10.2 2022 Audit Summary - Laserfiche WebLink

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CITY OF PEQUOT LAKES,MINNESOTA RECONCILIATION OF CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31,2022 Net Change in Fund Balances-Total Governmental Funds $ 322,624 Amounts reported for governmental activities in the Statement of Activities are different due to the following: Capital outlays are reported in governmental funds as expenditures.However,in the Statement of Activities,the cost of those assets is allocated over the estimated useful lives as depreciation expense: Capital Outlay Capitalized $ 553,278 Depreciation Expense (637,468) Loss on Disposal of Assets (115,639) (199,829) The issuance of long-term debt provides current financial resources to governmental funds while the repayment of principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction,however,has any effect on net position.Also,governmental funds report the effect of premiums and discounts when debt is first issued,whereas these amounts are deferred and amortized in the Statement of Activities.The amounts below detail the effects of these differences in the treatment of long-term debt and related items: Bond Principal Repayments 146,439 Bond Issuance (176,000) (29,561) Interest on long-term debt in the Statement of Activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds only when it is due. In the Statement of Activities,however,interest expense is recognized as the interest accrues,regardless of when it is due: (1,710) Under the modified accrual basis of accounting,certain revenues cannot be recognized until they are available to liquidate liabilities of the current period: Property Taxes (31,346) Special Revenues (11,463) Grants Receivable (164,700) Other Receivables 5,000 (202,509) Some expenses reported in the Statement of Activities do not require the use of current financial resources and,therefore,are not reported as expenditures in the governmental funds: Compensated Absences (6,716) Joint venture investments reported in governmental activities are not current financial resources. Therefore the change in the value of such investments is not reported in the governmental funds: Change in Equity Interest&Initial Investment (293,060) Certain liabilities do not represent the impending use of current resources. Therefore,the change in such liabilities and related deferrals are not reported in the governmental funds: Net OPEB Liability and Deferred Outflows/Inflows of Resources 2,537 Net Pension Liability and Deferred Outflows/Inflows of Resources (8,728) (6,191) CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $ (416,952) See accompanying notes. 25