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CITY OF ORONO. MINNESOTA <br />Notes to Financial Statements (continued) <br />December 31. 1995 <br />NOTE 1 - SIGNinCANT ACCOUNTING POLICIES (CONTINUED) <br />J. Liability for Compensated Absences <br />Vacation and sick leave expected to be liquidated with expendable available financial resources is reported <br />as an expenditure and a fund liability of the governmental fund type that will pay it. The remaining portion <br />of such obligations is recorded in the General Long-Term Debt Account Group. The unused vacation of <br />the Proprietary Funds is included in accrued liabilities of the respective fund. <br />K. Bond Discounts/Issuance Costs <br />In the governmental fund t>pes, bond discounts and issuance costs are recognized in the current period. <br />Bond discounts and Issuance costs in the Enterprise Funds are deferred and amortized over the term of the <br />bonds using the bonds outstanding method which approximates the effective interest rate method. <br />L. Budgets and Budgetary Accounting <br />Each Fall, after holding a meeting to obtain public comments, the City Council legally adopts the General <br />Fund and all of the Special Revenue Funds' budget for the following fiscal year beginning January 1. <br />These budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP). <br />The City has established budgetary control at the department level. City management must request Council <br />approval before exceeding the budget at that level. City management may transfer appropriations within <br />the department level without Council approval. Appropriations lapse at year-end; however, the Council <br />may approve the carryover of specific amounts. <br />Budget amounts are presented on a modified accrual basis of accounting and include several amendments <br />adopted by the City Council during the year. Encumbrance accounting is not used. <br />During the year, the City made significant budget amendments to the General Fund appropriations and the <br />Special Revenue Funds' revenue and appropriations as reflected in the following table: <br />-33- <br />n