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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2015 <br />S. CHANGE IN ACCOUNTING ESTIMATE <br />For fiscal year 2015, the City had a change in accounting estimate for a change in depreciation <br />methodology. Prior to 2015, the City did not take any depreciation for capital assets in the year of <br />acquisition. Beginning January 1, 2015, the City started depreciating assets in the month they are placed in <br />service. <br />T. CHANGE IN ACCOUNTING PRINCIPLE <br />During the fiscal year ended December 31, 2015, the City adopted GASB Statement No. 68, Accounting <br />and Financial Reporting for Pensions, and the related GASB No. 71, Pensions Transition for Contributions <br />Made Subsequent to the Measurement Date -an amendment of GASB No. 68. The primary objective of <br />these Statements is to improve accounting and financial reporting by state and local governments for <br />pensions. They also improve information provided by state and local governmental employers about <br />financial support for pensions that is provided by other entities. See Note 19 for more detail of the effect of <br />this change in accounting principle on the financial statements. <br />Note 2 DEPOSITS AND INVESTMENTS <br />Components of Cash and Investments <br />Cash and investments at year-end consist of the following: <br />Cash and Investments - Statement of Net Position <br />Permanent restricted Cash and Investments - Statement of Net Position <br />Cash and Investments - Statement of Net Position - Fiduciary Funds <br />Total <br />Cash and investments are presented in the financial statements as follows: <br />Deposits <br />Investments <br />Cash on Hand <br />Total <br />A. DEPOSITS <br />$ 35,853,693 <br />100,000 <br />727,635 <br />$ 36,681,328 <br />$ 2,182,827 <br />34,497,681 <br />820 <br />$ 36,681,328 <br />The City maintains a cash and investment pool that is available for use by all funds. Each fund type's <br />portion of this pool is displayed on the statement of net position and the balance sheet as "Cash and <br />Investments." In accordance with Minnesota Statutes, the City maintains deposits at financial institutions <br />which are authorized by the City Council. <br />Custodial Credit Risk — Custodial credit risk for deposits is the risk that in the event of a bank failure, the <br />City's deposits may not be returned to it. The City does not have a specific deposit policy for custodial <br />credit risk but rather follows Minnesota Statutes for deposits. Minnesota Statutes require that all deposits <br />be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal <br />110% of the deposits not covered by insurance or corporate surety bonds. Authorized collateral include: <br />U.S. government treasury bills, notes, or bonds; issues of a U.S. government agency; general obligations of <br />a state or local government rated "A" or better; revenue obligations of a state or local government rated <br />"AA" or better; irrevocable standby letter of credit issued by a Federal Home Loan Bank; and time deposits <br />insured by a federal agency. Minnesota Statutes require securities pledged as collateral be held in <br />safekeeping in a restricted account at the Federal Reserve Bank or at an account at a trust department of a <br />commercial bank or other financial institution not owned or controlled by the depository. <br />The City's deposits in banks at December 31, 2015 were entirely covered by federal depository insurance <br />or by surety bonds and collateral in accordance with Minnesota Statutes. <br />44 <br />