Ordinance on the Accounting of Municipalities - Purpose

1. This regulation governs the overall management of the financial budget, credit law, accounting, as well as financial leadership at the administrative level and budgetary control.

2. This regulation supports financial policy and administrative management according to business management principles. The economical and effective use of public funds shall be promoted, and the budgetary balance maintained.

3. Further details are regulated in the accounting manual for the Thurgau municipalities.

1. This regulation applies to the political municipalities and the school municipalities.

2. Furthermore, the regulation applies, subject to any contrary legal provisions, to independent institutions of the municipalities.

3. Citizens' municipalities must maintain a balance sheet, which shows the assets and liabilities as well as the equity or any negative balance. Tax law depreciation regulations apply to citizens' municipalities.

4. The term "eligible voters" in this regulation refers to the entirety of eligible voters and also includes their representation through Parliament.

1. Financial assets include those assets that can be sold without impairing the fulfillment of public duties.

2. Administrative assets include those assets that directly serve the fulfillment of public duties.

1. Revenues are payments from third parties that increase the assets.

2. An expenditure is the commitment of financial assets for the fulfillment of public duties. It requires a legal basis or a credit.

3. An investment is a financial transaction for which there is a freely realizable value, and it merely leads to reallocation within the financial assets.

1. An expenditure is considered new if there is significant discretion regarding the necessity, timing, or other circumstances of its execution.

2. An expenditure is considered binding if it is not deemed new within the meaning of paragraph 1.

1. Expense is defined as the depletion of value, while income is defined as the increase in value within a specific period.

1. The income statement reports the revenues and expenses of the public corporation for the accounting period.

1. The investment accounting includes items with a multi-year useful life that are capitalized, as well as the associated revenues.

2. The investment accounting serves as the basis for determining cash flows from investments and disinvestments in the cash flow statement.

3. The following capitalization thresholds apply

1. Municipalities with up to 1,000 inhabitants: CHF 25,000

2. More than 1,000 up to 5,000 inhabitants: CHF 50,000

3. More than 5,000 up to 10,000 inhabitants: CHF 75,000

4. More than 10,000 inhabitants: CHF 100,000

4. The capitalization threshold of CHF 100,000 is mandatory. The breakdown according to paragraph 3 serves as a recommendation for determination by the municipality.

5. If the total costs per object exceed the specified values, an expenditure must be recorded in the investment accounting.

1. The tax capacity corresponds to 100% of the tax revenue and is determined based on the following factors

1. Current tax table of individuals and legal entities, supplementary property taxes, capital gains taxes, as well as withholding taxes

2. Addendum table for individuals and legal entities

3. Depreciation table for individuals and legal entities, as well as the flat-rate tax credit

2. Not included in the calculation are

1. Compensation, default, and refund interest

2. Depreciation of interest

1. Budget management shall be guided by the principles of legality, budget balance, frugality, urgency, economic efficiency, the polluter pays principle, compensation for benefits, the prohibition of earmarking primary taxes, and impact orientation.

1. The financial plan shall be prepared annually by the executive for at least the three years following the budget.

2. The executive shall present the financial plan to the electorate.

1. The Financial Plan Shall Contain at Least

1. The Framework Conditions

2. An Overview of Expenses and Revenue from the Income Statement

3. A Summary of Investments

4. The Anticipated Funding Requirement

5. An Overview of the Development of Assets and Liabilities

6. The Development of Financial Ratios Concerning Indebtedness, Equity, and Self-Financing

1. The executive branch prepares the draft budget annually and submits it to the eligible voters or the municipal parliament for approval.

2. If a budget has not been presented by the deadline set in § 62, the executive branch is authorized to incur the necessary expenditures for the fulfillment of ordinary tasks.

1. The budget is structured according to the functional classification and, if desired, the institutional classification. The chart of accounts follows the accounting plan of HRM2 as per the handbook on accounting for the Thurgau municipalities.

1. The Budget Contains

1. Expenses to be approved and expected revenues in the profit and loss statement

2. Expenses to be approved and expected income in the investment account

2. The budget shall inform the eligible voters about the funding and significant changes compared to the current year's budget and the previous year's account.

1. In administrative units managed according to the principle of performance mandates and global budgets, tasks are generally divided into product groups or services.

2. The binding budget credit is determined as the balance of expenses and revenues, set as a global budget for the administrative unit as a whole.

3. Expenses and revenues, as well as expenditures and income, must be recorded financially and statistically according to type classification.

4. The executive approves the performance mandates with final authority; however, this is subject to the approval of the global credit by the eligible voters.

1. The executive shall manage the credits approved by the electorate. It may delegate the authority to a specified extent.

1. Special financings exist when funds are allocated for the fulfillment of specific public tasks. The establishment of special financing requires a legal basis. Main taxes may not be earmarked.

