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<br /> <br /> <br /> <br />B.The Finance Director shall establish an annual process of independent review by an <br />external auditor. This review will provide internal control by assuring compliance with <br />policies and procedures. <br /> <br /> <br />C.The investment portfolio will be designed to obtain a market average rate of return during <br />budgetary and economic cycles, taking into account the City of Elk River’s investment risk <br />constraints and cash flow needs. <br /> <br /> <br />D.The Finance Director shall prepare an investment report directed to the City Council on a <br />quarterly basis including: <br />1. Listing of individual securities held at the end of the reporting period. <br />2. Listing of investments by maturity date. <br />3. Percentage of the total portfolio which each type of investment represents. <br />4. Market to market analysis. <br />5. Rate of return for the quarter. <br /> <br />Fund Balance <br />Fund balance reserves are an important component in ensuring the overall financial health of a <br />community, by giving the city sufficient funds to meet contingency and cash-flow timing needs. In <br />establishing an appropriate fund balance, the city needs to consider the demands of cash flow, need <br />for emergency reserves, ability to manage fluctuations of major revenue sources, credit rating and <br />long-term fiscal health. <br /> <br />A.Classification of Fund Balance/Procedures <br /> <br />1.Nonspendable <br />Amounts that are not in a spendable form or are required to be maintained intact. <br />Examples are inventory or prepaid items. <br /> <br />2.Restricted <br />Amounts subject to externally enforceable legal restrictions. Examples include grants, <br />tax increment and bond proceeds. <br /> <br /> <br />3.Unrestricted <br />The total of committed fund balance, assigned fund balance, and unassigned fund <br />balance: <br /> <br /> <br />Committed fund balance – amounts that can be used only for the specific <br />purposes determined by a formal action of the government’s highest level of <br />decision-making authority. Commitments may be changed or lifted only by the <br />government taking the same formal action that imposed the constraint originally. <br /> <br /> <br />Assigned fund balance – amounts a government intends to use for a specific <br />purpose; intent can be expressed by the government body or by an official or body <br />to which the governing body delegates the authority. <br /> <br /> <br />Unassigned fund balance – residual amounts that are available for any purpose <br />in the general fund. The General fund should be the only fund that reports a <br />positive unassigned fund balance amount. This classification is also used to <br />account for deficit fund balances in other governmental funds. <br /> <br />Financial Management Policies Page 7 <br /> <br />