VLAWMO Annual Financial Report 2007

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i L IL L L VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION VADNAIS HEIGHTS, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Budgetary Information Annual budgets are prepared on a basis consistent with accounting principles generally accepted in the United States of America for the General fund. All annual appropriations lapse at year end. The Organization does not use encumbrance accounting. During the budget year, supplemental appropriations and deletions are or may be authorized by the Board. There were amendments to the budget during 2007 for multiple expenditures through allocation of the budget and available fund balance. Note 3: DETAILED NOTES ON ACCOUNTS A. Deposits and Investments For purposes of identifying the risk of investing public funds, the balances are categorized as follows: Deposits Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the Organization's deposits and investments may not be returned or the Organization will not be able to recover collateral securities in the possession of an outside party. In accordance with Minnesota statutes and as authorized by the Board, the Organization maintains deposits at those depository banks, all of which are members of the Federal Reserve System. Minnesota statutes require that all Organization deposits be protected by insurance, surety bond or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds. Authorized collateral includes the legal investments described below, as well as certain first mortgage notes, and certain other State or local government obligations. Minnesota statutes require that securities pledged as collateral be held in safekeeping by the Organization or in a financial institution other than that furnishing the collateral. At year end, the Organization's carrying amount of deposits was $402,481 and the bank balance was $424,813. The bank balance was covered by federal depository insurance and by collateral held in the Organization's name. A reconciliation of cash and temporary investments as shown on the Statements of Net Assets for the Organization follows: Carrying amount of deposits Cash on hand 2007 $ 402,481 50 Total $ 402,531 Cash and investments Unrestricted $ 378,000 Restricted 24,531 Total $ 402,531 -14-