Annual Financial Report 12/31/1989

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CITY OF LINO LAKES, MINNESOTA Page 3 of 21 NOTES TO FINANCIAL STATEMENTS December 31, 1989 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) BASIS OF ACCOUNTING The modified accrual basis of accounting is followed by the City for its governmental funds (General, Special Revenue, Debt Service and Capital Project) and Agency Funds. Under this method of accounting, revenues are recognized when they become susceptible to accrual - that is, when they become both measurable and available to finance expenditures of the fiscal period. Also, under this method, expenditures are recognized in the accounting period when the liability is incurred, except for. • Interest on long -term debt which is recognized when due, except for January 1 maturities which are recognized in the previous fiscal period Major revenue sources susceptible to accrual include property taxes, special assessments, intergovernmental revenues, charges for services and interest on investments. Major revenue sources not susceptible to accrual include licenses and permits, fees, and miscellaneous revenues. Such revenues are recorded as revenue when received because they are not measurable until collected. The accrual basis of accounting is followed for the proprietary funds. Under this method of accounting, revenues are recognized during the accounting period in which they are earned and become measurable and expenses are recognized in the accounting period in which they are incurred, if measurable. BUDGETARY DATA The City Council adopts an annual budget for the General Fund. During the budget year supplemental appropriations and deletions are or may be authorized by the City Council. The amounts shown in the financial statements as "Budget" represent the original budgeted amounts plus all revisions made during the year and/or for the year. The modified accrual basis of accounting is used by the City for budgetary data. The City monitors budget performance on the departmental basis. All amounts over budget have been approved by the City Council through the disbursement approval process. Significant budget variances are as follows for the current year: Licenses and permits exceeded budget because of increased development within the City in 1989. Highways and streets was under budget because the City did not hire an additional employee in 1989.