2. Expenses and revenues of special financings are recorded in the profit and loss account. Balances of special financings are accounted for in the balance sheet.

3. As a rule, all direct and imputed expenses and expenditures, as well as revenues and income, are to be charged to or credited to the special financing in the sense of full cost accounting.

4. The accounted balances of special financings are to be interest-bearing. The executive sets the interest rate.

1. The Renewal Fund is considered earmarked equity capital and serves for the long-term pre-financing of renewal and renovation costs of buildings and facilities, which are not or only partially financed through taxes.

2. School communities contribute to this fund from the difference between contribution-recognized and utilized building-related costs for school buildings. The deposits are made independently of the financial outcome.

3. Renewal funds do not bear interest.

1. The creation of reserves for projects not yet approved (pre-financing) may be budgeted or carried out with the financial statement. They require a resolution from the formally competent authority. They are disclosed as extraordinary expenses.

2. Pre-financing can be established for capital expenditures, provided there is no existing deficit or it does not create one.

3. The creation of pre-financing at the expense of existing equity is not permissible.

4. Pre-financing must be dissolved as soon as it is determined that the investment project will not be executed.

5. Pre-financing accumulated from general tax revenues is not subject to interest.

1. The issuance of a regulation concerning a land credit account is the responsibility of the eligible voters.

2. With a regulation concerning a land credit account, the executive branch can conduct real estate transactions, which are to be allocated to the financial assets, with conclusive competence.

3. If the properties acquired through the land credit account are allocated to administrative assets or sold, the land credit account must be settled through the investment account with the original purchase price of the property as well as the incurred costs and credits.

4. The executive branch must annually render an account with the financial statement about the real estate purchases and sales conducted, as well as the transfers to the financial or administrative assets.

1. The cumulative result of the income statement must show a surplus or be balanced within eight years. The assessment is based on the last five annual statements and the budgeted result for the current year. Any expenses surpass must be balanced in the subsequent budget and the first planning year.

2. If the balance sheet shows a deficit, this must be reduced annually by at least 20 percent of the remaining book value; the corresponding amounts must be considered in the budget.

3. Municipalities may deviate from the equalization rule according to paragraph 1, as long as the net debt ratio is below 100%.

1. The financial situation is illustrated using the following financial ratios

1. Net debt ratio

2. Self-financing ratio

3. Interest burden ratio

4. Net debt per resident in Swiss francs

5. Self-financing share

6. Capital service ratio

7. Gross debt ratio

8. Investment share

9. * Balance sheet situation (balance surplus quotient)

10. * ...

11. Tax capacity per resident

2. The ratios may be adjusted to nationwide Swiss developments and recommendations.

3. Entity-specific deviations are regulated in the manual.

1. A credit is the authorization to incur financial obligations for a specific purpose up to a certain amount.

2. Credits must be obtained before entering into new obligations.

3. They must be requested in the form of commitment credits, supplementary credits, budget credits, or additional credits.

4. They must be used for the purpose for which they were approved.

5. They are determined based on careful estimates of the anticipated needs.

1. Object Loans and Credit Lines must be specifically resolved in the form of commitment credits. They generally extend over more than one calendar year.

2. The Object Loan grants the authorization to enter into commitments for a single project up to the approved amount.

3. The Credit Line grants the authorization to enter into commitments for several individual projects combined within a program up to the approved amount.

1. An obligation credit is usually approved as a gross credit. It can be approved as a net credit as the balance between expenses and revenues if third-party contributions are legally binding in their amount, or if the obligation credit is granted subject to specific services from third parties.

1. The requirement for commitment appropriations for the calendar year must be included in the respective budget.

1. In the financial statement, an account must be given of the closed or possibly obsolete commitment credits.

1. Continuous monitoring must be conducted over the current commitment appropriations.

2. The individual projects included in the framework credit must be specified.

1. The supplementary credit is the addition to an insufficient commitment credit.

2. If it becomes apparent before or during the execution of a project that the approved commitment credit, adjusted for inflation, is exceeded by more than 10%, but at least by the amount for the activation threshold according to § 8, the executive must request a supplementary credit before entering into new commitments.

3. Additional costs due to fixed expenditures do not require a supplementary credit.

1. By means of the budget credit, the legislature authorizes the executive to charge the annual account for the specified purpose up to the determined amount.

2. Unclaimed credits expire at the end of the fiscal year.

1. Foreseeable Expenditures or Outlays from Commitment Appropriations, for which the legislative decision is still pending at the time of the budget resolution, shall be included in the budget with a restrictive annotation. They remain restricted until the legal basis is in effect.

1. The supplementary credit is the augmentation of an insufficient budget credit.

2. If it becomes apparent before or during the utilization of the budget credit that the approved amount is insufficient, the executive must request a supplementary credit before assuming new commitments. This is subject to the credit overrun for non-controllable expenditures pursuant to § 34.

