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<br />CITY OF ARDEN HILLS, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31,2002 <br /> <br /> I <br /> .- <br /> I <br /> Deficit I <br />$ 734 I <br /> 489,646 <br /> 150,944 I <br /> <br />Note 2: STEWARDSHIP, COMPLIA1'1[CE AND ACCOUNTABILITY - CONTINUED <br /> <br />C. Deficit Fund Equity <br /> <br />The following funds had fund equity deficits at December 3 1,2002: <br /> <br />Fund <br /> <br />Special revenue <br />Recreation Program <br />Economic Development Authority <br />Capital projects <br />Municipal Land and Buildings <br /> <br />The deficits will be eliminated with future revenue sources and transfers from other fimds. <br /> <br />I <br /> <br />Note 3: DETAILED NOTES ON ALL FUNDS AND ACCOUNTS <br /> <br />Cash balances of the City's funds arc combined (pooled) and invested to the extent available in various <br />invesllilents authorized by Minnesota statutes. Each fund's portion of this pool (or pools) is displayed on the <br />financial statements as "cash and temporary investments". For purposes ofidentitying the risk of investing public <br />funds, the balances are categorized as follows: <br /> <br />I <br /> <br />A. Deposits and Investments <br /> <br />. <br /> <br />In accordance with Minnesota statutes and as authorized by the Council, the City maintains deposits at those <br />depository banks, all of which arc members of the Federal Reserve System. <br /> <br />.. <br /> <br />Deposits <br /> <br />Mirmesota statutes require that all City deposits be protected by insurance, surety bond or collateral. The market <br />value of collateral pledged must equal 110 percent ofthe deposits not covered by insurance or bonds (140 <br />percent in the case of mortgage notes pledged). <br /> <br />. <br /> <br />. <br /> <br />Authorized collateral includes the legal investments described below, as well as certain first mortgage notes, and <br />certain other State or local goverrunent obligations. Minnesota statutes require that securities pledged as <br />collateral be held in safekeeping by the City or in a financial institution other than that furnishing the collateral. <br />The City has deposits with a bank and a book value of$I,651,000 that are entirely covered with FDIC insurance <br />at December 31, 2002. <br /> <br />I <br /> <br />Investments <br /> <br />I <br /> <br />Investments are categorized into these three categories of credit risk: <br /> <br />1. Insured or registered, or securities held by the City or its agent in the City's name. <br /> <br />I <br /> <br />2. <br /> <br />Uninsured and llIIfegistered, with securities held by the counterparty's trust department or agent in the <br />City's name. <br /> <br />I <br /> <br />3. <br /> <br />Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but I <br />not in the City's name. <br /> <br />-. <br /> <br />-17- <br /> <br />I <br />