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CITY OF ST. ANTHONY ' NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 Note 1 . Significant Accounting Policies The financial statements of the City of St. Anthony (the City) have been prepared in ' confirmity with generally accepted accounting principles as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting prin- ciples. The more significant accounting policies are described below. A. Reporting Entity. ' The City operates pursuant to applicable Minnesota laws and statutes under the council-manager plan as defined by state statutes. For financial reporting purposes, the City's general purpose financial statements present the primary government, com- ponent organizations for which the primary government is financially accountable for and other organizations over which the City exercises significant influence. Signi- ficant influence or accountability is based primarily on operational and financial ' relationships with the City. Based on the application of the reporting entity criteria, the Housing and Redevel- opment Authority of St. Anthony (HRA) is considered a component unit of the City. The City established the HRA under state statutes to assist and support housing and redevelopment projects undertaken within the City which are under the statutory 1 authority of the HRA. The governing board and management of the HRA are appointed . by the City Council . In addition, the Council reviews and approves tax levies and other financial matters related to the HRA. The City provides major financing of HRA activities and debt issued in connection with HRA projects are general obliga- tions of the City. The HRA is presented in the accompanying financial statements as a blended component unit. As such, certain of its activities are reported in the appropriate special revenue, debt service and capital project fund types. ' its relationship with related organi- zations.In addition, the City is required to disclose p 9 zations. The St. Anthony Firefighters Relief Association, a nonprofit organization, is organized to provide pension and other benefits to its members in accordance with ' Minnesota Statutes. The Board of Directors is elected by membership of the Associa- tion. All funding is conducted in accordance with Minnesota Statutes; state aids and other revenues flow directly to the Association. Additionally, the Association pays ' benefits directly to its members. Because the City is not financially accountable for the Relief Association, (the Association is able to fund itself independently of the City) , and the City makes only certain appointments to the Board of Directors, it is excluded from the reporting entity of the City. t B. Fund Accounting The City uses funds and account groups to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compli- ance and to aid financial management by segregating transactions related to certain ' government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. Funds are arranged in the accompanying financial statements into governmental and pro- ' prietary categories. Each category, in turn, is divided into separate `fund types' . -12-