Management Report and Recommendations 12/31/1995

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City of Lino Lakes, Minnesota Management Report, Page 3 A schedule of cash and investment balances by fund type (as adjusted for interfund payables/receivables) is as follows: Fund December 31, Increase 1994 1995 (Decrease) General $1,848,102 $1,937,813 $89,711 Special Revenue 6,746 14,021 7,275 Debt Service 1,725 ,929 1,329,794 (396,135) Capital Project 7,675,057 7,194,651 (480,406) Enterprise 294,765 552,116 257,351 Agency 82,097 130,997 48,900 Total $11,632,696 $11,159,392 ($473,304) Accounting Standards The Governmental Accounting Standards Board (GASB) issued on March 13, 1996, a proposed statement on accounting and financial reporting for certain investments. This proposed statement would require investments in (a) interest - earning investment contracts, (b) external investment pools and open -end mutual funds, (c) debt securities, and (d) equity securities to be reported at fair value. Fair value is the amount at which a financial investment could be exchanged in a current transaction between willing parties. If the GASB's project on investments proceeds as planned, a final statement is expected to be issued by the end of 1996. Essentially, this proposed statement would require the City to record virtually all investments at fair value. Currently, the City's investments are recorded at amortized cost in accordance with current accounting principles. This change may result in greater "swings" in investment earnings because of market changes. At December 31, 1995, the carrying value and market value of the City's investments was $10,397,565 and $10,378,903 respectively.