Ordinance on the Financial Management of Municipalities (FHGV) - Financial Reporting (FHGV)

1. Financial Reporting pursuant to Article 109a of the Municipal Act of 21 April 2009 shall include at least

a) a commentary by the council on the annual financial statement;

b) an overview of the municipality's asset, financial, and income situation.

1. Internal allocations are recorded when services rendered or interest expenses or income pertain to a special financing or a designated contribution.

2. Other internal allocations may be recorded to the extent they are essential for the determination of expenses and income or for ensuring the efficient fulfillment of economic tasks.

1. Deposits into and withdrawals from reserves pursuant to Art. 110b and Art. 110c of the Municipal Act of April 21, 2009, shall be itemized individually.

1. Expenses for value-maintaining measures on existing assets are recorded as expenses in the income statement, regardless of their amount.

1. The council may set an activation threshold for the general budget and the budgets of dependent public-law enterprises, each according to the principle of materiality. These activation thresholds shall not exceed CHF 200,000 each.

2. For budgets for which the council does not set an activation threshold, it shall be determined by the annual gross expenditure of the respective budget as follows

a) less than CHF 10 million: CHF 25,000;

b) CHF 10 million to CHF 20 million: CHF 50,000;

c) CHF 20 million to CHF 40 million: CHF 75,000;

d) more than CHF 40 million: CHF 100,000.

3. Investments below the activation threshold are not capitalized.

4. Loans and equity participations are capitalized regardless of the activation threshold.

**1. When investing financial assets, emphasis is placed on security and appropriate risk diversification.**

1. Financial assets are valued as follows on the balance sheet date

a) cash and bank balances at nominal values;

b) receivables at their collectible value;

c) financial investments at market value;

d) foreign currencies at market values;

e) prepaid expenses at nominal values;

f) real estate at official market value;

g) other financial and tangible assets at market values. If market values cannot be determined, they are valued at acquisition or production costs.

2. Real estate of financial assets is revalued at least after each official appraisal. In the event of a significant and permanent impairment, an extraordinary official reappraisal is conducted.

3. At the time of acquisition, real estate of financial assets is valued at acquisition costs. At the latest, after five years, valuation is carried out at the official market value.

1. The council may establish the depreciation period for each asset category in accordance with Annex A and B of this decree. The established depreciation period is determined by the average expected useful life of the assets in each asset category.

2. Different depreciation periods for each asset category may be established for the general budget and the budget of dependent public-law entities.

3. If a municipality does not perform any functions assigned to it by the constitution or law of the canton, the council, in making its determination, is not bound by the asset categories and depreciation periods according to Annex A and B of this decree.

4. For municipalities where the council does not establish the depreciation period for each asset category, the depreciation periods for each asset category according to Annex A of this decree shall apply.

5. An investment is depreciated for the first time at the earliest in the year of commencement of use and at the latest in the following year.

6. If a permanent impairment is foreseeable for an administrative asset, its book value shall be adjusted.

1. Allocations from general public funds shall be made only up to the amounts provided for in the budget.

2. Advances to special financing are exceptionally permissible when earmarked funds temporarily do not cover the expenditure. Advances and commitments shall bear interest.

3. A special financing arrangement shall be dissolved if its purpose ceases to exist or can no longer be fulfilled.

1. Earmarked Private Donations May Only Be Used Differently in Proper Application of Civil Law Provisions on Foundations.

1. The reserve amount is separately disclosed for the following two areas

a) Financing of future maintenance and renewal work on properties in financial assets;

b) Compensation for fluctuations in the value of financial assets.

2. The reserve does not earn interest.

1. The fixed annual contribution from the income of properties in the financial assets shall not exceed 2 percent of the new value of all buildings in the financial assets. The reserve balance shall not exceed 20 percent of the new value of all buildings in the financial assets.

2. Lower limit values may be specified in the regulations.

3. Withdrawals from the reserve correspond to the maintenance and renovation expenses for the properties in the financial assets, provided the reserve balance is sufficient for this purpose.

