Laserfiche WebLink
City of Redwood City 7.1.G. - Page 70 <br /> Notes to the Basic Financial Statements <br /> For the year ended June 30, 2013 <br /> NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br /> L. Use of Estimates <br /> The preparation of the basic financial statements in conformity with generally accepted accounting <br /> principles requires management to make estimates and assumptions. These estimates and <br /> assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets <br /> and liabilities. In addition, estimates affect the reported amount of expenses. Actual results could differ <br /> from these estimates and assumptions. <br /> M. Implementation of New GASB Pronouncements <br /> In FY 2012/13 the City adopted new accounting standards in order to conform to the following <br /> Governmental Accounting Standards Board Statement: <br /> GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of <br /> Resources, and Net Position. The Statement renames "net assets" to "net position" to reflect the <br /> difference between assets and liabilities. <br /> NOTE 2 — CASH AND INVESTMENTS <br /> A. Cash and Deposits <br /> The carrying amount of the City's cash and deposits, including restricted cash, was $2,428,114 at June <br /> 30, 2013. Bank balances before reconciling items were $2,475,449 at June 30, 2013. Of the total bank <br /> balances, $573,837 was insured or held by the City or its agent in the City's name and $1,901,612 was <br /> collateralized. <br /> All cash deposits in banks are fully insured or collateralized. California state law requires that public <br /> fund deposits be collateralized by either government securities with a value equal to 110% of the <br /> deposits or first trust deed mortgage notes having a value equal to 150 %. Per state law each institution <br /> must use a third party (which may be the institution's trust department) to hold the pledged collateral <br /> in a pool to secure all the institution's public fund deposits. The code states that collateral pledged in <br /> this manner shall have the effect of perfecting a security interest in such collateral superior to those of a <br /> general creditor. Thus, collateral for cash is considered to be held in the City's name. Banks and <br /> savings and loans in California are subject to state - mandated reporting requirements to ensure that the <br /> required levels of control are maintained. The City may waive collateral requirements for deposits, <br /> which are fully insured with each financial institution up to $250,000 by the Federal Deposit Insurance <br /> Corporation (FDIC). <br /> Cash balances from all funds are combined and invested to the extent possible pursuant to the City <br /> Council approved investment policy and guidelines and state government code. The earnings from <br /> these investments are allocated monthly to each fund based on an average of monthly opening and <br /> closing balances of cash and investments. Investments are stated at fair value. All enterprise fund <br /> investments are considered to be liquid investments for cash flow purposes. <br /> 42 <br />