AgdaPkt 2009-12-14 - Laserfiche WebLink

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6.1 B - Attachment No. 4 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED� L. Implementation of New GASB Pronouncements In 2009 the City adopted new accounting standards in order to conform to the following Governmental Accounting Standards Board Statements: • GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations — the Statement establishes accounting and financial reporting standards for pollution/contamination remediation obligations and remediation activities to address the detrimental effects of existing pollution. • GASB Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments and GASB Statement No. 56, Codification of Accounting and Financial Reporting Guidance Contained in the AICPA Statement of Auditing Standards — these Statements incorporate certain accounting and financial reporting guidance for state and local governments into GASB's authoritative literature. NOTE 2—CASH AND INVESTMENTS A. Cash and Deposits The carrying amount of the City's cash and deposits, including restricted cash, was $2,006,755 at June 30, 2009. Bank balances before reconciling items were $3,378,145 at June 30, 2009. Of the total bank balances, $434,647 was insured or held by the City or its agent in the City's name and $2,943,498 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 $250,000 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. 36