VLAWMO Annual Financial Report 2002

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VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2002 Based on these criteria, there are no organizations considered to be component units of the Organization. B. FUND ACCOUNTING The accounting system of the Organization is organized and operated on the basis of funds and account groups. A fund is defined as a fiscal and accounting entity with a self -balancing set of accounts recording cash and other fmancial resources, together with all related liabilities and residual equities or balances, and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. The following types of funds and account groups are employed by the Organization: GOVERNMENTAL FUNDS: General Fund is the general operating fund of the Organization. It is used to account for fmancial resources to be used for general administrative expenses and for the construction and maintenance of projects of common benefit to the Organization. ACCOUNT GROUPS: The governmental fund types are designed to account for the financial flow of a particular fund; therefore, they generally include only current assets and current liabilities on their balance sheets. The Organization maintains one account group to account for noncurrent assets as follows: General Fixed Assets — This account group contains the fixed assets used in the governmental fund type operations. They are assets of the Organization as a whole and not of individual funds. C. BASIS OF ACCOUNTING The modified accrual basis of accounting is followed by the Organization for its governmental funds. Under this method of accounting, revenues are recognized when they become susceptible to accrual; that is, when they become both measurable and available to finance expenditures of the fiscal period. Also, under this method, expenditures are recognized in the accounting period when the liability is incurred, except for disbursements for inventory -type items and prepaid expenses which are considered expenditures at the time of purchase. 14