ERMUSR FINIANCIALS 04-17-2008 - Laserfiche WebLink

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2007 AND 2006 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED The Utilities may also invest idle funds as authorized by Minnesota statutes, as follows: 1. Direct obligations or obligations guaranteed by the United States or its agencies. 2. Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are in securities in (1) above. 3. General obligations of the State of Minnesota or any of its municipalities. 4. Banker's acceptances of United States banks eligible for purchase by the Federal Reserve System. 5. Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality, and maturing in 270 days or less 6. Repurchase or reverse repurchase agreements with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker-dealers. 7. Guaranteed investment contracts (GIC's) issued or guaranteed by United States commercial banks or domestic branches of foreign banks or United States insurance companies if similar debt obligations of the issuer or the collateral pledged by the issuer is in the top two rating categories, or in the top three rating categories for long-term GIC's issued by Minnesota banks. Investments for the Utilities are reported at fair value. According to its investment policy, the Utilities will diversify its investments by security type and institution. In establishing specific diversification strategies, the following general policies and constraints shall apply: Portfolio maturities shall be staggered to avoid undue concentration of assets at a specific maturity sector, with one broker-dealer or financial institution, or any one type of instrument. The maturities selected shall provide for stability of income and reasonable liquidity. Accounts Receivable Accounts receivable include amounts billed for services provided before year end. The Utilities has established a reserve for uncollectible accounts at $52,500 and $17,500 for the Electric and Water fund, respectively. No substantial losses from present receivable balances are anticipated. Interfund Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "interfund receivables/payables" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds". Inventories Inventories are stated at lower of average cost or market on the first-in, first-out (FIFO) method. -15-