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CITY OF ROSEViLLE MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31. 1992 Note 1- SummarY of Sicnificant Accountina Poticies (Continued) internat Service Funds - Internat Service FuMs are used to account for the financing of goods or services provided by one department or egency to other departments or a9encies of the City. 7he City has tuo internal Service Punds, they ere: uorkers' Conpensation Self-Insurance Fund uhich accounts for the City's Vorkers' compensation ctaims, end the Risk Management Furd uhich accounts for all of the City's Beneret insurence costs. PIDUCIARY FUNDS Agency funds - Agency Funds ere used to eccount for the assets held by the City in a trustee capacity or as en agent fior individuals, privete organizations, other govermients, and/or other funds. The City's A9ency Funds are custodial in nature (assets equal liabilities) ard do not involve measurement of resutts of operations. L. Measurement Focus '�.. The aeeounting and reportin9 treetment applied to the fixed essets end long-term liebilities essociated uith '�.. a fund ere determined by its measurement focus. Goverrmental funds end Expendable Trust funds are accounted for on a spending or "finencial flou" meesurertient focus. This meens tnat only current assets and current tiebilities are generalLy inctuded on their balante sheets. Their reported fund balance is considered a measure of availabte spendable resources. Goverrvnentat fund operating statements present increases (revenues end other financing sources) end decreeses (expenditures end other finencing uses) in net . turrent assets. Accordingly they are seid to present a sumiary of sources end uses of evailable spendeble resourtes during a period. ��.. Fixed essets used in 8overrmental fund type operations (generaL fixed essets) are acwunted for in the Generel '��.. Fixed Assets Account Group rather than in Goverrvnentat Funds. Pubic domain general fixed assets consisti�g � of certain improvements other than buitdings including roads bridges curbs and gutters streets end sideuatks and lighting systems are �capitalized along uith other generol fixed assets. No depreciation has .. been provided on general fixed assets. '� Lon9-term liebilities expected to be financed fran goverrmentel funds ere accounted for in the General Long Term �' Debt Account Group not in the goverrmental funds. The account Broups differ fran "funds" in that they ere not involved uith measurement of operations. They are conrerned onLy uith the measurement of financial position. .. Noncurrent portions of long-term receivables due to goverrvnental funds are reported on their batante sheets '�.. in spite of their measurement focus. Houever speciet reporting treatments ere used to indicate in a goverrvnental funds that they should not be tonsidered "availabte spendable resources" si�ce they do not represent net current assets. Recognition of revenues in these funds represented by noncurrent receivebles are deterred until they become current receivables. ��.. Because of their spending measurement fotus, expenditures recognition for goverrmental fund types exclude emounts represented by noncurrent liabilities. Since they do not effect net current asse2s suth long term amounts ere not recognized as goverrmentaL fund type expenditures or fund liabilities. They are instead reported as liabilities in the Generat Long-term Debt Account Group. � �� Proprietery funds are eccounted for on a cost ot services or "capital meintenance" measurement focus. 7his means that att assets, including fixed assets, and all liabitities, including long-term liahilities . associated uith their activity, are included on their balence sheets. Their reported fund equity is . segregated into contributed capital and retained earnin9s components. The operatin9 stetertients of the funds . present increases (revenues) end decreases (expenses) in net total essets. D. Basis of Accounting '�. The modified aetrual basis of accounting is used by a 9overrmental fund types, expendabte trust funds end . agenty funds. Under the modified eccrual 6asis of eccounting, revenues ere reeognized when susceptible to accrual (ie., when they 6ecome both meesurable and evailable). "Measurabte" means the emount of the transattion can be determined and "avaitabte" means cotleetible within the current period or soon enough thereafter to 6e used to pay liabiities of the eurrent period. The city considers property taxes as aveilebte .. if they are cotLected within 60 deys efter year end. Expenditures are recorded uhen the reteted tund tiabiity .. is incurred. Principal end interest on generat long•term debt are recorded as fund Liabiities when due o e8hen amou�ts have been accuiulated in the debt service furd for peyments to be made earty in the follouing y Those revenues susceptible to accruel ere property taxes, special assessments, licenses, interest revenue and '��.. eharges for services. State aids held by the stete ai year-erd on behalf of the goverrment atso are recognized as revenue. Fines end permits ere not susceptible to accrual because generally they ere not measurable untit reteived in tash. '��.. The eccrual basis of atcounting is utilized by proprietary fund types. Under this method, revenues are recorded uhen earned end expenses are recorded at the time liebilities ere incurred. Unbilled utitity service receivabLes ere recorded et year end. . 31