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<br />NOTE 1. <br /> <br />NOTE 2. <br /> <br />NORTH METRO TELECOMMUNICATIONS COMMISSION <br />NOTES TO FINANCIAL STATEMENTS <br /> <br />NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING <br />POLICIES (continued) <br /> <br />Accounting Estimates: <br /> <br />The preparation of financial statements in conformity with accounting principles <br />generally accepted in the United States of America requires management to make <br />estimates and assumptions that affect the reported amounts and disclosures in <br />these financial statements. Actual results could differ from those estimates. <br /> <br />DEPOSITS AND INVESTMENTS <br /> <br />Deposits: <br /> <br />In accordance with applicable Minnesota Statutes, the Commission maintains <br />deposits at authorized depository banks all of which are members of the Federal <br />Reserve System. <br /> <br />Minnesota Stahltes require that all deposits be protected by insurance, surety <br />bonds, or collateral. If collateral is pledged as protection for the deposits, the <br />market value of the collateral must at a minimum be 110% of the deposits not <br />covered by insurance or bonds (140% in case of pledged mortgage notes). <br /> <br />Authorized collateral includes the legal investments described below, as well as <br />certain first mortgages, and certain other State or local goverrunent obligations. <br />Minnesota statutes require that securities pledged as collateral be held in <br />safekeeping by the commission or in a financial institution other than that <br />furnishing the collateral. <br /> <br />At year-end, the Commission's deposits were $100,420. The entire bank balance <br />was covered by federal depository insurance or collateral held by the <br />Commission's agent in the Commission's name. <br /> <br />Investments: <br /> <br />Investments are categorized into three categories of credit risk: <br /> <br />1. Insured or registered, or securities held by the Commission or its agent in the <br />Commission's name. <br /> <br />2. Uninsured and umegistered, with securities held by the dealer's or broker's <br />trust depariment or agent in the Commission's narne. <br /> <br />3. Uninsured and umegistered, with secmities held by the dealer or broker, or by <br />its trust department or agent not in the Commission's name. <br /> <br />P.120 <br />