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I . ,- Note 1: , , I , I I Note 2: .e I . I I I I I. I I CITY OF ARDEl\ IIILLS, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 3 L 2002 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 earnings arc limited to outside third-party restrictions. Designations offunct 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, custolllers or other funds. Memorandum Only - Total Columns Total colunms on the general purpose financial statements are captioned as "memorandum only" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present infonnation that reflects financial 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 ofihe accompanying financial statements in order to provide an llildcrstanding of changes in the City's financial position and operations. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent vrith the current year's presentation. STEWARDSHIP, COMPLIANCE AND ACCOUNT ABILITY A. Budgetary Information Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for the general, special revenue and debt service funds. The capital projects funds adopt project length budgets. All al111ual appropriations lapse at fiscal year end. The City does not use encumbrance 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 Conncil holds public hearings and a final 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 amended by the Council. B. Excess of Expenditures over Appropriations For the year ended Deccmber 31, 2002, expenditures exceeded appropriations in the following funds: Fund Budget Actual Excess Special revenue Cable TV $ 20,045 $ 25,239 $ 5,194 TCA_AP 38,415 144,885 106,470 Debt service Tax Increment Bonds of 1998A 286,315 286,318 3 The excess expenditure over appropriations was funded by revenue in excess of budget and available fund balance. -16-