CCP 05-24-1999 - Laserfiche WebLink

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CITY OF ARDEN HILLS, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES I A. Reporting Entity .1 I Note 1: The City of Arden Hills operates under the "Optional Plan A" form of government as defined in the State of 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 generaJly accepted accounting principles, the fmancial statements present the City and its component units, entities for which the City is considered to be fmancially accountable. I Blended component units, although legally separate entities, are, in substance, part of the City's operations and so data from these units are combined with data of the primary government. The blended component unit has a December 31 year end. I Blended Component Units I The Economic Development Authority of the City was created pursuant to Minnesota Statutes 469.090 through 469.108 to carry out economic and industriaJ development and redevelopment consistent with policies established by the City Council. The EDA activities are blended and reported in a separate Special Revenue Fund. Separate fmancial statements are not issued for this component unit. I B. Measurement Focus, Basis of Accounting and Basis of Presentation I The accounts of the City are organized and operated on the basis of funds and account groups. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds I 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 and manageriaJ requirements. Account groups are a reporting device to account for certain assets and liabilities I of the governmental funds not recorded directly in those funds. . The City has the following fund types and account groups: Governmentalfunds are used to account for the City's general government activities. GovernmentaJ fund types use the flow of current fmanciaJ resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they are "measurable and available"). "Measurable" means the amount of the transaction can be determined, and "available" means collectible within the current period or soon enough thereafter to pay liabilities ofthe current period. The City considers all revenues available if they are collected within 60 days after year end. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences and claims and judgments which are recognized when the obligations are expected to be liquidated with expendable available fmancial resources. I I I Property taxes, franchise taxes, licenses, interest and special assessments are susceptible to accrua1. 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 fmancial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and 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 incurred and all other grant requirements have been met. . GovernmentaJ funds include the following fund types: The Generalfundis the City's primary operating fund. those required to be accounted for in another fund. . It accounts for all fmancial resources of the City, exce_. -11- I