2002-05-22 WS Packet - Laserfiche WebLink

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CITY OF CENTERVILLE, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Compensated Absences It is the City's policy to pennit employees to accumulate a limited amount of earned but unused vacation, which is paid to the employee upon separation. Sick leave may be accumulated but is not payable upon termination from City employment for regular employees. Union employees are allowed severance equal to their unused compensatory time and half their accrued sick leave up to a maximum of 400 hours after 10 years of service. In governmental fund types the cost of these benefits is recoguized when payments are made to the employees. A liability of$14,151 represents accrued vacation, sick and compensatory time unused at year end. The liability has been recorded in the generaliong-term debt account group. Long-term Obligations The City reports long-term debt of governmental funds at face value in the general long-term debt account group. Certain other governmental fund obligations not expected to be financed with current available fmancial resources are also reported in the general long-term debt account group. Long-term debt and other obligations fmanced by proprietary funds are reported as liabilities in the appropriate funds. For governmental fund types, bond premiums and discounts, as well as issuance costs, are recoguized during the current period. Bond proceeds are reported as an other fmancing source net of the applicable premium or discount. Issuance costs, other than those withheld from the actual net proceeds received, are reported as debt service expenditures. For proprietary fund types, bond issuance costs and discounts are deferred and amortized over the life of the bonds using the straight line method. Fund Equity Reservations of fund balance represent amounts that are not appropriable or are legally segregated for a specific purpose. Reservations of retained earnings are limited to outside third-party restrictions. Desiguations of fund balance represent tentative management plans that are subject to change. The proprietary fund's contributed capital represents equity acquired through capital grants and capital contributions from developers, customers or other funds. Memorandum Only - Total Columns Total colunms on the general purpose financial statements are captioned as "memorandwn only" because they do not represent consolidated fmancial inIorrnation and are presented only to facilitate fmancial analysis. The columns do not present infonnation that reflects [mancial position, results of operations or cash flows in accordance with accounting principles generally accepted in the United States of America. Interfund eliminations have not been made in the aggregation of this data. Comparative DataJRec1assifications Comparative total data for the prior year have been presented in the selected sections of the accompanying financial statements in order to provide an understanding of changes in the City's fmancial position and operations. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year's presentation. Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for the general fund. All annual appropriations lapse at fiscal year end. The City does not use encumbrance accounting. In August of each year, all departments of the City submit requests for appropriations to the City Administrator so that a budget may be prepared. Before September 15, the proposed budget is presented to the Council for review. The Council holds public hearings and a fmal budget is prepared and adopted in early December. The appropriated budget is prepared by fund, function and department. The City's department heads, with the approval of the City Administrator, may make transfers of appropriations within a department. Transfers of appropriations between departments require the approval of the Council. The legal level of budgetary control is the department level. Budgeted amounts are as originally adopted, or as amended by the Council. There were no budget amendments made during the year. -13-