CHAPTER 110:
FINANCIAL ADMINISTRATION
CHAPTER 110: FINANCIAL ADMINISTRATION
Section
110.01 Definitions
110.02 Accounting records and financial reports
110.03 Annual budget ordinance
110.04 Annual audit of city funds
110.05 Official depositories; disbursement of city funds
§ 110.01 DEFINITIONS.
As used in this chapter, unless the context otherwise requires, the following definitions shall apply:
"BUDGET." A proposed plan for raising and spending money for specified programs, functions, activities, or objectives during a fiscal year.
"DEBT SERVICE." The sum of money required to pay installments of principal and interest on bonds, notes, and other evidences of debt accruing within a fiscal year and to maintain sinking funds.
"ENCUMBRANCES." Obligations in the form of purchase orders or contracts that are chargeable to an appropriation. An obligation ceases to be an encumbrance when paid or when the actual liability is recorded.
"FISCAL YEAR." The accounting period for the administration of fiscal operations.
"GENERALLY ACCEPTED PRINCIPLES OF GOVERNMENTAL ACCOUNTING." Those standards and procedures promulgated and recognized by the National Council of Governmental Accounting, the Municipal Finance Officers of the United States and Canada, and the American Institute of Certified Public Accountants. (KRS 91A.010)
§ 110.02 ACCOUNTING RECORDS AND FINANCIAL REPORTS.
(A) The city shall keep its accounting records and render financial reports in such a way as to:
(1) Determine compliance with statutory provisions;
(2) Determine fairly and with full disclosure the financial operations of constituent funds and account groups of the city in conformity with generally accepted governmental accounting principles; and
(3) Readily provide such financial data as may be required by the federal revenue sharing program.
(B) The municipal accounting system shall be organized and operated on a fund basis. (KRS 91A.020)
§ 110.03 ANNUAL BUDGET ORDINANCE.
(A) The city shall operate under an annual budget ordinance adopted and administered in accordance with the provisions of this section. No money shall be expended from any governmental or proprietary fund, except in accordance with a budget ordinance adopted pursuant to this section.
(B) Monies held by the city as a trustee or agent for individuals, private organizations, or other governmental units need not be included in the budget ordinance.
(C) If in any fiscal year subsequent to a fiscal year in which the city has adopted a budget ordinance in accordance with this section, no budget ordinance is adopted, the budget ordinance of the previous fiscal year has full force and effect as if readopted.
(D) The budget ordinance of the city shall cover one fiscal year.
(E) Preparation of the budget proposal shall be the responsibility of the Commission.
(F) The budget proposal shall be prepared in such form and detail as is prescribed by ordinance.
(G) The budget proposal together with a budget message shall be submitted to the Commission not later than 30 days prior to the beginning of the fiscal year it covers. The budget message shall contain an explanation of the governmental goals fixed by the budget for the coming fiscal year; explain important features of the activities anticipated in the budget; set forth the reasons for stated changes from the previous year in program goals, programs, and appropriation levels; and explain any major changes in fiscal policy.
(H) (1) The Commission may adopt the budget ordinance making appropriations for the fiscal year in such sums as it finds sufficient and proper, whether greater or less than the sums recommended in the budget proposal. The budget ordinance may take any form that the Commission finds most efficient in enabling it to make the necessary fiscal policy decisions.
(2) No budget ordinance shall be adopted which provides for appropriations to
exceed revenues in any one fiscal year in violation of section 157 of the
Kentucky Constitution.
(I) The full amount estimated to be required for debt service during the budget year shall be appropriated.
(J) The Commission may amend the budget ordinance at any time after the ordinance's adoption, so long as the amended ordinance continues to satisfy the requirements of this section.
(K) Administration and implementation of an adopted budget ordinance shall be the responsibility of the Commission. Such responsibility includes the preparation and submission to the Commission of operating statements, including budgetary comparisons of each governmental fund for which an annual budget has been adopted. Such reports shall be submitted not less than once every three months in each fiscal year.
(L) To the extent practical, the system utilized in the administration and implementation of the adopted budget ordinance shall be consistent in form with the accounting system called for in § 110.02.
(M) No city agency, or member, director, officer, or employee thereof, may bind the city in any way to any extent beyond the amount of money at that time appropriated for the purpose of the agency. All contracts, agreements, and obligations, express or implied, beyond such existing appropriations are void; nor shall any of the money by the city in any way to any extent, beyond the balance of any appropriation made for the purpose. (KRS 91A.030)
§ 110.04 ANNUAL AUDIT OF CITY FUNDS.
(A) The city, except as provided in division (J) below, shall, as soon as practicable and in no event later than 270 days after the close of each fiscal year, cause each fund
of the city to be audited by the Auditor of Public Accounts or a certified public accountant.
