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CITY OF LITTLE CANADA, MINNESOTA <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2015 <br /> <br /> <br /> <br />(47) <br /> <br />NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />Q. Net Position/Fund Balance (Continued) <br />Assigned – consists of internally imposed constraints. The City adopted a formal <br />fund balance policy which gives authority to assign fund balances to the Finance <br />Director and/or City Administrator. <br /> <br />Unassigned – is the residual classification for the General Fund and also reflects the <br />negative residual amounts in other funds. <br /> <br />When both restricted and unrestricted fund balance is available for use, it is the City’s <br />policy to use restricted first, then unrestricted fund balance. <br /> <br />When committed, assigned or unassigned amounts are available for use, it is the City’s <br />policy to use committed first, than assigned, and finally unassigned amounts. <br /> <br />R. Interfund Transactions <br />Interfund services provided and used are accounted for as revenues, expenditures, or <br />expenses. Transactions that constitute reimbursements to a fund for expenditures/ <br />expenses initially made from it that are properly applicable to another fund, are recorded <br />as expenditures/expenses in the reimbursing fund and as reductions of <br />expenditures/expenses in the fund that is reimbursed. Interfund loans are reported as an <br />interfund loan receivable or payable which offsets the movement of cash between funds. <br />All other interfund transactions are reported as transfers. <br /> <br />S. Risk Management <br />The City is exposed to various risks of loss related to torts: theft of, damage to, and <br />destruction of assets; errors and omissions; and natural disasters. The City participates <br />in the League of Minnesota Cities Insurance Trust (LMCIT), a public entity risk pool for <br />its general property and casualty, workers' compensation, and other miscellaneous <br />insurance coverages. LMCIT operates as a common risk management and insurance <br />program for a large number of cities in Minnesota. The City pays an annual premium to <br />LMCIT for insurance coverage. The LMCIT agreement provides that the trust will be self- <br />sustaining through member premiums and will reinsure through commercial companies <br />for claims in excess of certain limits. Settled claims resulting from these risks have not <br />exceeded insurance coverage in any of the past three fiscal years. There were no <br />significant reductions in insurance coverage in 2015.