VLAWMO Annual Financial Report 2003

Home Search

VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2003 Component units are legally separate entities for which the Organization (primary government) is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading. The criteria used to determine if the primary government is financially accountable for a component unit include whether or not the primary government appoints the voting majority of the potential component unit's governing body, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit. 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 financial 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. 12