and significance of their relationship with the county are such that exclusion would cause the reporting enti­ty’s financial statements to be misleading or incomplete. The nucleus of a county’s financial reporting entity is the primary gov­ernment, the county.

Primary government is a term used in connection with defining the financial re­porting entity. The primary government is the focus of the financial reporting entity. For the county, the primary government represents the financial activities, funds or accounts directly under the control of the county board.

Component Unit describes a legally sep­arate organization for which the county board is financially accountable. In addi­tion, component units can be other orga­nizations for which the nature and signifi­cance of their relationship with the county are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete.

County Governmental Fund Types

The General Fund is the general operat­ing fund of the county. It is used to account for all financial resources, except those that are required to be accounted for in another fund.

Special Revenue Funds are used to ac­count for the proceeds of specific revenue sources that are legally restricted for spec­ified purposes.

Debt Service Funds are used to account for the accumulation of resources for, and the payment of principal, interest and relat­ed costs of long term debt.

Capital Project Funds are used to ac­count for financial resources to be used for the acquisition or construction of major capital facilities.

Permanent Funds are used to report re­sources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government’s programs – that is, for the benefit of the government or its citizenry.

County Proprietary Funds

Enterprise Funds are used to report an activity for which a fee is charged to exter­nal users for goods or services.

Internal Service Funds are used to report any activity that provides goods or services to other funds, departments or agencies of the primary government and its component units, or to other governments on a cost reimbursement basis.

County Fiduciary Funds

Investment Trust Funds are used to report governmental external investment pools that are maintained by the county for other entities.

Private-Purpose Trust Funds are used to report all trust arrangements, other than those properly reported in investment trust funds, under which principal and income benefit individuals, private organizations or other governments.

Agency Funds are used to account for assets held by the county as an agent for individuals, private organizations, other governments and/or other funds; for exam­ple, taxes collected and held by the county for a school district.

Character Classification of County Ex­penditures

The county’s government expenditures are classified by character or the periods expenditures are presumed to benefit. The county has the following character classifications:

• Current operating expenditures are presumed to benefit the current fiscal period.

• Debt Services are presumed to benefit prior fiscal periods as well as current and future periods and include amounts expended for pay­ment of principal, interest and other costs associated with debt.

• Capital outlays are presumed to benefit current and future fiscal periods and include amounts for the construction or acquisition of county capital assets.

• Intergovernmental represent re­sources transferred by the county to other governments.

Classification of County Functions

Functions are a group of related activities aimed at accomplishing a major service or regulatory program for which the county is responsible. The county has the following function classifications:

• The General Government function includes expenditures for general county activities such as the county commissioners, county attorney’s office, county auditor/treasurer’s office, county assessor’s office, county recorder’s office, court ad­ministration, veteran’s service offi­cer, the planning and zoning office and other general service offices.

• Public Safety relates to the objec­tive of protection of persons and property and includes expenditures for correction’s activities, operation of the sheriff’s department, the county jail, civil defense and emer­gency services.

• Highways and Streets includes expenditures relating to the con­struction and maintenance of coun­ty highways and streets.

• Sanitation involves expenditures for the removal and disposal of waste and includes county solid waste collection, disposal and recy­cling.

• Human Services represents ac­tivities designed to provide public assistance and institutional care for individuals unable to provide essential needs for themselves. These programs include child support collection, child welfare, chemical dependency, medical as­sistance and others.

• Health involves all activities in­volved in the conservation and improvement of public health. This function includes expenditures for the county public health depart­ment.

• Culture and Recreation involves cultural and recreational activi­ties maintained for the benefit of the county residents and visitors. These activities include libraries, information centers and other rec­reation programs.

• Conservation involves activities designed to conserve and develop such natural resources as water, soil and forests, and includes such programs as soil and water con­servation, county extension, water planning and others.

• Economic Development activities are directed toward economically developing the area encompassed by the county.