3. Decisions regarding supplementary credits are made by the eligible voters, unless the executive is responsible.

1. If the undertaking of an expenditure or an outlay for which no adequate credit has been approved in the budget cannot be postponed without adverse consequences for the municipality or the corporation, or if it concerns a mandatory or non-discretionary expenditure, the executive authority may decide on a credit overrun.

2. Credit overruns are also permissible for expenditures and outlays which are offset by corresponding related revenues and income within the same fiscal year.

3. The executive authority must inform the eligible voters of credit overruns with the financial statement, including an explanation of the reasons.

1. The financial reporting shall present a picture of the financial position that corresponds to the actual assets, financial, and income situation.

1. The financial reporting is based on the principles of gross presentation, accrual, going concern, materiality, understandability, reliability, comparability, and consistency.

1. An allowance for depreciation is recorded as an extraordinary write-down. These extraordinary write-downs are to be undertaken based on business management considerations. They are performed in cases where the asset is no longer available before the end of its useful life.

1. The Annual Financial Statement comprises the following elements

1. Balance Sheet

2. Income Statement

3. Investment Statement

4. Cash Flow Statement

5. Notes

2. The Notes shall specifically include the breakdown of equity, provisions report, investment and liability statement, asset statement, information on pre-financing, the accounting principles, and additional information relevant for the financial assessment.

3. The chart of accounts as per the manual is binding. It is aligned with the chart of accounts developed by the Intercantonal Coordination Group HRM2 and approved by the accounting standards body. Supply and disposal businesses and other public law organizations may use different charts of accounts within the framework of the relevant technical recommendations.

1. In the balance sheet, the active (assets) and the passive (liabilities and equity) components are compared.

2. The assets are categorized into financial and administrative assets.

3. The liabilities are categorized into debt capital and equity.

1. The income statement presents the operating result on the first level and the extraordinary result on the second level, each with the respective expense or revenue surplus. Furthermore, it shows the overall result, which affects the equity.

2. Expenses and revenue are considered extraordinary if they could not have been anticipated in any way and are beyond influence and control, or they do not belong to the operational area. Extraordinary expenses or extraordinary revenue also include additional depreciation, the elimination of the balance sheet deficit, as well as contributions to and withdrawals from equity.

1. The investment calculation compares the investment expenditures and the investment revenues.

1. The cash flow statement provides information regarding the origin and use of funds.

2. The cash flow statement presents the cash flow from operating activities (income statement), the cash flow from investing activities (investment calculation), and the cash flow from financing activities in a structured manner.

1. The Statement of Changes in Equity shows the causes of changes in equity.

1. Each existing provision must be individually listed in the provision statement.

2. The provisions must be classified by categories.

1. In the participation report, both the equity participations and the organizations that are significantly influenced by the public sector must be listed.

1. The Warranty Register shall list the facts from which a significant obligation of the community could arise in the future.

1. The investment schedule contains the total of the asset book values and the accumulated depreciation (aggregated with the accumulated impairments) at the beginning and end of the period.

1. Assets in the financial assets are generally recorded at acquisition cost. Adjustments must be made if the market value significantly deviates from the book value.

2. Provisions are established for existing obligations where the timing of fulfillment or the amount of future outflow of resources is subject to uncertainties.

1. Liabilities and financial assets are valued at nominal value.

2. Initial recognition of investments in financial assets is at cost. If there is no expense incurred, they are valued at fair value at the time of acquisition. Subsequent valuations occur at fair value on the balance sheet date, with systematic revaluation of financial assets annually and other assets periodically.

3. If a permanent impairment is foreseeable for a position of financial assets, its carried value shall be adjusted.

1. Assets in administrative properties are valued at acquisition or production cost.

2. Assets of the administrative properties that are subject to depreciation through use are regularly depreciated according to the asset category based on the assumed useful life; only straight-line depreciation is permitted. An asset accounting system must be maintained. The handbook regulates the details. The asset categories to be used are listed in the appendix. In objectively justified individual cases, the municipality may apply a different, shortened useful life.

3. Additional depreciation is permissible; these must be bound to rules determined by the executive. They must be recorded as extraordinary expenses. No additional depreciation is possible in the event of a negative financial statement.

4. If a permanent impairment in value is foreseeable for an item of administrative property, its book value is corrected.

1. The accounting shall adhere to the principles of completeness, accuracy, timeliness, and verifiability.

2. The bookkeeping records both external business transactions and internal allocations in a chronological and systematic manner.

1. Administrative units shall securely preserve the records along with the accounting documents for a period of ten years. More extensive provisions in special legislation remain reserved.

