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City of San Leandro <br />Notes to Basic Financial Statements <br />For the year ended June 30, 2013 <br />NOTE 1- SIGNIFICANT ACCOUNTING POLICIES (Continued) <br />The Fiduciary fund financial statements normally include a Statement of Net Position and a Statement of <br />Changes in Fiduciary Net Position. The City's fiduciary funds represent a private purpose trust fund and <br />agency funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve <br />measurement of results of operations. As a result, a statement of Changes in Fiduciary Net Position is not <br />presented in this report. The City's Fiduciary Funds includes the Deposits Fund which accounts for all <br />deposits held on behalf of other persons and businesses and the Cherrywood Fund accounts for monies <br />accumulated for payments of special assessment bonds. <br />D. Recognition of Interest Liability <br />In the government -wide financial statements, interest payable of long-term debt is recognized as the <br />liability is incurred for governmental fund types as wells as proprietary fund types. <br />In the fund financial statements, the Governmental fund types do not recognize the interest payable when <br />the liability is incurred. Interest on long-term debt is recorded in the fund statement when payment is <br />made. Proprietary fund types recognize the interest payable when the liability is incurred. <br />E. Use of Restricted and Unrestricted Net Position <br />When an expense is incurred for purposes for which both restricted and unrestricted net position are <br />available, the City's policy is to apply restricted net position first. <br />F. Cash, Cash Equivalents and Investments <br />The City pools cash and investments from all sources, except the fiscal agent cash and investments, for <br />the purpose of increasing income through investment activities. Interest income on investments is <br />allocated on the basis of average month-end cash and investment balances in each fund. Cash and cash <br />equivalents represent cash and investments and restricted cash and investments with an original maturity <br />term of three months or less. Pooled cash and investments allocated to proprietary fund types are <br />considered cash and cash equivalents since specific investments held in the City's pooled cash and <br />investments are not allocated to each fund. <br />The City invests in the California Local Agency Investment Fund ("LAIF"), which is part of the Pooled <br />Money Investment Account operated by the California State Treasurer. LAIF funds are invested in high <br />quality money market securities and are managed to insure the safety of the portfolio. A portion of <br />LAIF's investments are in structured notes and asset-backed securities. <br />LAIF determines fair value on its investment portfolio based on market quotations for these securities <br />where market quotations are readily available, and on amortized cost or best estimate for those securities <br />where market value is not readily available. <br />In accordance with GASB Statement No. 31, highly liquid money market investments with maturities of <br />one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair <br />value. Market value is used as fair value for those securities for which market quotations are readily <br />available. <br />48 <br />