CAFR2013_FINAL - Laserfiche WebLink

Home

NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED) Investments are subject to various risks, the following of which are considered the most significant: Custodial credit risk – For investments, this is the risk that in the event of a failure of the counterparty to an investment transaction (typically a broker-dealer) the City would not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City does not have a formal investment policy addressing this risk, but typically limits its exposure by purchasing insured or registered investments, or by the control of who holds the securities. Credit risk – This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Minnesota Statutes limit the City’s investments to direct obligations or obligations guaranteed by the United States or its agencies; general obligations rated “A” or better; revenue obligations rated “AA” or better; general obligations of the Minnesota Housing Finance Agency rated “A” or better; commercial paper issued by the United States corporations or their Canadian subsidiaries, rated of the highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less; time deposits that are fully insured by the Federal Deposit Insurance Corporation or bankers acceptances of the United States banks and Guaranteed Investment Contracts guaranteed by a United States commercial bank or domestic branch of a foreign bank, or a United States insurance company, or their Canadian subsidiary, and with a credit quality in one of the top two highest categories by a nationally recognized rating agency. The City’s investment policies do not further address credit risk. Concentration risk – This is the risk associated with investing a significant portion of the City’s investment (considered 5 percent or more) in the securities of a single issuer, excluding United States guaranteed investments (such as Treasuries), investment pools and mutual funds. The City’s investment policies do not limit the concentration of investments. At year end, the City’s investment portfolio included 25% concentration in Federal Home Loan Banks. Interest rate risk – This is the risk of potential variability in the fair value of fixed rate investments resulting from changes in interest rates (the longer the period for which an interest rate is fixed, the greater the risk). The City does not have an investment policy limiting the duration of investments. NOTE 3 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS A. Short-Term Interfund Receivables/Payables Individual interfund due from and to other funds at year-end were as follows: These internal loans were utilized for cash flow purposes. Receivable Fund Payable Fund Amount Major Governmental Fund Major Governmental Fund 225,845$ Public Improvement Revolving Public Improving Revolving The COR Fund Capital Project Fund Fund Capital Project Fund Nonmajor Governmental Fund Nonmajor Governmental Fund 41,850 Economic Development Authority RALF Funded Project Fund Special Revenue Fund Capital Project Fund Nonmajor Governmental Fund Nonmajor Governmental Fund 28,987 State-Aid Construction 2012 Riverdale Drive Capital Project Fund Capital Project Fund 296,682$ 73