10.2 2022 Audit Summary - Laserfiche WebLink

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CITY OF PEQUOT LAKES,MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31,2022 USING THIS ANNUAL REPORT(Continued) Reporting the City's Most Significant Funds Our analysis of the City's major funds begins on page 13. The fund financial statements begin on page 20 and provide detailed information about the most significant funds-not the City as a whole.Some funds are required to be established by State law and by bond covenants. However,the City Council may establish other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes,grants,and other money. The City's three kinds of funds(governmental,proprietary,and fiduciary)use different accounting approaches. • Governmental Funds—Most of the City's basic services are reported in governmental funds,which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting,which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed,short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. We describe the relationship(or differences)between governmental activities(reported in the Statement of Net Position and the Statement of Activities)and governmental funds in reconciliations following the governmental fund financial statements. • Proprietary Funds—When the City charges customers for the services it provides,these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. In fact,the City's proprietary funds are the same as the business-type activities we report in the government-wide statements but provide more detail and additional information,such as cash flows,for proprietary funds. • Fiduciary Fund—this fund is used to account for resources held for the benefit of parties outside of the City.The City is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. All of the City's fiduciary activities are reported in a separate statement of fiduciary net position.We exclude these activities from the City-wide financial statements because the City cannot use these assets to finance its operations. 9