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I I. Note 1: I I I I I . I Note 2: .. I I . I . I I. I I CITY OF ARDEN HILLS, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Fund Equity Reservations of fund balance represent amounts that are not appropriable or are legally segregated for a specific purpose. Reservations of retained eamings are limited to outside third-party restrictions. Designations offund balance represent tentative management plans that are subject to change. The proprietary funds contributed capital represents equity acquired through capital grants and capital contributions from developers, customers or other funds. Memorandum Only - Total Columns Total colunms on the general purpose fmancial statements are captioned as "memorandum only" because they do not represent consolidated financial information and are presented only to facilitate fmancial analysis. The colunms do not present information that reflects fmancial position, results of operations or cash flows in accordance with accounting principles generally accepted in the United States of America. Interfund eliminations have not been made in the aggregation of this data. Comparative DatalReclassifications Comparative total data for the prior year have been presented in the selected sections of the accompanying financial statements in order to provide an understanding of changes in the City's fmancial position and operations. AIsol certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year's presentation. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for all the general and special revenue funds. The capital projects funds adopt project length budgets. All annual appropriations lapse at fiscal year end. The City does not use encmnbrance accounting. In August of each year, all departments of the City submit requests for appropriations to the City Administrator so that a budget may be prepared. Before September 15"', the proposed budget is presented to the Council for review. The Council holds public hearings and a fmal budget is prepared and adopted in December. The appropriated budget is prepared by fund, function and department. The City's department heads, with the approval of the City Administrator, may make transfers of appropriations within a department. Transfers of appropriations between departments require the approval of the Council. The legal level of budgetary control is the fund level. Budgeted amounts are as originally adopted, or as amended by the Council. No budget amendments were made during the year. B. Excess of Expenditures over Appropriations For the year ended December 31, 200 I, expenditures exceeded appropriations in the following funds: Fund Budget Actual Excess General $ 2,453,941 $ 2,613,114 $ 159,173 Special revenue Insurance Deductible 5,000 25,948 20,948 Economic Development Authority 66,050 82,124 16,074 The excess expenditure over appropriations were funded by revenue in excess of budget and available fund balance. -15-