MOUNTLAKE TERRACE — A one-time adjustment to Mountlake Terrace’s accounting method will bring the city into line with federal and state law and will shift about $1 million in revenue to the 2005 final budget from the 2006 budget, city officials announced Tuesday.
City officials underscored the fact that it is not new money or missing money — just a more accurate way of counting the money.
“The result has been that for years the city’s financial position was not accurately reflected in the ending fund balances in accordance with Generally Accepted Accounting Principles (GAAP),” said city manager John Caulfield. “There’s been no missing funds or anything like that.”
The city has historically reported its general government revenues in the year the revenues were received by the city. For example, sales tax revenue received in January 2006 was reported as 2006 revenue even though it was actually earned in November 2005.
In a meeting with city officials, the State Auditor’s Office confirmed that the city should report the revenue in the year it is earned rather than received in accordance with federal and state law. The same is true of local gambling taxes, utility taxes, real estate excise tax, admission tax and medic transport fees, city officials said.
“However, earlier this year we felt it was appropriate to make the change to be consistent not only with Generally Accepted Accounting Principles, but also state reporting requirements,” said Caulfield. “The Auditor confirmed that after we asked about it.”
The result of this change is a one-time adjustment in the 2005 budget’s ending fund balance because some revenues received during the first quarter of 2006 will be reported back as 2005 revenues, which is the year the revenues were earned, city officials said.
“The city is appreciative of the assistance and guidance received from the State Auditor’s Office,” said Caulfield. “It is a positive reflection of both entities’ commitment to working together to ensure the City’s financial statements are properly reported.”
The auditor’s office will follow-up on the issue during the next audit, said spokesperson Mindy Chambers.
“We certainly acknowledge and appreciate the City’s paying attention to and noting there may have been some issue here,” she said. “Their commitment to making sure all of their revenue is accounted for and posted when it should be is appreciated.”
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