(B) The city shall enter into a written contract with the selected auditor. The contract shall set forth all terms and conditions of the agreement which shall include, but not be limited to, requirements that:
(1) The auditor will be employed to examine the general purpose financial
statements of all governmental proprietary and fiduciary funds of the
city;
(2) All audit information will be prepared in accordance with generally
accepted governmental auditing standards which includes such tests of
the accounting records and such auditing procedures as considered
necessary under the circumstances. Where the audit is to cover the use
of state or federal funds, appropriate state or federal guidelines shall be
utilized;
(3) The auditor prepare a typewritten or printed report embodying the
general purpose financial statements and his opinion and statements
relating thereto;
(4) The auditor express an overall opinion as to whether the general
purpose financial statements present fairly the financial condition of
the city or state the reasons why an overall opinion cannot be
expressed;
(5) The completed audit and all accompanying documentation shall be
presented to the Commission at a regular or special meeting;
(6) Any contract with a certified public accountant for an audit shall
require the accountant to forward a copy of the audit report and
management letters to the Auditor of Public Accounts upon the request
of the city or the Auditor of Public Accounts,, and the Auditor
of Public Accounts shall have the right to review the certified public
accountants work papers upon request.
(C) Within ten days of the completion of any audit, and its presentation to the City Commission pursuant to division (B) (5) of this section, the city shall forward three
copies of the audit report to the Finance and Administration Cabinet for information purposes.
(D) A copy of an audit report which meets the requirements of this section is considered satisfactory and final in meeting any official request to the city for financial data, except for statutory or judicial requirements, or requirements of the Legislative Research Commission necessary to carry out the purposes of KRS 6.995 to 6.975.
(E) Upon completion of an audit, the city may elect to publish the auditor's report in accordance with division (F) of this section, or may publish a financial statement in accordance with division (G) of this section. Notwithstanding the election of divisions (F) or (G) of this section, the city shall within 90 days after the close of the fiscal year, cause to be published in a newspaper qualified under KRS 424.120 a legal display advertisement of not less than eight column inches that the statement required by KRS 424.220 has been prepared and that copies have been provided to each local newspaper of general circulation, each news service, and each local radio or television station which has on file with the city a written request to be provided such statement.
(F) If the city elects to publish the auditor's report prepared in accordance with this section in lieu of the financial statement required by KRS 424.220, it shall publish such report, together with the general purpose financial statements of the city, which shall include the combined balance sheets, combined statements of revenues, expenditures or expenses, and changes in fund balances, retained earnings, or financial position for each fund of the city, and notes to such general purpose financial statements, in accordance with KRS Chapter 424. In addition, the advertisement shall contain a statement that copies of the financial statement prepared in accordance with KRS 424.220 are available to the public at no cost at the business address of the officer responsible for preparation of such statement.
(G) If the city elects to publish the financial statement prepared in accordance with KRS 424.220 in lieu of publishing the auditor's report, it shall, within 60 days after the completion of the audit, publish such statement in accordance with KRS Chapter 424.
(H) If the city determines that the cost of newspaper publication exceeds the cost of postage, supplies, and reproduction, the city may substitute delivery of a copy of the advertisement by first class mail to each residence within the publication area, in lieu of the newspaper publication required by this section. (KRS 424.190(2))
(I) Any person who violates any provision of this section shall be fined not less than $50 dollars nor more than $500. In addition, any officer who fails to comply with any of the provisions of this section shall, for each failure, be subject to a forfeiture of not less than $50 nor more than $500, in the discretion of the court, which may be recovered only once, in a civil action brought by any resident of the city. The costs of all proceedings, including a reasonable fee for the attorney of the resident bringing the action, shall be assessed against the unsuccessful party. (KRS 91A.040)
(J) In lieu of the auditing requirements set forth in KRS 91A.040, if the city for the fiscal year in question receives and expends, from all sources, and for all purposes, less than $25,000, revenue debt, the city may comply fully with the provisions of KRS 424.220 in lieu of the requirements listed in divisions (A) through (I) above. (KRS 91A.041)
_________________________
Statutory reference:
Department for Local Government to provide assistance, see KRS 91A.050
§ 110.05 OFFICIAL DEPOSITORIES; DISBURSEMENT OF CITY FUNDS.
(A) The Commission shall designate as the city's official depositories one or more banks, federally insured savings and loan companies, or trust companies within the Commonwealth. The amount of funds on deposit in an official depository shall be fully insured by deposit insurance or surety bonds.
(B) All receipts from any source of city money or money for which the city is responsible, which has not been otherwise invested or deposited in a manner authorized by law, shall be deposited in official depositories. All city funds shall be disbursed by written authorization approved by the Commission which states the name of the person to whom funds are payable, the purpose of the payment and the fund out of which the funds are payable. Each authorization shall be numbered and recorded. (KRS 91A.060)
Section
110.01 Definitions
110.02 Accounting records and financial reports
110.03 Annual budget ordinance
110.04 Annual audit of city funds
110.05 Official depositories; disbursement of city funds
§ 110.01 DEFINITIONS.
