Laserfiche WebLink
VADNAIS LAKE AREA WATER <br />MANAGEMENT ORGANIZATION <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2003 <br />C. BASIS OF ACCOUNTING <br />The modified accrual basis of accounting is followed by the Organization for its governmental funds. <br />Under this method of accounting, revenues are recognized when they become susceptible to accrual; <br />that is, when they become both measurable and available to finance expenditures of the fiscal period. <br />Also, under this method, expenditures are recognized in the accounting period when the liability is <br />incurred, except for disbursements for inventory -type items and prepaid expenses which are <br />considered expenditures at the time of purchase. <br />Major revenue sources susceptible to accrual include intergovernmental revenues, charges for services <br />and investment income. No interest has been accrued on investments since the amount is deemed by <br />management to be immaterial. <br />Miscellaneous revenue sources not susceptible to accrual are recorded as revenue when received <br />because they are not measurable until collected. <br />D. BUDGETS AND BUDGETARY ACCOUNTING <br />The Board of Commissioners adopts a budget for the general government operations of the <br />Organization on an annual basis. During the budget year, supplemental appropriations and deletions <br />are or may be authorized by the Board. The amounts shown in the financial statements as "Budgeted" <br />represent the original budgeted amounts plus all revisions made during the year and/or for the year. <br />The modified accrual basis of accounting is used by the Organization for budgeting data. All <br />appropriations end with the fiscal year for which they were made. <br />The Organization monitors budget performance and all amounts over budget have been approved by <br />the Board through the disbursement approval process. <br />The Organization prepares a revenue and expenditure budget for its General Fund. Encumbrance <br />accounting, under which purchase orders, contracts, and other commitments of monies are recorded in <br />order to reserve that portion of the applicable appropriation, is not employed by the Organization. <br />E. INVENTORIES <br />The original cost of materials and supplies has been recorded as expenditures at the time of purchase. <br />The Organization does not maintain significant amounts of inventories of materials and supplies. <br />13 <br />