VLAWMO Annual Financial Report 2009

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VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION VADNAIS HEIGHTS, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2009 Note 3: DETAILED NOTES ON ACCOUNTS - CONTINUED The investments of the Organization are subject to the following risks: • Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Ratings are provided by various credit rating agencies and where applicable, indicate associated credit risk. Minnesota Statutes limit the Organization's investments to the list on page 33 of the notes. • Custodial Credit Risk. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. • Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. • Interest rate risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The Organization does not have an investment policy that addresses the risks described above. C. Restricted Assets The Organization set aside the following cash balances for repayment of individual property owners: 2009 2008 Mitigation Restricted Cash D. Capital Assets Capital asset activity for the year ended December 31, 2009 was as follows: $ 21,943 $ 21,910 Beginning Ending Balance Increases Decreases Balance Governmental activities Capital assets, being depreciated Infrastructure $ 165,587 $ 15,632 $ $ 181,219 Less accumulated depreciation for Infrastructure (8,279) (9,538) (17,817) Total governmental activities $ 157,308 $ 6,094 $ $ 163,402 The full depreciation expense amount was charged to general government. -38-