1. The amount of the contribution shall not exceed the appreciation of financial and tangible assets of financial capital in the corresponding year. The maximum level of the reserve amounts to 10 percent of the book value of the financial and tangible assets of financial capital.

2. Lower threshold values may be set in the regulations.

3. Withdrawals from the reserve correspond to the depreciation of financial and tangible assets of financial capital in the corresponding year, insofar as the reserve level is sufficient for this.

1. An appropriation to the additional depreciation is decided by the citizenship or parliament with the budget or the annual financial statement.

2. An appropriation to the additional depreciation can be made if there is no deficit in the balance sheet and it does not lead to an excess of expenditure in the overall result of the profit and loss account.

3. The withdrawal from the additional depreciation is made starting from the year following the appropriation in equal annual amounts over the remaining depreciation period of the corresponding investment object of administrative assets.

4. An additional depreciation is reversed with effect on profit and loss if the corresponding investment object is no longer part of the administrative assets.

1. A contribution to pre-financing is decided by the citizens or parliament as part of the budget or annual financial statement.

2. The purpose of the pre-financing must be precisely defined.

3. A contribution to pre-financing can be made if there is no deficit in the balance sheet and it does not lead to an excess of expenditure in the overall result of the profit and loss account.

4. Withdrawal from pre-financing occurs from the start of the depreciation of the pre-financed investment object, in equal annual portions over its depreciation period.

5. Pre-financing is dissolved through profit and loss when its purpose ceases or can no longer be fulfilled. Changing the intended purpose is not permissible.

1. An allocation to or withdrawal from the compensation reserve is decided by the citizenry or parliament with the budget or the annual financial statement.

1. The following shall be included in the annex to the annual financial statements

a) Accounting principles, including the essential accounting and valuation principles, in particular depreciation methods and rates;

b) Statement of changes in equity;

c) Statement of provisions;

d) Statement of participations and guarantees;

e) Statement of investments;

f) Additional information that is significant for the assessment of the financial position, financial performance, and financial risks.

1. The Equity Statement shall include the following details for all equity accounts

a) The balance at the beginning and at the end of the fiscal year;

b) Changes.

1. The provisions reconciliation schedule lists all provisions existing at the beginning and end of the fiscal year.

2. For each provision, at least the following are specified

a) Designation;

b) Balance at the beginning and end of the fiscal year;

c) Commentary on changes.

3. For significant provisions, the nature of the obligation and its degree of uncertainty are briefly explained.

1. The shareholding overview lists significant participations.

2. For each participation, at least the following are specified

a) Name and legal form;

b) Activities and any public duties undertaken;

c) Total capital and the municipality's share;

d) Book value of the participation.

1. The Warranty Register shall include

a) the contingent liabilities, particularly those where the municipality undertakes obligations on behalf of third parties, such as sureties, guarantees, or deficit guarantees;

b) other contingent circumstances, if they have not yet been recorded as provisions.

2. For each warranty, at least the following shall be specified

a) Name of the receiving entity or contractual partner;

b) Type of legal relationship;

c) Description of the services covered by the warranty;

d) to the extent possible, the potential financial burden on the municipality.

1. The Investment Schedule indicates for administrative assets as well as financial and tangible fixed assets of the financial assets per investment category or balance sheet account group at least the following

a) the cumulative acquisition costs at the beginning and end of the fiscal year;

b) additions, disposals, and reclassifications;

c) increases or decreases resulting from revaluations, appreciation, or depreciation of the financial and tangible fixed assets of the financial assets;

d) cumulative depreciation of the administrative assets at the beginning and end of the fiscal year as well as their change;

e) other changes;

f) the cumulative book values at the end of the fiscal year.

1. With the budget, the council provides the citizens' assembly or parliament with the following information in particular

a) A commentary by the council adjusted to the size of the financial budget;

b) Designation of new expenditures;

c) The tax plan;

d) The financial plan, insofar as the citizens or parliament are not informed in another suitable manner.

