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VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION <br />VADNAIS HEIGHTS, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31, 2013 <br />Note 3: DETAILED NOTES ON ACCOUNTS - CONTINUED <br />At year end, the Organization's carrying amount of deposits was $125,082 and the bank balance was $125,418. The <br />entire bank balance was covered by federal depository insurance. <br />Investments <br />At year end, the Organization had the following investments that are insured or registered, or securities held by the <br />Organization's agent in the Organization's name: <br />Types of Investments <br />Fair Value <br />Credit Segmented and <br />Quality/ Time Carrying <br />Ratings (1) Distribution (2) Amount <br />Pooled investments <br />Minnesota Municipal Money Market fund NA Tess than 6 months $ 480,507 <br />(1) Ratings are provided by Moody's where applicable to indicate associated credit risk. <br />(2) Interest rate risk is disclosed using the segmented time distribution method. <br />The investments of the Organization are subject to the following risks: <br />• Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its <br />obligations. Ratings are provided by various credit rating agencies and where applicable, indicate associated <br />credit risk. Minnesota statutes limit the Organization's investments to the list on page 35 of the notes. <br />• Custodial Credit Risk. The custodial credit risk for investments is the risk that, in the event of the failure of the <br />counterparty to a transaction, a government will not be able to recover the value of investment or collateral <br />securities that are in the possession of an outside party. <br />• Concentration of Credit Risk. Concentration of credit risk is the risk of loss attributed to the magnitude of a <br />government's investment in a single issuer. <br />• Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of <br />an investment. <br />The Organization does not have an investment policy that addresses the risks described above. <br />A reconciliation of cash and temporary investments as shown in the financial statements of the Organization follows: <br />Carrying amount of deposits $ 125,082 <br />Investments 480,507 <br />Cash on hand 24 <br />Total $ 605,613 <br />Cash and investments <br />Unrestricted $ 588,720 <br />Restricted 16,893 <br />Total $ 605.613 <br />-39- <br />