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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 2:STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY - CONTINUED <br /> <br />C.Deficit fundequity <br /> <br /> <br /> The following funds had a deficit fund balance as of December 31, 2010: <br /> <br />Fund <br />Amount <br />Major Funds <br />Capital projects <br />Park$ 1,071,510 <br />Nonmajor Funds <br />Capital projects <br />CDBG Water Services 5,400 <br /> <br /> <br />These deficits will be eliminated with future transfers. <br /> <br />Note 3:DETAILED NOTES ON ALL FUNDS <br /> <br />A.Deposits and investments <br /> <br />Deposits <br /> <br />Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the City’s deposits <br />and investments may not be returned or the City will not be able to recover collateral securities in the possession of <br />an outside party. In accordance with Minnesota statutes and as authorized by the Council, the City maintains <br />deposits at those depository banks, all of which are members of the Federal Reserve System. <br /> <br />Minnesota 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 of the deposits not covered by insurance or bonds. <br /> <br />Authorized collateral in lieu of a corporate surety bond includes: <br /> <br />United States government Treasury bills, Treasury notes, Treasury bonds; <br /> <br />Issues of United States government agencies and instrumentalities as quoted by a recognized industry <br />quotation service available to the government entity; <br /> <br />General obligation securities of any state or local government with taxing powers which is rated “A” or <br />better by a national bond rating service, or revenue obligation securities of any state or local government <br />with taxing powers which is rated “AA” or better by a national bond rating service; <br /> <br />General obligation securities of a local government with taxing powers may be pledged as collateral against <br />funds deposited by that same local government entity; <br /> <br />Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by <br />written evidence that the bank’s public debt is rated “AA” or better by Moody’s Investors Service, Inc., or <br />Standard & Poor’s Corporation; and <br /> <br />Time deposits that are fully insured by any federal agency. <br /> <br />Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a Federal <br />Reserve Bank, or in an account at a trust department of a commercial bank or other financial institution that is not <br />owned or controlled by the financial institution furnishing the collateral. The selection should be approved by the <br />City. <br />-56- <br /> <br />