1997 CAFR - Laserfiche WebLink

Home

' L ACCOUNTING SYSTEM INTE ' The City's accounting system is organized and operated on a fund basis. Each fund or account group is a distinct, self-balancing accounting entity. The various funds and account groups utilized by the City are described in Note One of the fmancial statements. All funds are in conformity with generally accepted accounting principles ' applicable to governmental entities. ,, Accounting and bookkeeping for all City activities are centralized under the Finance Department. The responsibility for fmancial records, maintaining internal controls, and preparing financial and budgetary reports is delegated to this department. The internal control structure is designed to ensure that the assets of the City are protected from loss, theft or ' misuse, and to ensure that adequate accounting data is compiled to allow for the presentation of fmancial statements in conformity with GAAP. The intemal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a ' control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgements by management. ' The City also maintains budgetary controls of which the objective is to ensure compliance with legal provisions embodied in the annual appropriated budget as approved by the City Council. During the year, the Council may increase the budget, but only to the extent that additional revenues have been realized. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is at the department 1 level for budgeted funds. The City Council also adopts afive-year Capital Improvement Program as a financial planning document. ('ASH MANAGEMENT The City of Ramsey subscribes to the "pooled cash" concept of investing, which means that all funds with cash balances (except the Escrow Fund and certain other funds) participate in an investment pool. This pooled cash concept provides for investing greater amounts of money at more favorable rates. During 1997, the City earned $1,057,743 from investments in obligations issued by the United States and its agencies, bank certificates of deposit, and commercial paper. RISK MANAGEMENT 1 The City participates in the League of Minnesota Cities Insurance Trust (LMCIT], a public entity risk pool for its general property and casualty, workers' compensation, and other miscellaneous insurance coverages. The LMCIT operates as a common risk management and insurance program for approximately 780 cities. The City pays an annual premium to the LMCIT for insurance coverage. The LMCIT agreement provides that the Trust will be self- sustaining through member premiums and will reinsure through commercial companies for claims in excess of certain limits. The City has elected higher deductibles through the LMCIT in order to keep premiums at a minimum. To supplement the commercial coverages, the City established the Self-Insurance Trust Fund. Premiums for the LMCIT policies are not paid from the the Self-Insurance Trust Fund, but rather are budgeted and paid from the 1 respective operating funds. The City also carves commercial insurance for certain other risks of loss, including employee health insurance. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. vii i~