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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2017 <br /> <br /> <br /> <br /> <br />Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <br /> <br />The City of Lino Lakes, Minnesota (the City) is a public corporation formed under Minnesota Statute 410. As <br />such, the City is under home rule charter regulations and applicable statutory guidelines. <br /> <br />The basic financial statements of the City have been prepared in conformity with U.S. generally accepted <br />accounting principles as applied to governmental units by the Governmental Accounting Standards Board <br />(GASB). The following is a summary of significant accounting policies: <br /> <br />A. FINANCIAL REPORTING ENTITY <br /> <br /> In accordance with GASB pronouncements and accounting principles generally accepted in the United <br />States of America, the financial statements of the reporting entity include those of the City (the primary <br />government) and its component units. The component units discussed below are included in the City’s <br />reporting entity because of the significance of their operational or financial relationships with the City. <br /> <br />COMPONENT UNITS <br /> <br /> In conformity with accounting principles generally accepted in the United States of America, the <br />financial statements of the component units have been included in the financial report as blended <br />component units. <br /> <br />The Economic Development Authority (EDA) of Lino Lakes is an entity legally separate from the <br />City. However, for financial reporting purposes, the EDA is reported as if it were a part of the <br />City’s operation because the governing body is substantially the same as the governing body of the <br />City and a financial benefit or burden relationship exists between the City and the EDA. The EDA <br />does not issue separate financial statements. The Housing and Development Authority (HRA) of <br />Lino Lakes is an entity legally separate from the City. However, for financial reporting purposes, <br />the HRA is reported as if it were part of the City’s operations because the members of the City <br />Council serve as commission members and a financial benefit or burden relationship exists <br />between the City and the HRA. The HRA has not yet incurred any financial activity. <br /> <br /> <br />B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS <br /> <br />The government-wide financial statements (i.e., the Statement of Net Position and the Statement of <br />Activities) report information on all of the non-fiduciary activities of the primary government and its <br />component units. Governmental activities, which normally are supported by taxes and <br />intergovernmental revenues, are reported separately from business-type activities, which rely to a <br />significant extent on fees and charges for support. <br /> <br /> The Statement of Activities demonstrates the degree to which the direct expenses of a given function or <br />business-type activity are offset by program revenues. Direct expenses are those that are clearly <br />identifiable with a specific function or business-type activity. Program revenues include 1) charges to <br />customers or applicants who purchase, use, or directly benefit from goods, services, or privileges <br />provided by a given function or business-type activity and 2) grants and contributions that are restricted <br />to meeting the operational or capital requirements of a particular function or business-type activity. <br />Taxes and other items not included among program revenues are reported instead as general revenues. <br /> <br /> The fund financial statements are provided for governmental funds, proprietary funds and fiduciary <br />funds, even though the latter are excluded from the government-wide financial statements. The <br />45