2. The registry and archival plan for municipalities issued by the State Archive shall be applied accordingly.

1. In asset accounting, the assets (fixed assets, capitalized investments) are recorded, which are utilized over several years.

1. The internal control system includes regulatory, organizational, and technical measures.

2. The executive takes the necessary measures to protect assets, ensure the appropriate use of funds, prevent or detect errors and irregularities in accounting, and guarantee the compliance of financial reporting and reliable reporting.

3. In doing so, it takes into account the risk situation and the cost-benefit ratio, as well as the size of the municipality.

1. Internal Settlements are credits and debits between administrative units. They must be carried out to the extent that they are essential for determining expenses and revenues, or for economic performance fulfillment and cost transparency.

1. The executive branch ensures the proper delivery of the data required by the canton.

1. The Executive is particularly responsible for

1. fundamental guidelines regarding the investment of financial assets; subject to differing constitutional or statutory provisions

2. the procurement of funds

3. changes in the purpose of administrative assets, provided these do not result in expenditures

4. the conversion of no longer needed administrative assets into financial assets

5. the preparation of the budget, supplementary and additional credits, as well as the annual financial statements and the closing of accounts for the attention of the Legislature

6. the creation of the financial plan

7. the approval of budget overruns in accordance with § 34

8. the issuance of ownership strategies for significant holdings or for institutions controlled by the municipality

1. The Audit Commission examines the bookkeeping and the annual financial statements in both formal and substantive respects.

2. It prepares a written report for the executive and the authorities responsible for the approval of the accounts.

3. It is entitled to request the presentation of books and documents, such as invoices, receipts, resolutions, contracts, and any information it deems necessary for conducting a proper audit.

4. The executive may engage an audit firm to provide assistance or additionally assign such a firm to carry out the audit.

1. The examination particularly includes

1. compliance with the budget and financial authorities

2. adherence to the chart of accounts and numbering according to categories and functional classification, as well as the balance sheet

3. the regulation of supporting documents

4. the arithmetic accuracy of documents and the annual financial statements

5. the existence and completeness of assets and liabilities

6. the propriety of valuation

7. the efficiency of task fulfillment

8. * the existence and implementation of the internal control system according to § 54

2. The audit commission of the political municipality must also verify the tax collection office with regard to the allocation and remittance of taxes. It is entitled to access the audit report of the tax review authority of the cantonal tax administration.

1. The Audit Commission may conduct unannounced inspections of cash holdings, money accounts, and securities stocks, as well as scheduled interim audits, throughout the year.

1. The result of the audits is to be documented in a report signed by the members of the Audit Commission. This report is to be attached to the original annual accounts. Details of the audit are to be recorded in an internal report for the executive's review.

2. The executive or the affected offices are required to respond to an internal audit report within 60 days.

1. The following deadlines are considered final

1. Municipal voting on the budget and determination of the tax rate: End of December

2. Submission of the annual financial statement to the audit committee: End of March

3. Approval of the annual financial statement by the municipality: End of June

4. Submission of the approved financial statement to cantonal or federal authorities: End of July

2. The final deadline for municipal voting in municipalities that hold only one municipal assembly for approval of the annual financial statement and budget with determination of the tax rate is the end of March. In this case, only mandatory expenditures may be incurred until the budget is approved.

3. Municipalities that traditionally hold their budget meeting in January (for example, on Bechtelistag) may continue this tradition and conduct the municipal voting by the end of January at the latest.

1. Upon the enactment of this regulation, a review of the allocation to financial and administrative assets, a revaluation of financial assets, provisions, and deferred charges and credits will be conducted.

2. The revaluation reserve for financial assets arises from the revaluation of financial assets during the transition to HRM2. It is intended to be used for tangible assets within the financial assets, but in the transition year, it is also available to offset incorrectly recorded positions in the financial assets.

3. The revaluation reserve may not be altered for five years after the introduction of HRM2. Exceptions are made for withdrawals to cover losses from the periodic revaluation or from the sale of financial assets.

4. From the sixth year after the introduction of HRM2, the revaluation reserve shall be dissolved within five years in favor of the balance sheet surplus or a pre-financing.

5. The previously recorded administrative assets will not be revalued. A voluntary revaluation according to Technical Recommendation No. 19 of the Conference of Cantonal Finance Directors, as amended on January 25, 2008, is possible in fee-financed areas. The previously unvalued administrative assets will generally be depreciated linearly over ten years. If large investments from recent years result in excessive burdens, these can be depreciated based on their remaining useful life. School buildings can generally be depreciated according to their remaining useful life.

6. If the residual value is below the capitalization threshold, it may be directly depreciated.

1. A balanced result of the cumulative profit and loss account pursuant to § 22 paragraph 1 must be achieved by the budget for 2029 and the financial plan for 2030 at the latest, unless the conditions pursuant to § 22 paragraph 2 are met.