CCP 05-24-2004 - Laserfiche WebLink

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. . . Note 1: CITY OF ARDEN HILLS, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The City of Arden Hills operates under the "Optional Plan A PI form of government as defmed 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 res.ponsible for the proper administration of aU affairs relating to the City. The City has considered all potential units for which it is fmancially accOlll1table. and other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's fmancial statements to be misleading or incomplete. The Governmental Accounting Standards Board (GASB) has set forth criteria to be considered in determining [mancial accountability. These criteria include appointing a voting majority of an organization's governing body, and (1) the ability of the primary government to impose its will on that organization Or (2) the potential for the organization to provide specific benefits to, or impose specific financial burdens on the primary government The City has the following component unit. 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. Blended Component Units The Economic Development Authority (EDA) uf1he City was created pnrsnant to Minnesota statutes 469.090 through 469.108 to carry out economic and industrial development and redevelopment consistent with policies established by the Council. It is comprised of the members of the City Council. The EDA activities are blended and reported in a separate special revenue fund. Separate [mandai statements are not issued for this component unit. B. Measurement Focus., Basis of Accounting and Basis of Presentation The accounts of the City are organized and operated on the basis of funds and account groups. A fimd is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with [mance- related legal and contractual provisions. The minimum number of funds are maintained consistent with legal and managerial requirements. Account groups are a reporting device to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is ;recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the year in which the resources are measurable and become available. Non-exchange transactions, in which the City receives value without directly giving equal value in return, include property taxes, grants, entitlement and donations. On an accrual basis, revenue from property taxes is recognized in the year for which the tax is levied. Revenue from grants, entitlements and donations is recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first pennitted, rnatching requirements, in which the City must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the City on a reimbursement basis. On a modified accrual basis, revenue from non-exchange transactions must also be available before it can be recognized. Deferred revenue arises when assets are recognized before revenue recognition criteria have been satisfied_ Grants and entitlements received before eligibihty requirements are met are also recorded as deferred revenue. On the modified accrual basis, receivables that will not be collected within the available period bave also been reported as deferred revenue. -11-