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CITY OF ELK RIVER,MINNESOTA <br /> NOTES TO FINANCIAL STATEMENTS <br /> DECEMBER 31,2013 <br /> Note 2: STEWARDSHIP,COMPLIANCE,AND ACCOUNTABILITY <br /> A. Deficit Fund Equity <br /> The following funds had deficit fund balances at December 31,2013: <br /> Primary Government: <br /> TIF Districts-major capital projects fund $ 1,039,866 <br /> Park Dedication-capital projects fund $ 839,659 <br /> The City plans to eliminate these deficits through future park dedication and tax increment fund revenues. <br /> Note 3: DETAILED NOTES ON ALL FUNDS <br /> A. Deposits and Investments <br /> Deposits <br /> Custodial credit risk for deposits is the risk that in the event of a bank failure,the City's deposits may not be returned or <br /> the City will not be able to recover collateral securities in the possession of an outside party. In accordance with <br /> Minnesota statutes,the City maintains deposits at the depository banks authorized by the City Council,all of which are <br /> members of the Federal Reserve System. Minnesota Statutes require that all City deposits be protected by insurance, <br /> surety bond,or collateral. The market value of collateral pledged must equal 110%of the deposits not covered by <br /> insurance or bonds. Authorized collateral includes the legal investments as prescribed by Minnesota statutes,as well as <br /> certain first mortgage notes,and certain other state or local government obligations. Minnesota Statutes require that <br /> securities pledged as collateral be held in safekeeping by the City Treasurer or in a financial institution other than that <br /> famishing the collateral. <br /> At year end,the City's carrying amount of deposits was$13,545,562 and the bank balance was$13,456,471. The bank <br /> balance was covered by federal depository insurance totaling$1,130,472 and the remaining balance was covered by <br /> securities held by the pledging financial institution's agent in the City's name. <br /> The carrying amount of deposits for the HRA,a discretely presented component unit,was$1,043,777 and the bank <br /> balance was$1,043,777. The bank balance was covered by federal depository insurance and securities held by the <br /> pledging financial institution's agent in the HRH's name. <br /> Investments <br /> Minnesota Statutes and the City's investment policy authorize the City to invest in the following: <br /> a. Direct obligations or obligations guaranteed by the United States or its agencies. <br /> b. Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only <br /> investments are in securities described in(a)above. <br /> c. General obligations of the State of Minnesota or any of its municipalities. <br /> d. Bankers acceptances of United States Banks eligible for purchase by the Federal Reserve System. <br /> e. Commercial paper of the highest quality issued by United States corporations or their Canadian subsidiaries and <br /> maturing in 270 days or less. <br /> 44 <br />