Laserfiche WebLink
IV-21CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Lino Lakes, Minnesota (tbe City) is a public corporation fonned under Minnesota Statute 410. As such, tbe City is under home rule charter regulations and applicable statutory guidelines. The basic financial statements oftbe City have been prepared in conformity with U.S. generally accepted accounting principles as applied to governmental units by tbe Governmental Accountiug Standards Board (GASB). The following is a summary of significant accountiug policies: A. FINANCIAL REPORTING ENTITY In accordance with GASB pronouncements and accountiug principles generally accepted in tbe United States of America, tbe financial statements oftbe reporting entity include those oftbe City (tbe primacy government) and its component units. The component units discussed below are included in tbe City's reporting entity because oftbe significance oftbeir operational or financial relationships with tbe City. COMPONENT UNITS In confonnity with accountiug principles generally accepted in tbe United States of America, tbe financial statements oftbe component units have been included in tbe financial report as blended component units. The Economic Development Authority (EDA) of Lino Lakes is an entity legally separate from tbe City. However, for financial reporting purposes, tbe EDA is reported as ifit were a part oftbe City's operation because tbe governing body is substantially tbe same as tbe governing body oftbe City and a financial benefit or burden relationship exists between tbe City and tbe EDA. The EDA does not issue separate financial statements. The Housing and Development Authority (HRA) of Lino Lakes is an entity legally separate from tbe City. However, for financial reporting purposes, tbe HRA is reported as ifit were part oftbe City's operations because tbe members oftbe City Council serve as commission members and a financial benefit or burden relationship exists between tbe City and tbe HRA. The HRA has not yet incurred any financial activity. B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements (i.e., tbe Statement of Net Position and tbe Statement of Activities) report information on all oftbe non-fiduciary activities oftbe 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 tbe degree to which tbe direct expenses of a given function or business-type activity are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or business-type activity. Program revenues include I) eharges 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 tbe 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 tbe latter are excluded from tbe 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, 2018 governmental and enterprise funds, with each displayed as separate columns in tbe fund financial statements. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Proprietary fund operatiug revenues, such as charges for services, result from exchange transactions associated with tbe principal activity of tbe fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperatiug revenues, such as subsidies and investment earnings, result from nonexchange transactions or incidental activities. The City reports tbe following major governmental funds: General Fund is tbe City's primary operatiug fund. It accounts for all financial resources oftbe general government, except those required to be accounted for in another fund. General Obligation Improvement Note of2009A Fund accounts for tbe accumulation of resources for, and tbe payment ot; interest, principal and related costs on general long-term debt. The note was used to finance improvement projects at tbe I-35E and County Road 14 interchange. General Obligation Improvement Bonds of2016B Fund accounts for tbe accumulation of resources for, and tbe payment ot; interest, principal and related costs on general long-term debt. Area and Unit Charge Fund accounts for tbe collection of water and sewer unit charges to be used for debt payments and construction of governmental infrastructure. MSA Construction Fund accounts for tbe financing of future reconstruction of state aid eligible streets. 2018 Street Reconstruction Fund accounts for street and utility improvements within tbe West Shadow Lake Drive and LaMotte neighborhoods. The City reports tbe following major proprietary funds: The Water Fund accounts for customer water service charges which are used to finance water system operatiug expenses. The Sewer Fund accounts for customer sewer service charges which are used to finance sanitary sewer system operating expenses. Additionally, tbe City reports tbe following fund type: Agency fands account for assets held as an agent for individuals, private organizations and other governmental units. The City's agency fund accounts for pass-through contractor's dePosits relating to prospective developments. C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING The government-wide financial statements are reported using tbe economic resources measurement focus and tbe accrual basis of accounting, as are tbe 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 tbe year for which Ibey are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements