10-25-04 Regular Meeting of La Porte Audit Committee

Browse Search

CITY OF LA PORTE, TEXAS Notes to the Financial Statements - Continued September 30, 2004 1. Summary of significant accounting policies - Continued P. Long-term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type. statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Q. Reservations of Fund Balances The fund balance reserves for revenue bond retirement and construction, prepaid items, inventory, and debt service are discussed in notes 5, 1(G), 1(L), and 1(C) respectively. R. Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciations, reduced by the outstanding balances of any borrowing used for the acquisition, construction or improvements of those assets, and adding back unspent proceeds. Net assets are reported as restricted when there are limitations imposed on their use either through the enabling legislations adopted by the city or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. 2. Cash, Cash Equivalents and Investments Cash and Cash Equivalents The carrying amount of the City's deposits with financial institutions as of September 30, 2004, was $1,261,934 and the bank balance was $1,522,503. All of the bank balance was fully covered by federal depository insurance or collateral held by the City's agent -held in -the City's name. Short term deposits in the Texas Local Government Investment Pool (TexPool), the Local Government Investment Cooperative (LOGIC), and Tex Star were $18,456,886 at September 30, 2004. Credit Risk Collateral is required for all bank deposits at 100% of deposits not covered by federal depository insurance. Obligations that may be pledged as such collateral are obligations of the United States and its agencies and obligations of the State and its municipalities and school districts. Collateral pledged to cover the City's deposits is required to be held in the City's name by the trust department of a bank other than the pledging bank (the City's agent). Collateral securities must bear a Baa-1 or better rating to qualify for use in securing uninsured depository balances. Deposits at year-end are -representative of the types of deposits maintained by the City during the year. 52