05-26-2021 Council Packet - Laserfiche WebLink

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CITY OF LITTLE CANADA, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E.Budgets Budgets are adopted on a basis consistent with GAAP. Annual appropriated budgets are adopted for the General and all Special Revenue Funds. Budgeted expenditure appropriations lapse at year- end. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the appropriation, is not employed by the City because it is, at present, not considered necessary to assure effective budgetary control or facilitate effective cash management. The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1.The City Administrator submits to the City Council a proposed operating budget for the fiscal year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer comments. 3.The budget is legally enacted through passage of a resolution on a departmental basis and can be expended by each department based upon detailed budget estimates for individual expenditure accounts. 4. The City Administrator is authorized to transfer appropriations within any department budget. Additional interdepartmental or interfund appropriations and deletions are or may be authorized by the City Council with fund (contingency) reserves or additional revenues. 5.Formal budgetary integration is employed as a management control device during the year for the General Fund and Special Revenue Funds. 6.Legal debt obligation indentures determine the appropriation level and debt service tax levies for the Debt Service Funds. Supplementary budgets are adopted for the Proprietary Funds to determine and calculate user charges. These Debt Service and Proprietary budget amounts represent general obligation bond indenture provisions and net income for operation and capital maintenance and are not reflected in the financial statements. 7.A capital improvement program is reviewed annually by the City Council for the Capital Project Funds. However, appropriations for major improvement projects (subject to statutory purchasing requirements) are not adopted until the actual bid award of the improvement. The appropriations are not reflected in the financial statements. 8.Expenditures may not legally exceed budgeted appropriations at the total fund level. Monitoring of budgets is maintained at the expenditure category level (i.e., salaries, wages and benefits, supplies, services, capital outlay) within each activity. 9. The City Council may authorize the transfer of budgeted amounts between City funds. 52