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M. ELIMINATION OF INTERNAL ACTIVITY ON THE STATEMENT OF <br /> ACTIVITIES <br /> The City, as a general rule, eliminates the effect of interfund activity on the government- <br /> wide financial statements. The only interfund activities that will be reported on these <br /> financial statements are those between the two types of activities: governmental and <br /> business-type. <br /> N. APPLICATION OF FASB PRONOUNCEMENTS TO BUSINESS-TYPE <br /> ACTIVITIES <br /> The City generally follows private-sector standards of accounting and financial reporting <br /> issued prior to December 1, 1989 for the government-wide and proprietary fund financial <br /> statements to the extent that those standards do not conflict with or contradict guidance of <br /> the Governmental Accounting Standards Board. The City has the option of following <br /> subsequent private-sector guidance for their business-type activities and enterprise funds, <br /> subject to the same limitation, however,the city elects not to follow subsequent private- <br /> sector guidance. <br /> O. SPECIAL AND EXTRAORDINARY ITEMS <br /> The City's policy regarding the financial reporting for special and extraordinary items is <br /> that it will be reported separately on the government-wide financial statements, if <br /> applicable, in accordance with the definitions provided in GASB #34. <br /> Adopted by the City Council of Pequot Lakes this day of , 2005. <br /> Attest: <br /> Cathy Malecha <br /> Mayor <br /> Sandra A. Peine <br /> City Clerk <br /> Policies and Procedures.doc: 4/1/2005 7 <br />