10-24-2016 Council Packet - Laserfiche WebLink

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,2015 S. CHANGE IN ACCOUNTING ESTIMATE For fiscal year 2015, the City had a change in accounting estimate for a change in depreciation methodology. Prior to 2015, the City did not take any depreciation for capital assets in the year of acquisition. Beginning January I, 2015, the City started depreciating assets in the month they are placed in service. T. CHANGE IN ACCOUNTING PRINCIPLE Notel During the fiscal year ended December 31, 2015, the City adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions, and the related GASB No. 71, Pensions Transition for Contributions Made Subsequent to the Measurement Date-an amendment of GASB No. 68. The primary objective of these Statements is to improve accounting and financial reporting by state and local governments for pensions. They also improve information provided by state and local govermnental employers about financial support for pensions that is provided by other entities. See Note 19 for more detail of the effect of this change in accounting principle on the financial statements. DEPOSITS AND INVESTMENTS ComJ!!!nents of Cash and InvesiD!ents Cash and investments at year-end consist of the following: Cash and Investments -Statement of Net Position $ 35,853,693 Permanent restricted Cash and Investments -Statement ofNet Position 100,000 Cash and Investments -Statement ofNet Position -Fiduciary Funds 727,635 Total ~681,328 Cash and investments are presented in the financial statements as follows: Deposits $ 2,182,827 Investments 34,497,681 Cashon Hand 820 Total $ 36,681,328 A. DEPOSITS The City maintains a cash and investment pool that is available for use by all funds. Each fund type's portion of this pool is displayed on the statement of net position and the balance sheet as ''Cash and Investments." In accordance with Minnesota Statutes, the City maintains deposits at financial institutions which are authorized by the City Council. Custodial Credit Risk -Custodial credit risk for deposits is the risk that in the event of a bank failure, the City's deposits may not be returned to it. The City does not have a specific deposit policy for custodial credit risk but mther follows Minnesota Statutes for deposits. Minnesota Statutes require that all deposits be protected by insumnce, surety bond, or collateral. The market value of collateral pledged must equal II 0% of the deposits not covered by insumnce or corpomte surety bonds. Authorized collateral include: U.S. government treasury bills, notes, or bonds; issues of a U.S. government agency; general obligations of a state or local govermnent mted "A" or better; revenue obligations of a state or local government rated "AA'' or better; irrevocable standby letter of credit issued by a Federal Home Loan Bank; and time deposits insured by a federal agency. Minnesota Statutes require securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or at an account at a trust departmeut of a commercial bank or other financial institution not owned or controlled by the depository. The City's deposits in banks at December 31, 2015 were entirely covered by federal depository insumnce or by surety bonds and collateral in accordance with Minnesota Statutes. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,2015 Note 2 DEPOSITS AND INVESTMENTS <CONTINUED> B. INVESTMENTS The City may also invest idle funds as authorized by Minnesota Statutes as follows: Direct obligations or obligations guaranteed by the United States or its agencies Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the highest credit mting, is mted in one of the two highest mting categories by a statistical mting agency, and all of the investments have a final matority of thirteen months or less General obligations mted "A" or better; revenue obligations mted "AA'' or better General obligations of the Minnesuta Housing Finance Agency rated "A" or better Banker's acceptances of United States banks eligible for purchase by the Federal Reserve System Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality category by a least two nationally recognized mting agencies, and maturing in 270 days or less Guaranteed investment contmcts guaranteed by United States commercial banks or domestic branches of foreign banks or United States insurance companies if similar debr obligations of the issuer or the collateral pledged by the issuer is in the top two mting categories Repurchase or reverse purchase agreements and secorities lending agreements financial institutions qualified as a "depository" by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. govermnent securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker-dealers Any security which is an obligation of a school district with an original matority not exceeding 13 months and (i) mted in the highest category by a national bond mting service or (ii) enrolled in the credit enhancement program pursuant to section 126C.55. Investments Held with Broker- Jnurest Rille JUsk Interest mte risk is the risk that changes in interest mtes will adversely affect the fair value of an investment. Generally, the longer the matority of an investment, the greater the sensitivity of its fair value to changes in market interest mtes. The City's policy to minimize interest mte risk includes investing primarily in short-tetm securities and structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations. Information about the sensitivity of the fair values of the City's investments to market interest mte risk fluctuations is provided by the following table that shows the distribution of the City's investments by maturity: IV-23