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2015-04-22 CC Packet
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2015-04-22 CC Packet
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CITY OF CENTERVILLE,MINNESOTA <br /> NOTES TO THE FINANCIAL STATEMENTS <br /> DECEMBER 31,2014 <br /> Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <br /> A. Reporting entity <br /> The City of Centerville,Minnesota(the City),operates under the"Optional Pian A"form of government as defined in <br /> the State of Minnesota statutes.Under this plan,the government of the City is directed by a City Council composed of an <br /> elected Mayor and four elected City Council Members. The City Council exercises legislative authority and determines <br /> all matters of policy.The City Council appoints personnel responsible for the proper administration of all affairs relating <br /> to the City.The City has considered all potential units for which it is financially accountable,and other organizations for <br /> which the nature and significance of their relationship with the City are such that exclusion would cause the City's <br /> financial statements to be misleading or incomplete. The Governmental Accounting Standards Board(GASB)has set <br /> forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority <br /> of an organization's governing body,and(1)the ability of the primary government to impose its will on that organization <br /> or(2)the potential for the organization to provide specific benefits to,or impose specific financial burdens on the <br /> primary government. The City does not have any component units. <br /> B. Government-wide and fund financial statements <br /> The government-wide financial statements(statement of net position and the statement of activities)report information <br /> on all of the nonfiduciary activities of the City. Governmental activities, which normally are supported by taxes and <br /> intergovernmental revenues,are reported separately from business-type activities, which rely to a significant extent on <br /> fees and charges for support. <br /> The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset <br /> by program revenues.Direct expenses are those that are clearly identifiable with a specific function or segment. <br /> Amounts reported as program revenues include 1)charges to customers or applicants who purchase,use,or directly <br /> benefit from goods,services,or privileges provided by a given function or segment and 2)grants and contributions that <br /> are restricted to meeting the operational or capital requirements of a particular function or segment.Taxes and other <br /> items not properly included among program revenues are reported instead as general revenues. <br /> Separate financial statements are provided for governmental funds and proprietary funds.Major individual governmental <br /> funds and major individual enterprise funds are reported as separate columns in the fund financial statements. <br /> C. Measurement focus, basis of accounting and financial statement presentation <br /> The government-wide financial statements are reported using the economic resources measurement focus and the <br /> accrual basis of accounting, as are the proprietary fund financial statements.Revenues are recorded when earned and <br /> expenses are recorded when a liability is incurred,regardless of the timing of related cash flows.Property taxes are <br /> recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon <br /> as all eligibility requirements imposed by the provider have been met. <br /> Governmental fund financial statements are reported using the current financial resources measurement focus and the <br /> modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. <br /> Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to <br /> pay liabilities of the current period.For this purpose,the City considers revenues to be available if they are collected <br /> within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred,as <br /> under accrual accounting.However,debt service expenditures,as well as expenditures related to compensated absences <br /> and claims and judgments,are recorded only when payment is due. <br /> Property taxes,franchise taxes,licenses and interest associated with the current fiscal period are all considered to be <br /> susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special <br /> assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the <br /> current period.All other revenue items are considered to be measurable and available only when cash is received by the <br /> City. <br /> Revenue resulting from exchange transactions,in which each party gives and receives essentially equal value,is <br /> recorded on the accrual basis when the exchange takes place. On a modified accrual basis,revenue is recorded in the <br /> year in which the resources are measurable and become available. <br /> -47- <br />
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