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f CITY OF ST. ANTHONY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1981 Note 1. Significant Accounting Policies The City of St. Anthony (the City) is incorporated under statutes of the State of Minnesota and operates under a council-manager plan. Accounting principles adopted by the City conform to generally accepted accounting principles and reflect practices common to local governmental units, except for the lack of a general fixed assets account group. The more significant accounting policies are summarized below. Fund Accounting and Budget - The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. Operations of each fund are accounted for in a separate set of self -balancing accounts. Activities accounted for in individual funds are based upon the purpose for which the fund was established. The various funds are arranged in the financial statements into seven fund groups and into two broad fund types. A plan of financial operation is set forth in the annual budget adopted by the City Council. The amounts shown in the financial statements represent the original budgeted amount and all revisions made during the year. Governmental Fund Types - Revenue and expenditures are recognized on the modified accrual basis of accounting. Under the modified accrual basis, revenue is recognized in the accounting period in which it becomes available and measurable. Expenditures are recognized in the accounting period in which the liability is incurred by the fund, if measurable, except for unmatured interest on long-term debt and accumulated unpaid vacation and sick pay, which are not accrued. Proprietary Fund Types - Income and expenses are recognized on the accrual basis of accounting. Income is recognized in the accounting period in which it is earned and becomes measurable; expenses are recognized in the period incurred, if measurable. Cash and Short -Term Investments - Cash available in excess of immediate needs is invested in certificates of deposit and short-term government obligations. Interest income is recognized as earned. Interest earnings are allocated to City funds on the basis of average cash balances. Investments are stated at cost, which approximates market. General Property Taxes - Revenue is recognized in the year of anticipated collection, with amounts due from the County and received early in the following year, recorded as a receivable (unremitted taxes). Allowances are provided for the full amount of delinquent taxes receivable. This procedure has the effect of recognizing general property taxes as revenue when cash is received because of the uncertainty of collection of the delinquent amount. -12- .oa,.