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05-13-19-R
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05-13-19-R
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<br />-29- <br />NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br /> <br />F. Cash and Investments <br /> <br />Cash and investments include balances that are combined and invested to the extent available in various <br />securities as authorized by state law. Allocations of pooled investment earnings to the respective funds is <br />based on participation by each fund. <br /> <br />For purposes of the Statement of Cash Flows, the City considers all highly liquid debt instruments with <br />an original maturity from the time of purchase by the City of three months or less to be cash equivalents. <br />The proprietary funds’ portion in the government-wide cash and investment management pool is <br />considered to be cash equivalent. <br /> <br />The City generally reports investments at fair value. The Minnesota Municipal Money Market (4M) Fund <br />is an external investment pool regulated by Minnesota Statutes that is not registered with the Securities <br />and Exchange Commission (SEC), but follows the same regulatory rules of the SEC. The fair value of the <br />position in the pool is the same as the value of the pool shares, which is based on an amortized cost <br />method that approximates fair value. The 4M Fund is sponsored by the League of Minnesota Cities. For <br />this investment pool, there are no unfunded commitments, redemption frequency is daily, and there is no <br />redemption notice required for the Liquid Class; the redemption notice period is 14 days for the Plus <br />Class. <br /> <br />The City categorizes its fair value measurements within the fair value hierarchy established by <br />accounting principles generally accepted in the United States of America. The hierarchy is based on the <br />valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active <br />markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are <br />significant unobservable inputs. <br /> <br />Debt securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing <br />technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark <br />quoted prices. <br /> <br />See Note 2 for the City’s recurring fair value measurements as of year-end. <br /> <br />G. Interfund Receivables and Payables <br /> <br />During the course of operations, numerous transactions occur between individual funds for goods <br />provided or services rendered. Short-term interfund loans are classified as “interfund <br />receivables/payables.” All short-term interfund receivables and payables at year-end are planned to be <br />eliminated in the subsequent year. Long-term interfund loans are classified as “advances <br />receivable/payable.” Any residual balances outstanding between the governmental activities and <br />business-type activities are reported in the government-wide financial statements as “internal balances.” <br /> <br />H. Receivables <br /> <br />Property taxes and special assessments receivable have been reported net of estimated uncollectible <br />accounts (see Note 1 I. and J.). Because utility bills are considered liens on property, no estimated <br />uncollectible amounts are established. Uncollectible amounts are not material for other receivables and <br />have not been reported. The only receivables not expected to be collected within one year are property <br />taxes and special assessments receivable.
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