As used in this chapter, unless the context otherwise requires, the following definitions shall apply:
"BUDGET." A proposed plan for raising and spending money for specified programs, functions, activities, or objectives during a fiscal year.
"DEBT SERVICE." The sum of money required to pay installments of principal and interest on bonds, notes, and other evidences of debt accruing within a fiscal year and to maintain sinking funds.
"ENCUMBRANCES." Obligations in the form of purchase orders or contracts that are chargeable to an appropriation. An obligation ceases to be an encumbrance when paid or when the actual liability is recorded.
"FISCAL YEAR." The accounting period for the administration of fiscal operations.
"GENERALLY ACCEPTED PRINCIPLES OF GOVERNMENTAL ACCOUNTING." Those standards and procedures promulgated and recognized by the National Council of Governmental Accounting, the Municipal Finance Officers of the United States and Canada, and the American Institute of Certified Public Accountants. (KRS 91A.010)
§ 110.02 ACCOUNTING RECORDS AND FINANCIAL REPORTS.
(A) The city shall keep its accounting records and render financial reports in such a way as to:
(1) Determine compliance with statutory provisions;
(2) Determine fairly and with full disclosure the financial operations of constituent funds and account groups of the city in conformity with generally accepted governmental accounting principles; and
(3) Readily provide such financial data as may be required by the federal revenue sharing program.
(B) The municipal accounting system shall be organized and operated on a fund basis. (KRS 91A.020)
§ 110.03 ANNUAL BUDGET ORDINANCE.
(A) The city shall operate under an annual budget ordinance adopted and administered in accordance with the provisions of this section. No money shall be expended from any governmental or proprietary fund, except in accordance with a budget ordinance adopted pursuant to this section.
(B) Monies held by the city as a trustee or agent for individuals, private organizations, or other governmental units need not be included in the budget ordinance.
(C) If in any fiscal year subsequent to a fiscal year in which the city has adopted a budget ordinance in accordance with this section, no budget ordinance is adopted, the budget ordinance of the previous fiscal year has full force and effect as if readopted.
(D) The budget ordinance of the city shall cover one fiscal year.
(E) Preparation of the budget proposal shall be the responsibility of the Commission.
(F) The budget proposal shall be prepared in such form and detail as is prescribed by ordinance.
(G) The budget proposal together with a budget message shall be submitted to the Commission not later than 30 days prior to the beginning of the fiscal year it covers. The budget message shall contain an explanation of the governmental goals fixed by the budget for the coming fiscal year; explain important features of the activities anticipated in the budget; set forth the reasons for stated changes from the previous year in program goals, programs, and appropriation levels; and explain any major changes in fiscal policy.
(H) (1) The Commission may adopt the budget ordinance making appropriations for the fiscal year in such sums as it finds sufficient and proper, whether greater or less than the sums recommended in the budget proposal. The budget ordinance may take any form that the Commission finds most efficient in enabling it to make the necessary fiscal policy decisions.
(2) No budget ordinance shall be adopted which provides for appropriations to
exceed revenues in any one fiscal year in violation of section 157 of the
Kentucky Constitution.
(I) The full amount estimated to be required for debt service during the budget year shall be appropriated.
(J) The Commission may amend the budget ordinance at any time after the ordinance's adoption, so long as the amended ordinance continues to satisfy the requirements of this section.
(K) Administration and implementation of an adopted budget ordinance shall be the responsibility of the Commission. Such responsibility includes the preparation and submission to the Commission of operating statements, including budgetary comparisons of each governmental fund for which an annual budget has been adopted. Such reports shall be submitted not less than once every three months in each fiscal year.
(L) To the extent practical, the system utilized in the administration and implementation of the adopted budget ordinance shall be consistent in form with the accounting system called for in § 110.02.
(M) No city agency, or member, director, officer, or employee thereof, may bind the city in any way to any extent beyond the amount of money at that time appropriated for the purpose of the agency. All contracts, agreements, and obligations, express or implied, beyond such existing appropriations are void; nor shall any of the money by the city in any way to any extent, beyond the balance of any appropriation made for the purpose. (KRS 91A.030)
§ 110.04 ANNUAL AUDIT OF CITY FUNDS.
(A) The city, except as provided in division (J) below, shall, as soon as practicable and in no event later than 270 days after the close of each fiscal year, cause each fund
of the city to be audited by the Auditor of Public Accounts or a certified public accountant.
