Management Report and Recommendations 12/31/1986

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City of Lino Lakes, Minnesota Management Report, Page 26 The Governmental Accounting Standards Board (GASB) has issued Statement No. 6 (Accounting and Financial Reporting for Special Assessments). The most significant changes which effect the City's Annual Financial Report are as follows: 1. Special Assessment Funds will no longer be presented in the combined and com- bining financial statements of the City. 2. The City will now be required to split the balance sheet and operating statement related to special assessment activities between the following funds and account groups: • Debt Service Fund • Enterprise Fund • Capital Project Fund • General Long -Term Debt Group of Accounts 3. Balance sheets contained in the combined and combining financial statements will no longer present a matching of cash, special assessments receivable and other assets compared to outstanding bond principal for the various special assessment bonds of the City. 4. Projects which are funded in part by water and sewer fund reserves will require a splitting of debt between the General Long -Term Debt Group of Accounts and the Enterprise Fund. The construction costs will require apportionment on two separate methods of accounting (accrual versus modified accrual). This reporting requirement may require a separate internal fund structure to comply with the terms of bond resolutions (legal requirement). The City would then be required to apportion internal fund reporting to an acceptable third party report format. The accounting principles relating to special assessments have been under scrutiny for a number of years. There have been a variety of proposals to amend the "generally accepted accounting principles" related to special assessment funds. Until the issuance of GASB #6, there had been a lack of concurrence of correct reporting procedures and therefore financial statements were often not comparable between various cities. Although we concur with the establishment of one consistent "generally accepted accounting principle" for special assessments, there will be a different set of finan- cial data published in the financial statements to judge and manage the special assessment funds of the City. We will be available to assist the City in this area.