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CITY OF CENTERVILLE, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31, 2014 <br /> <br />Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED <br /> <br />Net Position <br /> <br />Net position represents the difference between assets and liabilities. Net position is displayed in three components: <br /> <br /> <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 /> <br /> <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 /> <br /> <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 /> <br />Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY <br /> <br /> <br />A.Budgetary information <br /> <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 /> <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 /> <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 /> <br /> <br />B.Deficit fund equity <br /> <br /> The following funds had a deficit fund balance as of December 31, 2014: <br /> <br />Fund <br />Amount <br />Major <br />Park$ 1,103,264 <br /> <br />The Park fund deficit will be eliminated with transfers in future years. <br /> <br /> <br /> <br />-53- <br /> <br /> <br />