The Town of Friday Harbor was incorporated on February 9, 1909, and operates under the laws of the state of Washington applicable to a fourth-class town (Title 35 Revised Code of Washington). The Town is a general-purpose local government and provides street maintenance and improvements, fire and police protection (via contract), parks, and general administrative services.  The Town owns and operates four proprietary utility systems:  Water, Wastewater, Stormwater, and Refuse.

The Town reports financial activity in accordance with the Cash Basis Budgeting, Accounting, and Reporting System (BARS) Manual prescribed by the State Auditor’s Office under the authority of Washington state law, Chapter 43.09 RCW. This manual prescribes a financial reporting framework that differs from generally accepted accounting principles (GAAP). 

Basis of Accounting and Measurement Focus

Financial statements are prepared using the cash basis of accounting and measurement focus. Revenues are recognized when cash is received, and expenditures are recognized when paid.

In accordance with state law, the Town also recognizes expenditures paid within 20 days after the close of the fiscal year on December 31 for claims incurred during the previous period.

Fund Accounting

Financial transactions of the government are reported in individual funds. Each fund uses a separate set of self-balancing accounts that comprise its cash and investments, revenues, and expenditures.

• General Fund: This fund is the primary operating fund of the government. It accounts for all financial resources except those required or elected to be accounted for in another fund.
• Special Revenue Fund: These funds account for specific revenue sources that are restricted or committed to expenditures for specified purposes of the government.
  • Street
  • Low Income Assistance
  • In Lieu of Parking
  • Harbor Improvements
  • Hotel/Motel
• Capital Projects Fund: These funds account for financial resources which are restricted, committed, or assigned for the acquisition or construction of capital facilities or other capital assets. (REET)
• Enterprise Funds:
  • Water
  • Sewer
  • Refuse
  • Stormwater
• Fiduciary Funds: These funds account for assets held by the government in a trustee capacity or as a custodian on behalf of others.
  • Utility Assistance through Harbor Life Ring
  • Court Remittances
  • WA State Remittances