Annual Financial Report 12/31/1990

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Page 4 of 23 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1990 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) ENCUMRANCES Encumbrance accounting, under which purchase orders, contracts, and other commitments 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 not considered necessary to assure effective budgetary control or to facilitate effective cash planning and control. Any appropriations that need to be carried forward to the next year have to be reappropriated by the City Council from the fund balance of the fund involved. NOTE 2 DETAIL NOTES ON ALL FUND AND ACCOUNT GROUPS 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. The Enterprise Funds participate in the entity wide cash and investment management pool. For purposes of the Statement of Cash Flows, the Enterprise Funds equity in the cash and investment management pool is considered as cash equivalents. Investments are stated at cost (plus interest added, if any) which approximates market value except for assets of the Deferred Compensation Plan which are reported at market value. Material purchase discounts and premiums are amortized over the teen of the investment. Investment earnings are accrued at the balance sheet date. Interest is allocated to funds based on the average cash balance during the year. Cash and investment balances were as follows at December 31, 1990 and 1989: December 31, 1990 1989 Cash - checking $77,666 ($69,847) Investments 7,125,065 6,278,653 Petty cash and change 150 150 Totals $7,202,881 $6,208,956 Cash and investments with escrow agent represents 1) restricted cash held in escrow for the construction of a fire station and retirement of debt; and, 2) cash held by the City Deferred Compensation Administrator.