05-28-2025 Council Packet - Laserfiche WebLink

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City of Little Canada, Minnesota Notes to the Financial Statements December 31, 2024 Note 1: Summary of Significant Accounting Policies (Continued) The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available. Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The City has formally adopted a fund balance policy for the General fund. The City’s policy is to maintain a minimum unrestricted (combined committed, assigned and unassigned) fund balance between 42.5 percent and 65 percent of the subsequent year’s budgeted operating expenditures of the General Fund. For 2024, 42.5 percent of the next year’s budgeted operating expenditures is $2,438,019. Net Position Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources. Net position is displayed in three components: a.Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any outstanding debt attributable to acquire capital assets. b.Restricted net position - Consists of net position balances restricted when there are limitations imposed on their use through external restrictions imposed by creditors, grantors, laws or regulations of other governments. c.Unrestricted net position - All other net position that do not meet the definition of “restricted” or “net investment in capital assets”. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenditures/expense during the reporting period. Actual results could differ from those estimates. Note 2: Stewardship, Compliance and Accountability A.Budgetary Information The budget for each fund is prepared on the same basis of accounting as the fund financial statements. Legal budgetary control is at the fund level. The City adopts an annual budget for the General and Special Revenue funds. Budget amounts are presented as originally adopted or amended. The City has established budgetary control at the department level in the General fund. Management many amend the line items within the departments in the General fund without seeking approval of the City Council. Budgeted expenditure appropriations lapse at year-end. 72