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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2008 <br />Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />Q. RECENTLY ISSUED ACCOUNTING STANDARDS (CONTINUED) <br />- Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions. The requirements of <br />this Statement are effective for financial statement periods beginning after June 15, 2010. Governments that <br />wish to implement earlier than that date are encouraged to do so. <br />The effect these standards may have on future financial statements is not determinable at this time. <br />• Note 2 DEPOSITS AND INVESTMENTS <br />A. Deposits <br />'" The City maintains a cash and investment pool that is available for use by all funds. Each fund type's <br />portion of this pool is displayed on the statement of net assets and the balance sheet as "Cash and <br />Investments." In accordance with Minnesota Statutes the City maintains deposits at financial institutions <br />which are authorized by the City Council. <br />Custodial Credit Risk — Custodial credit risk for deposits is the risk that in the event of a bank failure, the <br />City's deposits may not be returned to it. The City does not have a specific deposit policy for custodial <br />credit risk but rather follows Minnesota Statutes for deposits. Minnesota Statutes require that all deposits be <br />protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% <br />of the deposits not covered by insurance or corporate surety bonds. Authorized collateral include: U.S. <br />government treasury bills, notes, or bonds; issues of a U.S. government agency; general obligations of a <br />state or local government rated "A" or better; revenue obligations of a state or local government rated "AA" <br />or better; irrevocable standby letter of credit issued by a Federal Home Loan Bank; and time deposits <br />insured by a federal agency. Minnesota statutes require securities pledged as collateral be held in <br />safekeeping in a restricted account at the Federal Reserve Bank or at an account at a trust departments of a <br />commercial bank or other financial institution not owned or controlled by the depository. <br />The carrying value and bank balance of the City's deposits in banks at December 31, 2008 is $17,760,590 <br />and $17,709,740, respectively, and were entirely covered by federal depository insurance or by surety <br />bonds and collateral in accordance with Minnesota statutes. <br />42 <br />