2022 Annual Comprehensive Financial Report

CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2022

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Description of Funds: (Continued) Internal Service Funds: Equipment Fund – This Fund accounts for the City’s funds accumulated for the acquisition of larger pieces of equipment. Buildings Fund – This Fund accounts for the City’s funds accumulated for construction, improvement or major repairs of major public buildings. Park Assets Fund – This Fund accounts for the City’s funds accumulated for the replacement of park assets. Employee Benefits Fund – This Fund accounts for the City’s funds accumulated for compensated absences and OPEB. Information and Technology Fund – This Fund accounts for the City’s funds accumulated for information technology resources. Self Insurance Fund –This Fund is used to account for all revenues and expenses associated with premiums, deductibles and claims for general liability and workers compensation policy through LMCIT. The City’s internal service funds are allocated between governmental and business-type activities and are combined, as allocated in Note 2, with the respective governmental activities and business-type activities in the government-wide financial statements. Fiduciary Fund: Southwest Metro Drug Task Force Custodial Fund – This Fund accounts for the activity related to the task force held by the City in a strictly custodial capacity. Component Unit Funds: Electric Fund – This Fund accounts for the operations of the SPUC’s electric utility. Water Fund – This Fund accounts for the operations of the SPUC’s water utility. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments, where the amounts are reasonably equivalent in value to the interfund services provided and other charges between the City’s utility function and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

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