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CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2023 II. Reconciliation of Government-WideandFund Financial Statements (Continued) B. Explanation of Certain Differences Between the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the Government -Wide Statement of Activities (Continued) Another element of that reconciliation states that "the net effect of various miscellaneous transactions involving capital assets (i.e., sales and donations) is to increase net position." The details of this $150,034 difference are as follows: In the statement of activities, only the gain on the sale of assets is reported. However, in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net position differs from the change in fund balance by the cost of the capital assets sold. $ (39,929) Donations of capital assets increase net position in the statement of activities, but do not appear in the governmental fund because they are not financial resources. 189,963 Total Governmental Funds to Arrive at Changes in Net Position of Governmental Activities $ 150,034 III. Stewardshipv,Coip liance. and Accountabilif; Violations of Legal or Contractual Provisions Note I.F.2, on the Excess of Expenditures Over Appropriations, describes budgetary violations that occurred for the year ended September 30, 2023. IV. Detailed Notes. on„All Activities and Funds A. Cash and Cash Equivalents Custodial Credit Risk for deposits is the risk that in the event of a bank failure, the City's deposits may not be returned or the City will not be able to recover collateral securities in the possession of an outside party. The City's policy requires deposits to be secured by collateral valued at market or par, whichever is lower, less the amount of the Federal Deposit Insurance Corporation (FDIC) insurance. Collateral agreements must be approved prior to deposit of funds as provided by law. At September 30, 2023, the City maintained deposits at a bank with a carrying amount of $43,766,995, and the bank's balances were $43,878,779. As of September 30, 2023, $599,897 was insured by FDIC and $43,307,239 was collateralized with securities held by the pledging financial institution's agent in the name of the City. The City's certificate of deposit totaling $99,897 is considered a deposit for this footnote, but is classified as an investment on the face of the financial statements. 43