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CITY OF MYRTLE BEACH, SOUTH CAROLINA NOTES TO FINANCIAL STATEMENTS June 30, 2010

Note 3 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

A. Excess of Expenditures Over Appropriations

The legal level of budget control is at the fund level. Thus, expenditures may not legally exceed appropriations, including supplemental appropriations, for an individual fund. For the year ended June 30, 2010, expenditures did not exceed appropriations for any of the City’s individual funds.

B. Deficit Fund Equity

The individual funds that have fund equity deficits at June 30, 2010 were as follows:

Convention Center Fund Nonmajor Governmental Fund:

$

808,736

Public Facilities Corporation Fund Internal Service Fund:

704,472

Health Insurance Fund

3,314,623

Note 4 - CASH AND TEMPORARY INVESTMENTS

State statutes authorize the City to invest in obligations of the United States and agencies thereof, general obligations of the State of South Carolina or any of its political units, savings and loan associations to the extent that the same are insured by an agency of the Federal government, certificates of deposit where the certificates are collaterally secured by securities of the type described above, or deposit accounts with banking institutions. The statutes provide that all authorized investments shall have maturities consistent with the time or times when the invested monies will be needed in cash. Statutes also allow the State Treasurer to assist local governments in investing funds. The City is under no contractual agreements that restrict investment alternatives.

A. Deposits

At year end, the carrying amount of the City's deposits in financial institutions was $26,009,680 and the financial institutions' balances totaled $26,038,457, including certificates of deposit. Of that balance, $2,016,258 was covered by federal depository insurance and $24,022,199 was collateralized with securities held by the pledging financial institutions' trust department in the City's name. At year-end, the City had $9,561 in cash on hand.

Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. The City’s deposit policy for custodial credit risk requires all deposits in excess of federal depository insurance to be collateralized with securities held by the pledging financial institution’s trust department in the City’s name.

At year end, the MBDRC’s carrying amount of deposits in financial institutions was $951,746 and the financial institutionsbalances totaled $666,820. Of that balance, $250,000 was covered by federal depository insurance and $416,820 was collateralized with securities held by the pledging financial institutions' trust department in the MBDRC's name. At year-end, cash on hand totaled $2,543.

The MBDRC’s deposit policy for custodial credit risk requires all deposits in excess of federal depository insurance to be collateralized with securities held by the pledging financial institution’s trust department in the MBDRC’s name.

At year-end, the MBCCHC’s carrying amount of deposits in financial institutions was $412,978 and the financial institutions’ balances totaled $261,930. Of that balance, $250,000 was covered by federal depository insurance and $11,930 was uninsured and uncollateralized. At year-end, cash on hand totaled $40,000.

The MBCCHC does not have a deposit policy for custodial credit risk.

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