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CITY OF HUGO, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS (CONTINUED) <br />1. Summary of Significant Accounting Policies (Continued) <br />A. Reporting Entity (Continued) <br />Related Organizations <br />The Hugo Firefighter's Relief Association is organized as a non-profit organization, legally <br />separate from the City, by its members to provide pension and other benefits to its members in <br />accordance with Minnesota statutes. The membership appoints the board of this Association <br />and separate financial statements are issued by this Association. All funding is conducted in <br />accordance with Minnesota statutes. Although the City levies property taxes for the Association, <br />this Association is fiscally independent to determine and levy taxes. The City's portion of the <br />costs of the Association's pension benefits are included in the General Fund. The Association <br />does not have any significant operational or financial relationship with the City. <br />B. Government -wide and Fund Financial Statements <br />The government -wide financial statements (i.e. the statement of net position and the statement <br />of activities) report information on all of the activities of the City. For the most part, the effect of <br />interfund activity has been removed from these statements. Governmental activities, which <br />normally are supported by taxes and intergovernmental revenues, are reported separately from <br />business -type activities, which rely to a significant extent on fees and charges for support. <br />The statement of activities demonstrates the degree to which the direct expenses of a given <br />function or segment are offset by program revenues. Direct expenses are those that are clearly <br />identifiable with a specific function or segment. Program revenues include 1) charges to <br />customers or applicants who purchase, use, or directly benefit from goods, services, or privileges <br />provided by a given function or segment and 2) grants and contributions that are restricted to <br />meeting the operational or capital requirements of a particular function or segment. Taxes and <br />other items not properly included among program revenues are reported instead as general <br />revenues. <br />Separate financial statements are provided for governmental funds and proprietary funds. Major <br />individual governmental funds and major individual enterprise funds are reported as separate <br />columns in the fund financial statements. <br />31 <br />