Setting aside funds in reserves is a key management tool to financially plan for current and future needs while promoting long-term financial stability. Cities use reserve funds to carry forward specifically designated funds to finance particular expenditures in a future fiscal year, to have sufficient funds available for major capital projects, to provide for contingency funds to offset future tax rate increases, or to have funds available to address major disaster and emergency response costs that may be incurred in the future. The prudent administration of reserves represents an important component of sound financial management and is essential in demonstrating effective stewardship of public funds.
Click on the pdf icon below for the full report
http://www.ward11calgary.ca/news/2010/reserves-compliance-audit-2010.pdf