(B) The city shall enter into a written contract with the selected auditor. The contract shall set forth all terms and conditions of the agreement which shall include, but not be limited to, requirements that:
(1) The auditor will be employed to examine the general purpose financial
statements of all governmental proprietary and fiduciary funds of the
city;
(2) All audit information will be prepared in accordance with generally
accepted governmental auditing standards which includes such tests of
the accounting records and such auditing procedures as considered
necessary under the circumstances. Where the audit is to cover the use
of state or federal funds, appropriate state or federal guidelines shall be
utilized;
(3) The auditor prepare a typewritten or printed report embodying the
general purpose financial statements and his opinion and statements
relating thereto;
(4) The auditor express an overall opinion as to whether the general
purpose financial statements present fairly the financial condition of
the city or state the reasons why an overall opinion cannot be
expressed;
(5) The completed audit and all accompanying documentation shall be
presented to the Commission at a regular or special meeting;
(6) Any contract with a certified public accountant for an audit shall
require the accountant to forward a copy of the audit report and
management letters to the Auditor of Public Accounts upon the request
of the city or the Auditor of Public Accounts,, and the Auditor
of Public Accounts shall have the right to review the certified public
accountants work papers upon request.
(C) Within ten days of the completion of any audit, and its presentation to the City Commission pursuant to division (B) (5) of this section, the city shall forward three
copies of the audit report to the Finance and Administration Cabinet for information purposes.
(D) A copy of an audit report which meets the requirements of this section is considered satisfactory and final in meeting any official request to the city for financial data, except for statutory or judicial requirements, or requirements of the Legislative Research Commission necessary to carry out the purposes of KRS 6.995 to 6.975.
(E) Upon completion of an audit, the city may elect to publish the auditor's report in accordance with division (F) of this section, or may publish a financial statement in accordance with division (G) of this section. Notwithstanding the election of divisions (F) or (G) of this section, the city shall within 90 days after the close of the fiscal year, cause to be published in a newspaper qualified under KRS 424.120 a legal display advertisement of not less than eight column inches that the statement required by KRS 424.220 has been prepared and that copies have been provided to each local newspaper of general circulation, each news service, and each local radio or television station which has on file with the city a written request to be provided such statement.
(F) If the city elects to publish the auditor's report prepared in accordance with this section in lieu of the financial statement required by KRS 424.220, it shall publish such report, together with the general purpose financial statements of the city, which shall include the combined balance sheets, combined statements of revenues, expenditures or expenses, and changes in fund balances, retained earnings, or financial position for each fund of the city, and notes to such general purpose financial statements, in accordance with KRS Chapter 424. In addition, the advertisement shall contain a statement that copies of the financial statement prepared in accordance with KRS 424.220 are available to the public at no cost at the business address of the officer responsible for preparation of such statement.
(G) If the city elects to publish the financial statement prepared in accordance with KRS 424.220 in lieu of publishing the auditor's report, it shall, within 60 days after the completion of the audit, publish such statement in accordance with KRS Chapter 424.
(H) If the city determines that the cost of newspaper publication exceeds the cost of postage, supplies, and reproduction, the city may substitute delivery of a copy of the advertisement by first class mail to each residence within the publication area, in lieu of the newspaper publication required by this section. (KRS 424.190(2))
(I) Any person who violates any provision of this section shall be fined not less than $50 dollars nor more than $500. In addition, any officer who fails to comply with any of the provisions of this section shall, for each failure, be subject to a forfeiture of not less than $50 nor more than $500, in the discretion of the court, which may be recovered only once, in a civil action brought by any resident of the city. The costs of all proceedings, including a reasonable fee for the attorney of the resident bringing the action, shall be assessed against the unsuccessful party. (KRS 91A.040)
(J) In lieu of the auditing requirements set forth in KRS 91A.040, if the city for the fiscal year in question receives and expends, from all sources, and for all purposes, less than $25,000, revenue debt, the city may comply fully with the provisions of KRS 424.220 in lieu of the requirements listed in divisions (A) through (I) above. (KRS 91A.041)
_________________________
Statutory reference:
Department for Local Government to provide assistance, see KRS 91A.050
§ 110.05 OFFICIAL DEPOSITORIES; DISBURSEMENT OF CITY FUNDS.
(A) The Commission shall designate as the city's official depositories one or more banks, federally insured savings and loan companies, or trust companies within the Commonwealth. The amount of funds on deposit in an official depository shall be fully insured by deposit insurance or surety bonds.
(B) All receipts from any source of city money or money for which the city is responsible, which has not been otherwise invested or deposited in a manner authorized by law, shall be deposited in official depositories. All city funds shall be disbursed by written authorization approved by the Commission which states the name of the person to whom funds are payable, the purpose of the payment and the fund out of which the funds are payable. Each authorization shall be numbered and recorded. (KRS 91A.060)
