5.1. ERMUSR 05-14-2013 - Laserfiche WebLink

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER,MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2012 AND 2011 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: 2012 2011 Deposits $ 11,508,557 $ 8,669,521 Investments 3,116,237 3,054,549 Cash on hand 400 400 Total $ 14,625,194 $ 11,724,470 Cash and investments Unrestricted $ 13,900,694 $ 10,999,970 Restricted 724,500 724,500 Total $ 14,625,194 $ 11,724,470 The investments of the Utility are subject to the following risks: • Credit Risk.Is the risk that an issuer or other counterparty 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 that,in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. According to 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. According to their investment policy the Utilities' will stagger maturities to avoid undue concentration of assets at a specific maturity sector. 38