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CITY OF ROSEVILLE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2005 NOTE 3 - 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 governmental funds classified as the general fund and special revenue funds. No budgets are prepared for other governmental funds which include the debt service and capital projects. All annual appropriations lapse at fiscal year -end. On or before mid -May of each year, all departments and agencies of the City submit requests for appropriations to the City's manager so that a budget may be prepared. Before September 15, the proposed budget is presented to the city council for review and approval. By September 15, the proposed budget and tax levy must be submitted to the county auditor. The Council holds public hearings and a final budget and tax levy must be prepared, adopted and submitted to the county auditor, no later than December 28. The appropriated budget is prepared by fund, function and department. The City's department heads may make transfers of appropriations within a department with approval of the City's manager. Transfers of appropriations between funds require the approval of the Council. The legal level of budgetary control (i.e. the level at which expenditures may not legally exceed appropriations) is at the fund level. The Council made several supplementary budgetary appropriations for the general fund and various special revenue funds in 2005. Those supplementary budgetary appropriations were not material. Encumbrance accounting is employed in governmental funds. There were no encumbrances (e.g., purchase orders, contracts) outstanding at year -end. B. Deficit fund equity The recreation, general obligation improvement bonds, charitable gambling, and information technology funds had deficit balances of $7,094, $1,620,955, $137,397, and $124,989, respectively. These fund deficits are expected to be covered from future fund revenues or transfers from other funds NOTE 4 - DETAILED NOTES ON ALL FUNDS A. Deposits and investments 1. Components of Cash and Investments Cash and investments at year -end consist of the following: Deposits Investments Cash on hand Total $ 8,124,951 31,918,716 8,427 $ 40,052,094 54