Annual Financial Report 12/31/1985

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1985 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The City monitors budget performance on the departmental basis. Any amounts over budget have been approved by the City Council through the disbursement approval process. Charter provisions prohibit the City from exceeding the overall General Fund Expenditures budget unless the original budget is formally amended. Encumbrance accounting, under which purchase orders, contracts, and other com- mitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is not employed by the City because it is at present considered not necessary to assure effective budgetary control or to facilitate effective cash planning and control. Note 2 - DETAIL NOTES ON ALL FUND AND ACCOUNT GROUPS ASSETS CASH AND INVESTMENTS Cash balances' from all funds are pooled and invested to the extent available in authorized investments. Earnings from investments are allocated to individual funds on the basis of the fund's available cash balance. Investments are stated at cost (plus interest added, if any) which approximates market value. Material purchase discounts and premiums are amortized over the term of the investment. Interest earnings are accrued at the balance sheet date. Cash and investment balances were as follows at December 31, 1985 and 1984: December 31, 1985 1984 Cash (overdraft) - checking $ 5,792 $ (23,450) Petty cash 150 150 Investments 2,599,201 565,091 Totals $2,605,143 $ 541,791 GRANT REVENUE RECOGNITION The City receives various Federal, State and other grants, the purpose of which is to fund specific City expenditures. These revenues are recognized at the time of the specific expenditures. The City also receives Federal Revenue Sharing and other general purpose grants. These grants are recognized as revenues in the period to which the grant applies.