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CITY OF ELK RIVER
<br />NOTES TO BASIC FINANCIAL STATEMENTS
<br />YEAR ENDING DECEMBER 31, 2016
<br />NOTE 3 DEPOSITS AND INVESTMENTS
<br />A. Components of Cash and Investments
<br />Cash and investments are presented in the financial statements as follows:
<br />Statement of Net Position
<br />Cash and Investments
<br />Restricted Cash and Investments
<br />Cash and Investments Held by Trustee
<br />Cash and Investments - Discrete CU
<br />Statement of Fiduciary Net Position
<br />Cash and Investments - Agency Funds
<br />B. Deposits
<br />Primary
<br />Component
<br />Total Primary
<br />Government
<br />Unit - HRA
<br />Gov and CU
<br />$ 53,247,375
<br />$
<br />$ 53,247,375
<br />997,660
<br />997,660
<br />9,284,303
<br />9,284,303
<br />-
<br />1,289,705
<br />1,289,705
<br />205,969
<br />-
<br />205,969
<br />$ 63,735,307
<br />$ 1,289,705
<br />$ 65,025,012
<br />In accordance with applicable Minnesota Statutes, the City maintains deposits at depository
<br />banks authorized by the City Council, including checking accounts and certificates of
<br />deposit. The following is considered the most significant risk associated with deposits:
<br />Custodial Credit Risk — In the case of deposits, this is the risk that in the event of a bank
<br />failure, the City's deposits may be lost. Minnesota Statutes require that all deposits be
<br />protected by federal deposit insurance, corporate surety bond, or collateral. The fair value
<br />of collateral pledged must equal 110% of the deposits not covered by federal deposit
<br />insurance or corporate surety bonds. Authorized collateral includes treasury bills, notes,
<br />and bonds; issues of U.S. government agencies; general obligations rated "A" or better;
<br />revenue obligations rated "AX or better; irrevocable standard letters of credit issued by the
<br />Federal Home Loan Bank; and certificates of deposit. Minnesota Statutes require that
<br />securities pledged as collateral be held in safekeeping in a restricted account at the Federal
<br />Reserve Bank or in an account at a trust department of a commercial bank or other
<br />financial institution that is not owned or controlled by the financial institution furnishing the
<br />collateral.
<br />The City has an investment policy in place to address custodial credit risk for deposits,
<br />stating all deposits and investments must be in compliance with Minnesota Statutes 118A,
<br />with collateralization levels of 110% of the market value of the principal and accrued
<br />interest.
<br />At year-end, the carrying amount of the City's deposits was $17,491,619 while the balance
<br />on the bank records was $17,643,205. At December 31, 2016, all deposits were fully
<br />covered by federal depository insurance, surety bonds, or by collateral held by the City's
<br />agent in the City's name.
<br />At year-end, the carrying amount of deposits for the HRA, a discretely presented
<br />component unit, was $1,289,705 and the bank balance was $1,289,705. At December 31,
<br />2016, all deposits were fully covered by federal depository insurance, surety bonds, or by
<br />collateral held by the City's agent in the City's name.
<br />(48)
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