06-14-2021 Council Packet - Laserfiche WebLink

Home Search

CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Lino Lakes, Minnesota (the City) is a public cOI))Oration formed under Minnesota Statute 410. As such, the City is under home rule charter regulations and applicable statutory guidelines. The basic financial statements of the City have been prepared in conformity with U.S. generally accepted accounting principles as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of significant accounting policies: A. FINANCIAL REPORTING ENTITY In accordance with GASB pronouncements and accounting principles generally accepted in the United States. of America, the financial statements of the reporting entity include those of the City (the primary government) and its component units. The component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationships with the City. COMPONENT UNITS In conformity with accounting principles generally accepted in the United States of America, the financial statements of the component units have been included in the financial report as blended component units. The Economic Development Authority (EDA) of Lino Lakes is an entity legally separate from the City. However, for financial reporting purposes, the EDA is reported as ifit were a part of the City's operation because the governing body is substantially the same as the governing body of the City and a financial benefit or burden relationship exists between the City and the EDA. The EDA does not issue separate financial statements. The Housing and Development Authority (HRA) of Lino Lakes is an entity legally separate from the City. However, for financial reporting purposes, the HRA is reported as ifit were part of the City's operations because the members of the City Council serve as commission members and a financial benefit or burden relationship exists between the City and the JIRA. The JIRA has not yet incurred any financial activity. B. GOVERNMENT-WIDE AND FUND F1NANCIAL STATEMENTS The government-wide financial statements (i.e., the Statement ofNet Position and the Statement of Activities) report information on all of the non-fiduciary activities of the primary government and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or business-type activity are offiet by program revenues. Direct expenses are those that are clearly identifiable with a specific function or business-type activity. Program revenues include I) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or business-type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business-type activity. Taxes and other items not included among program revenues are reported instead as general revenues. The fund financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. The emphasis of governmental and proprietary fund financial statements is on major individual CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 governmental and enterprise funds, with each displayed as separate columns in the fund financial statements. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. . Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or incidental activities. The City reports the following major governmental funds: General Fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. General Obligation Improvement Note of 2009A Fund accounts for the accumulation of resources for, and the payment of, interest, principal and related costs on general long-term debt. The note was used to finance improvement projects at the J-3SE and County Road 14 interchange. General Obligation Improvement Bonds of 2016B Fund accounts for the accumulation of resources for, and the payment of, interest, principal and related costs on general long-term debt. Area and Unit Charge Fund accounts for the collection of water and sewer unit charges to be used for debt payments and construction of governmental infrastructure. MSA Construction Fund accounts for the financing of future reconstruction of state aid eligible streets. 2018 Street Reconstruction Fund accounts for street and utility improvements within the West Shadow Lake Drive and LaMotte neighborhoods. The City reports the following major proprietary funds: The Water Fund accounts for customer water service charges which are used to finance water system operating expenses. The Sewer Fund accounts for customer sewer service charges which are used to finance sanitary sewer gystem operating expenses. C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current .financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers all revenues, except reimbursement grants, to be available if they are collected within 60 IV-18