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CITY OF LAKE ELMO, MINNESOTA NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2024 38 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of Lake Elmo (the City) have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. GAAP includes all relevant Governmental Accounting Standards Board (GASB) pronouncements. The City has a mayor-council form of government that is governed by an elected mayor and four-member council. The City provides the following services: water, sewer, and storm sewer utilities, recreation, public improvements, public safety, planning and zoning, and general administrative services. 1.A. FINANCIAL REPORTING ENTITY The City’s financial reporting entity is comprised of the primary governmental unit of the City of Lake Elmo, Minnesota. In determining the financial reporting entity, the City complies with the provisions of GASB Statement No. 14, The Financial Reporting Entity, and includes all component units of which the City appointed a voting majority of the units’ board; the City is either able to impose its will on the unit or a financial benefit or burden relationship exists. Blended Component Units Blended component units are separate legal entities that meet the component unit criteria describe d above and whose governing body is the same or substantially the same as the City Council or the component unit provides services entirely to the City. These component units’ funds are blended into those of the City’s by appropriate activity type to compo se the primary government presentation. Currently, the City has the following blended component unit: Economic Development Authority of the City of Lake Elmo The Economic Development Authority (EDA) of Lake Elmo is an entity legally separate from the City. The EDA provides services solely to the City of Lake Elmo and the City Council appoints the EDA’s board members. Therefore, the EDA has been reported as a blended component unit of the City. The EDA does not issue its own separate financial statements. The financial activity of the Authority is performed by the City of Lake Elmo and treated as routine City business. Discretely Presented Component Units Discretely presented component units are separate legal entities that meet the component unit criteria described above but do not meet the criteria for blending. Currently, the City has no discretely presented component units. Affiliated Organizations The Lake Elmo Firefighters Relief Association (the Association) is organized as a non-profit organization, legally separate from the City, to provide pension and other benefits to its members in accordance with Minnesota Statutes. Its board of direc tors is appointed by the membership of the Association and not by the City Council and the Association issues its own set of financial statements. All funding is conducted in accordance with applicable Minnesota Statutes, whereby State aids flow to the Association, and the Association pays benefits directly to its members. Because the Association is fiscally independent of the City, the financial statements of the Association have not been included within the City’s reporting entity. The City’s p ortion of the costs of the Association’s pension benefits is included in the general fund under public safety.