CR 2004-076 Establish New Internal Service Fund
C IT Y OF
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. May 17,2004 HOPKINS Council Report 04-076
Establish New Internal Service Fund
Proposed Action
Staff recommends adoption of the following motion: Move to approve the creation ofa new
Internal Service fund which will account for earned but not used employee vacation and flex
leave.
Adoption of this motion will result in creation of a new "'Employee Benefits" internal service
fund.
Overview
In 2003 the City of Hopkins is required to implement a Govenm1ental Accounting Standards
Board (GASB), repotting model specifiGalIy designed for govenm1ents, GASB 34. A part of this
procedure n:quires that "compensated absences payable", (earned but not used, employee
vacation and flex leave), be removed horn the general governmentalhmd statements and
recorded in the government-wide financial statements. To enable this procedure it is
recommended by the city's auditors', KPMG, that the city implement an internal service fund
. that records the expenditures and liability of compensated absences and any revenues that may be
incurred by implementing the internal service fund, (such as interest earnings). This will
simplify the repOliing rcquircmt:nt and will have a zero impact on the city's budget.
The City of Hopkins Charter states that the city council may establish new funds for special
purposes as necessary.
Recommendation
Finance is recommending that the city establish an internal service fund to record the expense
and liability associated with compensated absences begilU1ing in 2003. This will help simplify
reporting requirements of GASB 34,
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1:urIK. Yager
Finance Director
Financial Impact $ 0 Budgeted: Y/N Y Source: Various funds
Related Documents (CIP, ERP, etc.):
Notes:
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