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IftplM <br />CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2003 <br />Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <br />The City of Lino Lakes is a public corporation formed under Minnesota Statute 410. As such, the City is under <br />home rule charter regulations and applicable statutory guidelines. <br />The basic financial statements of the City of Lino Lakes have been prepared in conformity with U.S. generally <br />accepted accounting principles as applied to governmental units by the Governmental Accounting Standards <br />Board (GASB). The following is a summary of the significant accounting policies: <br />A. FINANCIAL REPORTING ENTITY <br />As required by U.S. generally accepted accounting principles, the financial statements of the reporting <br />entity include those of the City of Lino Lakes and its component units. A component unit is a legally <br />separate entity for which the primary government is financially accountable, or for which the exclusion <br />of the component unit would render the financial statements of the primary government misleading. <br />The criteria used to determine if the primary government is financially accountable for a component <br />include whether or not the primary government appoints the voting majority of the potential component <br />unit's board, is able to impose its will on the potential component unit, is in a relationship of financial <br />benefit or burden with the potential component unit, or is fiscally depended upon by the potential <br />component unit. <br />COMPONENT UNITS <br />In conformity with U.S. generally accepted accounting principles, the financial statements of <br />component units have been included in the financial reporting entity either as blended component units <br />or as discretely presented component units. <br />Blended Component Units. <br />The Economic Development Authority (EDA) of Lino Lakes is an entity legally separate from the City. <br />However, for financial reporting purposes, the EDA is reported as if it were part of the City's <br />operations because the members of the City Council serve as commission members. The EDA does not <br />issue separate financial statements. <br />The Housing and Redevelopment Authority (HRA) of Lino Lakes is an entity legally separate from the <br />City. However, for fmancial reporting purposes, the HRA is reported as if it were part of the City's <br />operations because the members of the City Council serve as commission members. The HRA has not <br />yet incurred any fmancial activity. <br />B. BASIC FINANCIAL STATEMENTS <br />1. Government -Wide Statements <br />The government -wide fmancial statements (i.e., the statement of net assets and the statement of <br />activities) display information about the primary government and its component units. These <br />statements include the financial activities of the overall City government, except for fiduciary activities. <br />Eliminations have been made to minimize the double - counting of internal activities. Governmental <br />activities, which normally are supported by taxes and intergovernmental revenues, are reported <br />separately from business -type activities, which rely to a significant extent on fees and charges to <br />extemal parties for support. <br />32 <br />