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City of Arden Hills March 31, 2000 Page Eight . Recycling Fund This fund has a cash balance of$55,830 and retained eamings of$51,740 at year-end. This is adequate to fund the current level of operations. Surface Water Management Fund This fund has a cash balance of$142,530 and retained earnings of$21l,688 at year-end. This is adequate to fund the current level of operations. Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments GASB Statement No. 34 is the result of an ahnost decade-Prior effort by GASB to reexamine the fmancial reporting model for state and local governments. The most notable change is the presentation of a set of highly aggregated, "full accrual" fmancial statements. At the same time, however, the Statement retains many familiar features of current governmental financial reporting, in particular fund-based fmancial statements. State and local governmental financial statement preparers and auditors will need to comprehend and implement a vast number of changes in accounting and fmancial reporting. They will have to explain those changes to persons who are unfamiliar with the particulars of accounting, much less the unique area of state and local governmental accounting. The following are some specific areas that need to be addressed with the implementation of this new statement: Timeline . GASB Statement No. 34 is effective in three phases based on the total annual revenues of the primary government's governmental and proprietary funds, although earlier application is encouraged. For this purpose, revenues include all revenues except for other fmancing sources and certain extraordinary items. The City is considered to be phase 3. Therefore, the City is required to implement GASB Statement No. 34 for the calendar year ending 2004. Management's Discussion and Analysis (MD&A) MD&A gives an objective and easily readable analysis ofa government's financial activities based on currently known facts, decisions, or conditions. It presents short- and Prior-term analyses of the government's activities, compares current-year results with those of the prior year, and discusses the positive and negative aspects of that comparison. Government-wide Financial Statements The government-wide fmancial statements are (I) a statement of net assets and (2) a statement of activities. The statement of net assets presents the government's fmancial position at a point in time (like a balance sheet does); the statement of activities presents its activities during a period (like an operating statement does). These statements present highly aggregated information for the overall government; they do not display individual funds or fund types. They also present fmancial information in separate rows and columns for the (I) primary government's aggregate governmental activities, (2) primary government's aggregate business-type activities, (3) total primary government, and (4) discretely presented component units. Capital Assets . Capital assets are tangible and intangible assets that are used in operations that have initial usefullives longer than one year. They include land and improvements, easements, buildings and improvements, equipment, and works of art and historical treasures. Capital assets also include infrastructure assets - normally stationary capital assets that can be preserved for significantly greater number of years than most capital assets. Infrastructure assets include roads, bridges and tunnels; water, sewer and drainage systems; dams; lighting systems; and buildings that are an ancillary part of a network of infrastructure assets. Capital assets are reported in the statement of net assets at historical cost (or estimated fair value, if donated) and net of accumulated depreciation. They are depreciated in the statement of activities over their estimated usefullives. DRAFT