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CITY OF ELK RIVER, MINNESOTA
<br />NOTES TO THE FINANCIAL STATEMENTS
<br />DECEMBER 31, 2017
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<br />NOTE 3: DEPOSITS AND INVESTMENTS
<br />A.Components of Cash and Investments
<br />Cash and investments at year-end consist of the following:
<br />Primary Component
<br />Government Unit - HRA
<br />Deposits 17,700,085$ 1,227,668$
<br />Investments 38,089,591 -
<br />Cash on Hand 16,115 -
<br /> Total 55,805,791$ 1,227,668$
<br />Cash and investments are presented in the financial statements as follows:
<br />Primary Component
<br />Government Unit - HRA
<br />Statement of Net Position
<br />Cash and investments 53,695,666$ 1,227,668$
<br />Restricted cash and investments 997,660 -
<br />Statement of Fiduciary Net Assets
<br />Cash and investments - Agency Funds 1,112,465 -
<br />Total 55,805,791$ 1,227,668$
<br />B.Deposits
<br />In accordance with applicable Minnesota statutes, the City maintains deposits at depository banks authorized by the City
<br />Council, including checking accounts and certificates of deposits. The following is considered the most significant risk
<br />associated with deposits:
<br />Custodial credit risk – In the case of deposits, this is the risk that in the event of a bank failure, the City’s deposits may
<br />be lost.
<br />Minnesota statutes require that all deposits be protected by federal deposit insurance, corporate surety bond, or collateral.
<br />The value of collateral pledged must equal 110% of the deposits not covered by federal deposit insurance or corporate
<br />surety bonds. Authorized collateral includes treasury bills, notes, and bonds; issues of U.S. government agencies;
<br />general obligations rated “A” or better; revenue obligations rated “A” or better; irrevocable standby letters of credit
<br />issued by the Federal Home Loan Bank; and certificates of deposit. Minnesota statutes require that securities pledged as
<br />collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or in an account at a trust department
<br />of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the
<br />collateral.
<br />The City (including Elk River Municipal Utilities) has an investment policy in place to address custodial credit risk for
<br />deposits, stating all deposits and investments must be in compliance with Minnesota Statutes 118A, with collateralization
<br />levels of 110% of the market value of the principal and accrued interest.
<br />At year-end, the carrying amount of the City’s deposits was $17,700,085 while the balance on the bank records was
<br />$17,750,107. At December 31, 2017, all deposits were fully covered by federal depository insurance, surety bonds, or
<br />by collateral held by the City’s agent in the City’s name.
<br />At year-end, the carrying amount of deposits for the HRA, a discretely presented component unit, was $1,227,668 and
<br />the bank balance was $1,227,553. At December 31, 2017, all deposits were fully covered by federal depository
<br />insurance, surety bonds, or by collateral held by the City’s agent in the City’s name.
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