5.1. ERMUSR 05-08-2012 - Laserfiche WebLink

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2011 AND 2010 Note 2: DETAILED NOTES ON ALL FUNDS -CONTINUED A reconciliation of cash and temporary investments as shown in the financial statements for the Utilities follows: Deposits Investments Cash on hand Total Cash and investments Unrestricted Restricted Total The investments of the Utility are subject to the following risks: 2011 2010 $ 8,669,521 $ 7,109,382 3,054,549 2,994,877 400 400 $ 11,724,470 $ 10,104,659 $ 10,999,970 $ 9,380,159 724,500 724,500 $ 11,724,470 $ 10,104,659 • Credit Risk. Is the risk that an issuer or other coun[erparty to an investment will not fulfill its obligations. Ratings are provided by various credit rating agencies and where applicable, indicate associated credit risk. Minnesota Statutes and the Utilities' investment policy limit the Utilities' investments to the list on page 31 of the notes. • Custodial Credit Risk. The custodial credit risk for investments is the risk [ha[, in [he event of the failure of [he counterparty to a transaction, a government will not be able to recover [he value of investment or collateral securities that are in the possession of an outside party. According [o their investment policy the Utilities' portfolio maturities shall be staggered to avoid undue concentration of assets with one broker- dealer or financial institution. • Concentration of Credit Risk Is the risk of loss attributed to the magnitude of a government's investment in a single issuer. According to their investment policy the Utilities' portfolio maturities shall be staggered to avoid undue concentration of assets in any one type of instrument. • Interest rate risk. Is the risk that changes in interest rates will adversely affect the fair value of an investment. Acwrding to [heir investment policy the Utilities' will stagger maturities to avoid undue concentration of assets at a specific maturity sector. 38