02-14-11 Regular Meeting of Fiscal Affairs Committee

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CITY OF LA PORTE, TEXAS Notes to the Financial Statements September 30, 2010 1. Summary of significant accounting policies — Continued The liability for compensated absences at September 30, 2010 is comprised of the following: Governmental Business Type Total Vacation $ 1,059,085 $ 178,211 $ 1,237,296 Sick Leave 2,139,328 199,369 2,338,697 Total All Funds $ 3,198,413 $ 377,580 $ 3,575,993 O. Long -term Obligations In the government -wide financial statements and proprietary fund types in the fund financial statements, long -term debt and other Tong -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. P. Reservations of Fund Balances The fund balance reserves for revenue bond retirement and construction, inventory and debt service are discussed in Notes 5 and 1(K), respectively. Other reserves of funds are for the Municipal Court Building Security Fees and Municipal Court Technology Fees, park zone, confiscated funds, animal control and judicial fund, child safety fees and law enforcement training. Q. 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 City reports cash and cash equivalents in the City's statement of cash flows for Proprietary Fund Types and in all other financial statements of financial position. The City considers cash and cash equivalents to be cash on hand, demand deposits, certificates of deposit, balances in privately managed public funds investment pools and money market mutual funds. Investments Investments consist of balances in privately managed public funds investment pools, money market mutual funds and investments in United States (US) Agency securities. The City reports all investments at fair value based on quoted market prices at year -end date. The Texas Public Funds Investment Act (PFIA), as prescribed in Chapter 2256 of the Texas Government Code, regulates deposits and investment transactions of the City. 52