Centerville 2010 Financial Report

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CITY OF CENTERVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDEDDECEMBER 31, 2010 Note 1:SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do option not conflict with or contradict guidance of GASB. Governments also have the of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. As a general rule the effect of interfund activity has been eliminated from government-wide financial statements. Exceptions to this general rule are charges between the City’s water and sewer function and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. program revenues Amounts reported as include 1) charges to customers or applicants for goods, services or privileges provided, 2) operating grants and contribution, and 3) capital grants and contributions, including special general revenues assessments. Internally dedicated resources are reported as rather than as program revenues. Likewise, general revenues include all taxes. operating nonoperating Proprietary funds distinguish revenues and expenses from items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed. D.Assets, liabilities and net assets or equity Deposits and investments The City’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other authorized investments. Earnings from such investments are allocated on the basis of applicable participation by each of the funds. The City may also invest idle funds as authorized by Minnesota statutes, as follows: 1.Direct obligations or obligations guaranteed by the United States or its agencies. 2.Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the highest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have a final maturity of thirteen months or less. 3.General obligations of a state or local government with taxing powers rated “A” or better; revenue obligations rated “AA” or better. 4.General obligations of the Minnesota Housing Finance Agency rated “A” or better. 5.Bankers’ acceptances of United States banks eligible for purchase by the Federal Reserve System. -51-