ADAMS COUNTY, PENNSYLVANIA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2025

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Government-wide financial statements (continued)

Government-wide statements are reported using an economic resources measurement focus and full accrual basis of accounting that involves the following steps to format the statement of net position:

• Capitalize current outlays for capital assets
• Report long-term debt as a liability
• Depreciate capital assets and allocate the depreciation to the proper program/activities
• Calculate revenue and expense using the economic resources measurement focus and the accrual basis of accounting
• Allocate net position balances as follows:

○ Net Investment in capital assets

Restricted net positions are those with constraints placed on the use by external sources (creditors, grantors, contributors, or laws or regulations of governments) or imposed by law through constitutional provisions or enabling legislation

○ Unrestricted net position are assets that do not have any of the above restrictions

Fund Financial Statements

Fund financial statements provide more detailed information on the County's most significant funds, not the County as a whole. Funds are groups of related accounts that the County uses to keep track of specific sources of funding and spending for particular purposes. Some funds are required by state law. Other funds are established by the County to control and manage resources designated for specific purposes. Fund financial statements are reported using current financial resources and modified accrual accounting established by the Government Accounting Standards Board (GASB) for governments.

The County has three types of funds:

Governmental funds include most of the County's basic services and focus on: (1) the flow in and out of cash and other financial assets that can readily be converted into cash, and: (2) the balances left at year-end that are available for spending. These funds are reported using the modified accrual accounting basis, and a current financial resources measurement focus. Consequently, the governmental funds statements provide a detailed short-term view for the financial resources available in the near future to finance the County's programs.

The relationship between governmental activities (reported in the statement of net position and the statement of activities) and governmental funds is described in a reconciliation that follows the governmental fund financial statements.

The County adopts an annual budget for the general fund, as required by state law. A budgetary comparison of the County's general fund and other budgeted major governmental funds is presented as required supplementary information.