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CITY OF CENTERVILLE, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />FOR THE YEAR ENDED DECEMBER 31, 2010 <br /> <br />Note 1:SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED <br /> <br />Net assets <br /> <br />Net assets represent the difference between assets and liabilities. Net assets are displayed in three components: <br /> <br />a.Invested in capital assets, net of related debt - Consists of capital assets, net of accumulated depreciation <br />reduced by any outstanding debt attributable to acquire capital assets. <br /> <br />b.Restricted net assets - Consist of net assets restricted when there are limitations imposed on their use <br />through external restrictions imposed by creditors, grantors, laws or regulations of other governments. <br /> <br />c.Unrestricted net assets - All other net assets that do not meet the definition of “restricted” or “invested in <br />capital assets, net of related debt”. <br /> <br />Comparative data/reclassifications <br /> <br />Comparative total data for the prior year have been presented only for the individual enterprise funds in the fund <br />financial statements in order to provide an understanding of the changes in the financial position and operations of <br />these funds. Also, certain amounts presented in the prior year have been reclassified in order to be consistent with <br />the current year’s presentation. <br />Note 2:STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY <br /> <br />A.Budgetary information <br /> <br /> <br />Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States <br />of America for the General fund. All annual appropriations lapse at fiscal year end. The City does not use <br />encumbrance accounting. <br /> <br />In May of each year, all departments of the City submit requests for appropriations to the City Administrator so that <br />a budget may be prepared. Before September 15th, the proposed budget is presented to the Council for review. The <br />Council holds public hearings and a final budget is prepared and adopted in early December. <br /> <br />The appropriated budget is prepared by fund, function and department. The City’s department heads, with the <br />approval of the City Administrator, may make transfers of appropriations within a department. Transfers of <br />appropriations between departments require the approval of the Council. The legal level of budgetary control is the <br />department level. The budget was amended during the year. These amendments results in a projected decrease in <br />fund balance of $156,830, compared to an original budgeted increase in fund balance of $10,850. <br /> <br />B.Excess of expenditures over appropriations <br /> <br /> <br />For the year ended December 31, 2010, expenditures exceeded appropriations in the following fund: <br /> <br />Excess of <br />Expenditures <br />FinalActualOver <br />Fund <br />BudgetAmountsAppropriations <br />General$ 2,184,430$ 2,197,049$ (12,619) <br /> <br />These over expenditures were funded by transfers from other funds. <br />-55- <br /> <br />