Audit Report 12/31/1979 - Laserfiche WebLink

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CITY OF LINO LAKES NOTES TO FINANCIAL STATEMENTS December 31, 1979 Note 1: Summary of Significant Accounting Policies a. Basis of accounting - The financial statements were prepared on the modified accrual basis of accounting. Modifications in such method from the accrual basis follow: 1. Revenues are recorded as received in cash except for - - interest on special assessment levies which is recorded when due - revenues susceptible to accrual - revenues of a material amount that have not been received at the normal time of receipt - revenues received before they are earned 2. Expenditures are recorded on the accrual basis except for - - disbursements for inventory items which are considered expenditures at the time of purchase - interest on long -term debt which is recorded as an expenditure when due - disbursements for vacation pay, sick pay and severance pay which are recorded as expen- ditures when paid b. Temporary investments consist of certificates of deposit which are stated at cost. Earnings on investments are allocated to the indi- vidual funds based on the average of the month end clerk's balance during the year. c. General fixed assets as of December 31, 1975, were stated at actual cost or estimated replacement value. Additions since 1975 are stated at cost. The policy of stating such assets at other than cost is at variance with generally accepted accounting principles. Additions and deletions are not accounted for in detailed inventory records. Depreciation of general fixed assets is not provided for in the City's records because depreciation does not constitute a current budgetary expenditure. The costs of these items are accounted for as current expenditures of the various funds in the year paid. However, accumulated depreciation is provided for the water and sewer system. The depreciation is computed using the straight line method at rates of 2% for the distribution system, 4% to 6% for wells and pump house, and 10% for equipment. - 10 - 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1