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Cabarrus County, North Carolina Notes to the Financial Statements For the Year Ended June 30, 2011 13. The County Manager may reduce revenue projections consistent with prevailing economic conditions, and also reduce expenditures correspondingly. In instances where budget appropriations and estimated revenues have been revised during the year, budget data presented in the financial statements represent the final authorized amounts as of June 30, 2011. Expenditures may not legally exceed budgeted appropriations at the functional level for all annually budgeted funds, financial plans and multi -year funds. During the year, several supplementary appropriations were necessary. The net effect of the budget amendments from the adopted budget to the final amended budget was immaterial. The budget ordinance must be adopted by July 1 of the fiscal year or the governing board must adopt an interim budget that covers the time until the annual ordinance can be adopted. As required by General Statute (G.S.) 159- 26(d), the County maintains encumbrance accounts, which are considered to be "budgetary accounts ". Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrances are recognized during the year; however, all encumbrances are canceled at year -end and, therefore, do not constitute expenditures or liabilities of the current year. Encumbrances canceled at year -end may be re- appropriated in the subsequent year. E. Assets, Liabilities and Fund Equity 1. Deposits and Investments All deposits of the County and its component units are made in board designated official depositories and are secured as required by G.S. 159 -31. The County and its component units may designate, as an official depository, any bank or savings association whose principal office is located in North Carolina. Also, the County and its component unit may establish time deposit accounts such as NOW and SuperNOW accounts, money market accounts, and certificates of deposit. State law (G.S. 159- 30(c)) authorizes the County and its component units to invest in obligations of the United States or obligations fully guaranteed both as to principal and interest by the United States; obligations of the State of North Carolina; bonds and notes of any North Carolina local government or public authority; obligations of certain non - guaranteed federal agencies; certain high quality issues of commercial paper and bankers' acceptances and the North Carolina Capital Management Trust ( NCCMT). Investments for the County and its component units with a maturity of more than one year at acquisition and non -money market investments are carried at fair value as determined by quoted market prices. The securities of the NCCMT Cash Portfolio, a SEC - registered (2a -7) money market mutual fund, are valued at fair value, which is the NCCMT'S share price. The NCCMT Term Portfolio's securities are valued at fair value. Money market investments that have a remaining maturity at the time of purchase of one year or less are reported at amortized cost. Non - participating interest earning investment contracts are reported at cost. 2. Cash and Cash Equivalent A centralized cash account is maintained and may be used by all funds except the Public School Building Fund. Interest is allocated quarterly to the owning funds based on the average cash balances outstanding during the quarter. Public School Building Fund cash is held by the Department of State Treasurer, State of North Carolina in a separate account upon which manual checks may be issued and /or draw down of funds made. The County and the Alliance pool monies from several funds to facilitate disbursement and investment and to maximize investment income. Therefore all cash and investments are essentially demand deposits and are considered cash and cash equivalents. 3. Restricted Assets The unexpended amounts of Certificates of Participation, Bonds, Installment Financings, Cabarrus Arena Marketing funds, and Medicaid Hold Harmless funds are classified as restricted cash and cash equivalents on the Statement of Net Assets and the Governmental Balance Sheet. The amounts are considered restricted because their use is expressly prohibited except for the original purpose of which the funds were received. 43 Attachment number 1 1 -3 Page 165