Title
Ordinance Amending FY 16-17 Technical Services Fund and Guilford Metro Communications Fund and Information Systems Fund Budgets to Allow Accounting for Certain Capital Leases
Body
Department: Financial & Administrative Services
Council District: All
Public Hearing:
Advertising Date/By:
Contact 1 and Phone: Richard Lusk, Finance Director 373-2077
Contact 2 and Phone: Bobby Fitzjohn, Financial Reporting Manager 373-2271
PURPOSE: To amend the FY 16-17 Technical Services Fund, Guilford Metro Communications Fund, and Information Systems Fund budgets, to account for capital lease accounting and reporting standards.
BACKGROUND: Certain City departments routinely enters into lease agreements for specialized equipment and technology rather than purchasing it. The lease payments are included in the departments' annual budget appropriation.
Generally accepted accounting principles (GAAP) require that leases meeting certain criteria be capitalized and need specialized accounting treatment. When a lease is capitalized, it is placed on the City's financial statements as an asset and a liability and requires budgetary authorization, similar to a purchase of capital equipment. Additionally, related principal and interest payments must be recorded for capitalized leases, however, this is not a cash payment, but rather, accounting entries only.
The attached ordinance enables certain capital leases identified in FY 16-17 to be capitalized and accounted for according to GAAP and does not authorize additional spending. These leases include IT equipment, public safety radios and GM911 communications equipment. Lease payments have already been appropriated in the department's operating budget.
BUDGET IMPACT: Budgeted expenses associated with capitalizing leases are equal to the associated accounting revenue recognized by entering into the lease.
RECOMMENDATION / ACTION REQUESTED: The Finance Department requests City Council approval of the attached budget o...
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