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CITY OF SAN MARCOS FINANCIAL POLICY <br />I. PURPOSE <br />The broad purpose of this policy is to enable the City to achieve and maintain along-term stable <br />and positive financial condition through the use of sound financial management practices. The <br />watchwords used to epitomize the City's financial management include integrity, prudent <br />stewardship, planning, accountability, full disclosure and communication. <br />The more specific purpose of this policy is to provide guidelines to the Director of Finance in <br />planning and managing the City's daily financial affairs and in developing recommendations to <br />the City Manager and City Council. <br />The City Council will annually review and approve this policy as part of the budget process. <br />The scope of this policy covers the operating budget, revenues, expenditures, capital <br />improvements program, financial planning, accounting, auditing, financial reporting, treasury <br />management, debt management, and financial condition and reserves, in order to: <br />A. Present fairly and with full disclosure the financial position and results of the financial <br />operations of the City in conformity to generally accepted accounting principles (GAAP). <br />B. Determine and demonstrate compliance with finance-related legal and contractual issues <br />in accordance with provisions of the City's Charter, the City's Code of Ordinances, the <br />Texas Local Government Code and other pertinent legal documents and mandates. <br />II. OPERATING BUDGET <br />A. Preparation -Budgeting is an essential element of the financial planning, control, and <br />evaluation process of municipal government. The "budget" is the City's annual financial <br />operating plan. The budget includes all of the operating departments of the governmental <br />funds, special revenue funds, enterprise funds, and permanent funds of the City. The <br />budget includes expenditures for personnel, contracted services, materials and supplies, <br />other charges, operating transfers, social services, indirect costs, capital outlay and debt <br />service. The budget is prepared by the City Manager and Director of Finance with the <br />participation of all the City's Department Directors within the provisions of the City <br />Charter, on a basis that is consistent with GAAP. <br />City of San Marcos Financial Policy -Revised January 2008 Page 2 <br />