2012-04-11 CC Packet - Laserfiche WebLink

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CITY OF CENTERV I L L E, MINNESOTA NOTESTOTHE FINANCIAL STATEMENTS DECEMBER 31, 2011 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES— CONTINUED Long -term obligations I n the government -wide financial statements, and proprietary fund types in the fund financial statements, long -term debt and other long-term obl i gati ons are reported as I i abi I i ti es i n the appl i cable governmental acti vi ti es, busi ness -type activities or proprietary fund type statement of net assets. Begi nni ng January 1, 2003, for governmental funds, bond premi ums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds usi ng the straight-line method. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. I n the fund fi nancial statements, governmental fund types recognized bond premi ums and discounts, as wel I as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premi ums recei ved on debt issuances are reported as other fi nanci ng sources whi le discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Fund equity In the fund financial statements, fund balance is divided into five classifications based primarily on the extent to which the City is bound to observe constrai nts i mposed upon the use of resources reported i n the governmental funds. These classifications are defined asfollows: Nonsnendable - Amounts that cannot be spent because they are not in spendable form, such as prepaid items. Restricted - Amounts related to externally imposed constraintsestablished by creditors, grantorsor contributors; or constraints imposed by statestatutory provisions. Commtted - Amounts constrained for specific purposes that are internally imposed by formal action (resolution) of the City Council (the Council), which is the City's highest level of decision - making authority. Committed amounts cannot be used for any other purpose unless the Council modifies or rescinds the commitment by resolution. Assigned - Amounts constrai ned for specific purposes that are i nternal I i mposed. I n governmental funds other than the General fund, assigned fund balance represents all remaining amounts that are not classified as nonspendable and are neither restricted nor committed. I n the General fund, assigned mounts represent intended uses establ i shed by the Council itself or by an official to which the governi ng body delegates the authority. The Counci I has adopted a fund balance policy which delegates the authority to assign amounts for specific purposes to the Finance Director. Unassigned - The residual classification for the General fund and also negative residual amounts in other funds. The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available. Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The City has formally adopted a fund balance policy for the General fund. The City's policy is to maintain a minimum unassigned fund balance of 40 -50 percent of budgeted operating expenditures for cash -flow timing needs. -55-