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CITY OF ARDEN HILLS, MlNNESOT A NOTES TO THE FINANCIAL STATEMENTS DECEMBER 3 I Note 1: S~::::SIGNIFICANT ACCOUNTING POUC1lESn- cO:TINU," A E: l'n In the fund financial statements, gove=ental funds rep e rvatio 1)al c~. 0 ,. t "IF not available for appropriation or are legally restricted by ou!ide parties for use for a specific purpose, Desi~tions of fund balance represent tentative management plans that J<>=bjectct~ang~, - i . Comparative DataJReclassifications Comparative total data for the prior year have been presented only for the individual enterprise funds in the fund fmancial statements in order to provide an understanding of the changes in the financial position and operations of these funds. Also, certain amounts presented in the prior year have been reclassified in order to be consistent with the current year's presentation. Note 2: STEW ARDSIDP, COMPLIANCE AND ACCOUNT ABILITY A. Budgetary Information Annual budget,,> are adopted on a basis consistent v.rith accounting principles generally accepted in the Unjtcd States of America for the General, special revenue and Debt Service funds, The capita] projects funds adopt project length budgets. All annual appropriations lapse at fiscal year end. The City does Dot use encumbrance accounting. In August of each year, all departments of the City submit requests fOT appropriations to the City Administrator so tbat a budget may be prepared. Before September 15th, the proposed budget 1S presented to the Council for review. The Couucil 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 bead" with the approval of the City Administrator, may make transfers of appropriations -....vithin a department. Transfers of appropriations between departments require the approval of the Council. Ibe 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 December 31, 2005, expenditures exceeded appropriations in the Economic Development Authority fund (the legal level ofbndgetary control) by $34,576, These overexpenditures were funded by greater than anticipated revenues and other financing sources. Note 3: DETAILED NOTES ON ALL FUNDS A. Deposits and Investments Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the City's deposits and investments may not be returned or tbe City will not be able to recover collateral securities in the possession of an outside party, The Minnesota Municipal Money Market Fund (the 4M Fund) is a customized cash management and investment program for Minnesota public fuuds, Spousored and governed by the League of Minnesota Cities since 1987, the 4M Fund is a unique investment alternative designed to address the daily and long term investment needs of Minnesota cities and other municipal entities. Allowable under Minnesota statutes, the 4M Fund is comprised of top quality, rated llvestments. . -29-