1. The estimated revenue from income and wealth taxes as well as property tax is included in the tax plan.

1. The School Board submits its resolutions regarding the financial requirements of the school community to the Municipal Council as follows

a) for the budget

1. by no later than December 31 of the previous year, if it is approved after the beginning of the year;

2. no later than five days after the resolution, if it is approved before the beginning of the year;

b) for the financial plan, annually by no later than August 31 of the previous year;

c) for special resolutions, no later than five days after the resolution.

2. The Municipal Council informs the School Board within 21 days of delivery if it intends to review certain expenditures for appropriateness under Article 121 of the Municipal Act of April 21, 2009. The School Board informs the citizenry or the parliament of the decision of the Municipal Council.

3. The request for an appropriateness review may only be submitted to the Department of Internal Affairs after the decision of the citizenry or the parliament of the school community.

1. If the budget is not adopted until after the start of the fiscal year, the council may incur essential administrative expenses up to that point.

2. The council may incur expenditures for the investment account, insofar as resolutions for loans are in place.

1. The Council takes measures

a) to protect assets;

b) to ensure the appropriate use of funds;

c) to prevent and detect errors and irregularities in accounting;

d) to ensure the regularity of accounting and reliable reporting.

2. The internal control system comprises regulatory, organizational, and technical measures.

3. When determining the measures, the Council considers the circumstances in the municipality, the risk situation, and the cost-benefit ratio.

4. The Council annually reviews compliance with the internal control system and records the results in a written report.

1. The Council shall specifically determine

a) the responsibilities of the administrative offices that manage funds;

b) the authorized signatories;

c) the visa regulation;

d) the competencies for the utilization of approved credits.

2. For postal and banking transactions, a collective signature by two individuals is required; in electronic payment transactions, an appropriate form of collective endorsement is necessary.

1. The council conducts at least one unannounced annual inspection of the administrative offices that manage funds.

2. The aspects inspected are

a) Recording of monetary transactions as well as consistency between entries and receipts;

b) Consistency between book balances and inventories;

c) Updating of the accounting records;

d) Collection of receivables;

e) Appropriateness of fund management;

f) Completeness and security of securities.

3. The council may delegate the execution of the inspection to council members, the financial audit office, or qualified third parties.

4. The results of the inspection are documented in a written report. If the execution was delegated, the council acknowledges receipt of the report.

1. The municipality shall conduct cost and performance accounting for administrative offices with result-oriented administrative management.

1. The council submits the annual financial statements, proposals concerning the budget and tax rate, as well as matters pursuant to Art. 55 para. 2 lit. b of the Municipal Act of April 21, 2009, to the Audit Commission in a timely manner to ensure a thorough review and to allow sufficient time for submitting applications.

1. The Audit Committee, together with the annual financial statements, specifically examines

a) the oversight activities of the Council pursuant to Art. 29 of this enactment;

b) compliance with regulations regarding security deposits by members of authorities and employees;

c) the existence of an internal control system.

1. In the case of administrative offices whose administration is regularly reviewed by special supervisory authorities, the examination is limited to the collection of fees and taxes.

1. Budget, Annual Financial Statement, Annual Report, Financial Reporting, and Report of the Audit Commission are to be permanently retained in their original form, while the accounting books and accounting records must be kept for ten years.

2. Documents related to perimeter contributions and other public law levies are to be retained for as long as necessary to ascertain performance.

1. Commercial books and accounting records may be recorded on immutable image or data carriers, provided that they can be made readable at any time during the retention period.

2. Free access to the commercial books and records recorded on image or data carriers shall be ensured for an announced audit of the books.

1. The competent department shall be submitted

a) The annual accounts and budget, categorized by type and function, in duplicate;

b) Minutes of the citizens' assembly, along with reports and proposals, or minutes of parliamentary sessions regarding the budget and annual accounts, including reports and proposals;

c) Financial plan.

1. From the time of the revaluation pursuant to Art. 174 para. 1 of the Municipal Law of April 21, 2009, existing administrative assets shall be depreciated over the remaining depreciation period according to Annex A and B of this decree. Article 8 of this decree shall be applied accordingly.

1. Reserves arising pursuant to Article 174, Paragraph 1 of the Municipal Act of April 21, 2009, from the revaluation of administrative assets of special financing, shall be allocated to the special financing in equity.