AgdaPkt 2006-01-09 - Laserfiche WebLink

Browse Search

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Buildings Improvements Equipment Streets Parks Bridges Traffic Signals Storm Drains K. Implementation of New GASB Pronouncements 20-50 33-60 2-15 20 25 30 20 40 Years Years Years Years Years Years Years Years The City adopted new accounting standards in order to conform to the following Governmental Accounting Standards Board Statements: Statement No. 40 - Deposit and Investment Risk Disclosure, an amendment ofGASB Statement No.3 GASB Statement No. 40 updates the custodial credit risk disclosure requirements of Statement No.3 and establishes more comprehensive disclosure requirements addressing other common risks of deposits and investments of state and local governments, such as credit risk, concentration of credit risk, interest rate risk, and foreign currency risk. NOTE 2 - CASH AND INvESTMENTS A. Cash and Deposits At June 30, 2005, the carrying amount of the City's cash and deposits was $813,743 and ($282,587) at June 30, 2005 and 2004, respectively. Bank balances before reconciling items were $3,029,085 at June 30, 2005. Of the total bank balances, $333,964 was insured or held by the City or its agent in the City's name and $2,695,121 was collateralized. All cash deposits in banks are fully insured or collateralized. California state law requires that public fund deposits be collateralized by either government securities with a value equal to 110% of the deposits or first trust deed mortgage notes having a value equal to 150%. Per state law each institution must use a third party (which may be the institution's trust department) to hold the pledged collateral in a pool to secure all the institution's public fund deposits. The code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash is considered to be held in the City's name. Banks and savings and loans in California are subject to state-mandated reporting requirements to ensure that the required levels of control are maintained. The City may waive collateral requirements for deposits, which are fully insured with each financial institution up to $100,000 by the Federal Deposit Insurance Corporation (FDIC). Cash balances from all funds are combined and invested to the extent possible pursuant to the City Council approved investment policy and guidelines and state government code. The earnings from these investments are allocated monthly to each fund based on an average of monthly opening and closing balances of cash and investments. Investments are stated at fair value. All enterprise fund investments are considered to be liquid investments for cash flow purposes. 35