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Cabarrus County, North Carolina
<br />Notes to the Financial Statements
<br />For the Year Ended June 30, 2010
<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 - collateralization, 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, 2010, the carrying amount of the County's bank deposits (including fiduciary funds) was
<br />$36,877,867 and the bank balance was $29,175,883. There was $56,771,676 in an escrow account with a
<br />financial institution. Sufficient collateral was maintained at June 30, 2010 to secure the County's deposits. Of
<br />the bank balance, $820,875 was covered by federal depository insurance; the balance was covered by collateral
<br />held by authorized escrow agents in the name of the County. At June 30, 2010, the County had $6,940 of cash
<br />on hand.
<br />At June 30, 2010, the carrying amount of the Alliance's bank deposits was $658,355 and the bank balance was
<br />$748,894. Of the bank balance, $250,000 was covered by federal depository insurance or by collateral held by
<br />the Alliance's agent in the Alliance's name. At June 30, 2010, the Alliance had $2,100 of cash on hand.
<br />B. Investments
<br />As of June 30, 2010 the County had the following investments and maturities
<br />Investment Type Fair Value
<br />6 Months 6 -12 Months
<br />Commercial Paper $ 28,928,040 $ 23,951,783 $ 4,976,257
<br />NC Capital Management Trust -
<br />Cash Portfolio 28,965,710 - -
<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. The
<br />County's investments in the NC Capital Management Trust Cash Portfolio carried a credit rating of AAAm by
<br />Standard & Poor's as of June 30, 2010.
<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 />the possession of an outside party. The County's formal policy indicates that the County shall utilize a third
<br />party custodial agent for book entry transactions, all of which shall be a trust department authorized to do trust
<br />work in North Carolina who has an account with the Federal Reserve. Certificated securities shall be in the
<br />custody of the designated investment officer.
<br />Concentration of Credit Risk. With the exception of U.S. Treasury securities and agencies and authorized
<br />pools, Cabarrus County's investment policy does not allow for an investment in any one issuer in excess of 35%
<br />of the County's total investments.
<br />At June 30, 2010, the Cabarrus Health Alliance investments consisted of $3,682,296 in the North Carolina
<br />Capital Management Trust's Cash Portfolio, which carried a credit rating of AAAm by Standard and Poor's. The Ij
<br />Alliance has no policy on credit risk or custodial credit risk.
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