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Page 4 of 21 <br />CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 1989 <br />NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) <br />ENCUMRANCES <br />Encumbrance accounting, under which purchase orders, contracts, and other commitments for the <br />expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, <br />is not employed by the City because it is at present not considered necessary to assure effective • <br />budgetary control or to facilitate effective cash planning and control. Any appropriations that need <br />to be carried forward to the next year have to be reappropriated by the City Council from the fund <br />balance of the fund involved. <br />NOTE 2 DETAIL NOTES ON ALL FUND AND ACCOUNT GROUPS <br />CASH AND INVESTMENTS <br />Cash balances from all funds are pooled and invested to the extent available in authorized <br />investments. Earnings from investments are allocated to individual funds on the basis of the fund's <br />available cash balance. <br />Investments are stated at cost (plus interest added, if any) which approximates market value. <br />Material purchase discounts and premiums are amortized over the term of the investment. <br />Investment earnings are accrued at the balance sheet date. Interest is allocated to funds based on the <br />average cash balance during the year. Cash and investment balances were as follows at December <br />31, 1989 and 1988: <br />December 31, <br />1989 1988 <br />Cash - checking ($69,847) ($17,196) <br />Investments 6,278,653 2,842,101 <br />Petty cash and change 150 150 <br />Totals <br />DEPOSITS <br />$6,208,956 $2 825,055 <br />In accordance with Minnesota Statutes, the City maintains deposits at those depository banks <br />authorized by the City Council all of which are members of the Federal Reserve System. <br />Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or <br />collateral. The market value of collateral pledged must equal 110% of the deposits not covered by <br />insurance or bonds (140% in the case of mortgage notes pledged). <br />Authorized collateral includes the legal investments described below, as well as certain first <br />mortgage notes and certain other state or local government obligations. Minnesota Statutes require <br />that securities pledged as collateral be held in safekeeping by the City treasurer or in a financial <br />institution other than that furnishing the collateral. <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />