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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-CONTINUED <br /> Net Position <br /> Net position represents the difference between assets and liabilities.Net position is displayed in three components: <br /> a. Net investment in capital assets-Consists of capital assets,net of accumulated depreciation reduced by any <br /> outstanding debt attributable to acquire capital assets. <br /> b. Restricted net position-Consist of net position balances restricted when there are limitations imposed on their <br /> use through external restrictions imposed by creditors,grantors, laws or regulations of other governments. <br /> c. Unrestricted net position-All other net position balances that do not meet the definition of"restricted"or"net <br /> investment in capital assets". <br /> Note 2: STEWARDSHIP,COMPLIANCE AND ACCOUNTABILITY <br /> A. Budgetary information <br /> Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of <br /> America for the General fund.All annual appropriations lapse at fiscal year end. The City does not use encumbrance <br /> accounting. <br /> In May of each year,all departments of the City submit requests for appropriations to the City Administrator so that a <br /> budget may be prepared.Before September 15th,the proposed budget is presented to the City Council for review. The <br /> City Council holds public hearings and a final budget is prepared and adopted in early December. <br /> The appropriated budget is prepared by fund, function and department. The City's department heads,with the approval <br /> of the City Administrator, may make transfers of appropriations within a department. Transfers of appropriations <br /> between departments require the approval of the City Council. The legal level of budgetary control is the department <br /> level.There were no budget amendments made during 2014. <br /> B. Deficit fund equity <br /> The following funds had a deficit fund balance as of December 31,2014: <br /> Fund Amount <br /> Major <br /> Park S 1,103,264 <br /> The Park fund deficit will be eliminated with transfers in future years. <br /> -53- <br />