|
Cabarrus County, North Carolina
<br />Notes to the Financial Statements
<br />For the Year Ended June 30, 2012
<br />Treasurer's agent in the name of the State Treasurer. Since the State Treasurer is acting in a fiduciary capacity
<br />for the County and its component units, these deposits are considered to be held by their agents in the entities
<br />name. The amount of pledged collateral is based on an approved averaging method for non - interest bearing
<br />deposits and the actual current balance for interest bearing deposits. Depositories using the Pooling Method
<br />report to the State Treasurer the adequacy of their pooled collateral covering uninsured deposits. The State
<br />Treasurer does not confirm this information with the County, its component units or the escrow agent. Because
<br />of the inability to measure the exact amounts of collateral pledged for the County or its component units under
<br />the Pooling Method, the potential exists for under -col lateral ization, and this risk may increase in periods of high
<br />cash flows. However, the State Treasurer of North Carolina enforces strict standards of financial stability for
<br />each depository that collateralizes public deposits under the Pooling Method. Cabarrus County has no formal
<br />policy regarding custodial credit risk for deposits, but relies on the State Treasurer to enforce standards of
<br />minimum capitalization for all pooling method financial institutions and to monitor them for compliance. The
<br />County complies with the provisions of G.S. 159 -31 when designating official depositories and verifying that
<br />deposits are properly secured. The Cabarrus Health Alliance has no formal policy regarding custodial credit risk
<br />for deposits.
<br />At June 30, 2012 the carrying amount of the County's bank deposits (including fiduciary funds) was $29,117,492
<br />and the bank balance was $29,713,281. There was $20,408,502 in an escrow account with a financial
<br />institution. Sufficient collateral was maintained at June 30, 2012 to secure the County's deposits. Of the bank
<br />balance, $928,016 was covered by federal depository insurance; the balance was covered by collateral held by
<br />authorized escrow agents in the name of the County. At June 30, 2012, the County had $7,200 of cash on
<br />hand.
<br />At June 30, 2012, the carrying amount of the Alliance's bank deposits was $1,125,919 and the bank balance
<br />was $1,268,952. Of the bank balance, $250,000 was covered by federal depository insurance or by collateral
<br />held by the Alliance's agent in the Alliance's name. At June 30, 2012, the Alliance had $3,000 of cash on hand.
<br />B. Investments
<br />As of June 30, 2012 the County had the following investments and maturities
<br />Investment Type Fair Value
<br />Commercial Paper $ 32,883,511 $ 32,883,511 $ - $ -
<br />NC Capital Management Trust
<br />Cash Portfolio 20,994,771 - - -
<br />Term 5,003,916 - - -
<br />Regions Sweep 5,002,002 - - -
<br />$ 63,884,200 $ 32,883,511 $
<br />Interest Rate Risk. As a means of limiting its exposure to fair value losses arising from rising interest rates, the
<br />County's investment policy limits at least half of the County's investment portfolio to maturities of less than 12
<br />months. Also, the County's investment policy requires purchases of securities to be laddered with staggered
<br />maturity dates and limits all securities to a final maturity of no more than three years.
<br />Credit Risk. The County's investment policy limits investments to the provisions of G.S. 159 -30 and restricts the
<br />purchase of securities to the highest possible ratings whenever particular types of securities are rated. State
<br />law limits investments in commercial paper to the top rating issued by nationally recognized statistical rating
<br />organizations (NRSROs). As of June 30, 2012, The County's investment in commercial paper were rated A -1+
<br />by Standard & Poor's, F1+ by Fitch Ratings, and P -1 by Moody's Investors Service. The County's investments in
<br />the NC Capital Management Trust Cash Portfolio carried a credit rating of AAAm by Standard & Poor's as of
<br />June 30, 2012.
<br />Custodial Credit Risk. For an investment, custodial credit risk is the risk that in the event of the failure of the
<br />counterparty, the County will not be able to recover the value of its investments or collateral securities that are in
<br />6 Months 6 -12 Months 1 -3 Years
<br />50 Attachment number 1
<br />1 -3 Page 306
<br />
|