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• GASB 70 - Accounting and Financial Reporting for Nonexchange Financial Guarantees <br />Some governments extend financial guarantees for the obligations of another government, a <br />not-for-profit entity, or a private entity without directly receiving equal or approximately <br />equal value in exchange (a nonexchange transaction). As a part of this nonexchange financial <br />guarantee, a government commits to indemnify the holder of the obligation if the entity that <br />issued the obligation does not fulfill its payment requirements. Also, some governments issue <br />obligations that are guaranteed by other entities in a nonexchange transaction. The objective <br />of this Statement is to improve accounting and financial reporting by state and local <br />governments that extend and receive nonexchange financial guarantees. <br />This Statement requires a government that extends a nonexchange financial guarantee to <br />recognize a liability when qualitative factors and historical data, if any, indicate that it is more <br />likely than not that the government will be required to make a payment on the guarantee. The <br />amount of the liability to be recognized should be the discounted present value of the best <br />estimate of the future outflows related to the guarantee expected to be incurred. When there is <br />no best estimate but a range of the estimated future outflows can be established, the amount <br />of the liability to be recognized should be the discounted present value of the minimum <br />amount within the range. <br />The pronouncement became effective, but did not have a material effect on the financial <br />statements. <br />Unusual Transactions, Controversial or Emerging Areas <br />We noted no transactions entered into by the City during the year for which there is a lack of <br />authoritative guidance or consensus. All significant transactions have been recognized in the financial <br />statements in the proper period. <br />Estimates <br />Accounting estimates are an integral part of the financial statements prepared by management and are <br />based on management's knowledge and experience about past and current events and assumptions <br />about future events. Certain accounting estimates are particularly sensitive because of their <br />significance to the financial statements and because of the possibility that future events affecting them <br />may differ significantly from those expected. The most sensitive estimate(s) affecting the City's <br />financial statements were: <br />Estimated Fair Value of Investments: As of June 30, 2014, the City held approximately $81.5 <br />million of cash and investments as measured by fair value as disclosed in Note 2 to the <br />Financial Statements. Fair value is essentially market pricing in effect as of June 30, 2014. <br />These fair values are not required to be adjusted for changes in general market conditions <br />occurring subsequent to June 30, 2014. <br />Estimate of Depreciation: Management's estimate of the depreciation is based on useful <br />lives determined by management. These lives have been determined by management based <br />on the expected useful life of assets as disclosed in Note 1 to the financial statements. We <br />evaluated the key factors and assumptions used to develop the depreciation estimate and <br />determined that it is reasonable in relation to the basic financial statements taken as a whole. <br />12 <br />