CONTENTS
Tables xi
Figures xiii
Preface xv
Acknowledgments xvii
Part 1. Water Utility Financial Management Overview
1. What Is Financial Management? 3
Functional Responsibilities Included Under Financial Management
Authoritative Standards for the Functional Responsibilities
Industry Guidelines
Book Organization
2. Water Utility Industry Description 11
Implications of Ownership
Environmental Regulation
3. The Functions of Financial Management 17
The Financial Management Cycle
Cash Management
Measuring Financial Performance
Resource Acquisition, Inventory, and Insurance
Internal Control
Part 2. Financial Accounting Overview
4. Financial Planning and Control 33
Financial Planning Process
Financial Control Process
Presentation of Annual Financing Plans
Summary
5. Accounting 41
Accounting Functions
Designing the Accounting System
When to Record Transactions: Accrual Versus Cash Accounting
How to Record: Double-Entry Bookkeeping
Governmental Water Utilities
Organizing the Office
6. Reporting of Accounting Information 55
Criteria for Good Reports
Reports for Different Users and Purposes
Part 3. Financial Reports
7. Budgeting 67
Information Content
Frequency of Reporting
General Budget Development
Elements of Budget Reporting
Relevance, Accuracy, and Timing of Interim Budget Reporting
8. Financial Statement Reports 83
Guidelines for Reporting: Financial Statement Standards
Reports of Private Water Utilities
Reports of Governmental Water Utilities





Other Financial Statement Reporting
9. Rate and Regulatory Reports 101
Goals -- Rate Process
Test Period
Rate Case
Rate Base, Cost of Service, and Cost of Capital
Reporting
Part 4. Accounting Cycle Implementation and Management
10. Revenue and Rates 111
Operating Revenues
Operating Revenue Accounts
Projecting Operating Revenues
Applying the Rate Schedules
Monitoring Revenues
11. Operation and Maintenance Expenses 127
Nature and Classification
Planning
Source-of-Supply and Pumping Expenses
Water Treatment Expenses
Transmission and Distribution Expense
Billing and Customer Relations
Administrative and General
Centrally Provided Services
Controlling Operation and Maintenance Expenses
Summary of Planning Operation and Maintenance Expenses
12. Capital Assets 149
Nature and Significance of Depreciation
Differences Between Private and Governmental Utilities
Definitions and Concepts
Determining Depreciation Expense
Selecting a Depreciation Formula
Methods of Applying Depreciation Formulas
Reevaluating the Adequacy of Periodic Depreciation Charges
Determining Amortization Expense -- Depreciation Expense for Income Tax
13. General and Income Taxes 171
Types and Descriptions of Taxes
Accounting for General Taxes
Anticipating Tax Implications
Estimating Taxes
Summary
14. Capital Improvement Programs 181
The Capital Expenditures Budget
Sources of Funding
Capital Project Construction
Recording of Capital Improvement Spending
Construction Costs
Accounting for Different Funding Sources
Accounting for Retirement Units of Property
Comparing Budgeted and Actual Expenditures
Continuing Property Records
15. Current and Other Assets 205
Liquid Assets
Receivables
Materials and Supplies
Restricted Assets
Deferred Charges
16. Liabilities and Other Credits 239
Differences Between Private and Governmental Utilities
Current and Long-Term Differences
Definitions of Key Liabilities
Definitions of Other Credits
Chart of Accounts
Controlling and Monitoring Current and Accrued Liabilities
Types of Financial Reports
17. Equity, Capital, and Financial Ratios 249
Differences Between Private and Governmental Water Utilities
Retained Earnings/Fund Net Assets
Appropriated Retained Earnings/Restricted Net Assets
Contributed Assets
Requirements From Governing Authorities
Tools for Evaluating Utility Financial Position and Operations
Ratio Analysis
Part 5. Financial Management Functions
18. Financing 261
Financing Water Utility Operations
19. Audits 267
Financial Audits
Operational, Management and Other Audits
Summary
20. Internal Controls 271
Internal Control Components
A More In-Depth Look at Fraud
Evaluating and Communicating Identified Deficiencies
Guidance for Regulators and Elected Officials
Summary -- Acknowledgments
Sources and Suggested Reading 287
Index 289
Appendices on CD
A. Suggested System of Accounts for Class A Water Utilities
B. Sample Private Utility Annual Report
C. Sample Governmental Utility Annual Report
D. Sample Interim Financial Reports
E. Sample Policy Statements.