2002-08-12 CC Worksession - 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 io the general long-term debt account group. Long-term Obligations The City reports long-term debt of governmental funds at face value io the general long-term debt account group. Certaio other governmental fund obligations not expected to be financed with current available financial resources are also reported io the general long-term debt account group. Long-term debt and other obligations fmanced by proprietary funds are reported as liabilities io the appropriate funds. For governmental fund types, bond premiums and discounts, as well as issuance costs, are recognized during the current period. Bond proceeds are reported as an other financiog 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 usiog the straight lioe method. Fund Equity Reservations of fund balance represent amounts that are not appropriable or are legally segregated for a specific purpose. Reservations of retaioed earnings are limited to outside third-party restrictions. Designations 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 Colnmns Total columns on the general pwpose [mancial statements are captioned as "memorandum only" because they do not represent consolidated fmancial ioforrnation and are presented only to facilitate fmancial analysis. The columns do not present ioforrnation that reflects fmancial position, results of operations or cash flows io accordance with accounting principles generally accepted io the United States of America. Interfund eliminations have not been made io the aggregation of this data. Comparative DataJReclassifications Comparative total data for the prior year have been presented io the selected sections of the accompanyiog financial statements io order to provide an understanding of changes io the City's fmancial position and operations. Also, certaio amounts presented io the prior year data have been reclassified io order to be consistent with the current year's presentation. Note 2: STEWARDSIDP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information Anoual budgets are adopted on a basis consistent with accountiog priociples 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 IS, the proposed budget is presented to the Council for review. The Council holds public heariogs and a final budget is prepared and adopted io 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 origioally adopted, or as amended by the Council. There were no budget amendments made duriog the year. -13-