CCP 05-27-1997 - Laserfiche WebLink

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---.------------- -- I CITY OF ARDEN HILLS, MINNESOTA .1 NOTES TO FINANCIAL STATEMENTS I DECEMBER 31, 1996 Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity I The City of Arden Hills operates under the "Optional Plan A" form of government as defmed in the State of I Minnesota Statutes. Under this plan, the government of the City is directed by a Council composed of an elected Mayor and four elected Council Members. The Council exercises legislative authority and determines all matters of policy. The Council appoints personnel responsible for the proper administration of all affairs relating to the City. As required by generally accepted accounting principles, the financial statements present the City I and its component units. The City does not have any component units. B. Measnrement Focus, Basis of Acconntiog and Basis of Presentation The accounts of the City are organized and opemted on the basis of funds and account groups. A fund is an I independent fIscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with fmance- related legal and contractual provisions. The minimum number of funds are maintained consistent with legal I and managerial requirements. Account groups are a reporting device to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. The City has the following fund types and account groups: I Governmental funds are used to account for the City's general government activities. Governmental fund types use the flow of current financial resources measurement focus and the modifIed accruaI basis of accounting. ., Under the modifIed accrual basis of accounting, revenues are recognized when susceptible to accruaI (Le., wh I they are "measurable and available"). "Measurable" means the amount of the transaction can be detennined, an "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers all revenues available if they are collected within 60 days after year end I Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when doe, and certain compensated absences and claims and judgments which are recognized when the obligations are expected to be liquidated with expendable available financial resources. I Property taxes, franchise taxes, licenses, interest. and special assessments are susceptible to accroal. Other receipts and taxes become measurable and available when cash is received by the government and are recognized as revenue at that time. I The preparation of general purpose financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and I disclosures. Accordingly, actual results could differ from those estimates. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure driven grants are recognized as revenue when the qualifying expenditures have been I incurred and all other grant requirements have been met. Governmental funds include the following fund types: The General fund is the City's primary operating fund. It accounts for all financial resources of the City, except I those required to be accounted for in another fund. The Special Revenue funds account for revenue sources that are legally restricted to expenditures for specifIed .- purposes (not including major capital projects). The Debt Service fund accounts for the servicing of general long-term debt not being financed by proprietary funds. I -10- I