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VADNAIS LAKE AREA WATER <br />MANAGEMENT ORGANIZATION <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2003 <br />F. "MEMORANDUM ONLY" PRESENTATIONS <br />Total columns on the General Purpose Financial Statements are captioned "Memorandum Only" to <br />indicate that they are presented only to facilitate financial analysis. Data in these columns do not <br />present financial position or results of operations in conformity with generally accepted accounting <br />principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been <br />made in the aggregation of this data. <br />G. USE OF ESTIMATES <br />The preparation of financial statements in accordance with generally accepted accounting principles <br />(GAAP) requires management to make estimates that affect amounts reported in the financial <br />statements during the reporting period. Actual results could differ from such estimates. <br />H. COMPENSATED ABSENCES <br />Vested or accumulated vacation leave and other benefit amounts that are expected to be liquidated <br />with expendable available financial resources are reported as an expenditure and a fund liability of the <br />governmental fund that will pay it. No expenditure is reported for these amounts. At December 31, <br />2003, the amount of accumulated vacation leave was immaterial to the financial statements and is not <br />reported. <br />I. FIXED ASSETS <br />General fixed assets are recorded as expenditures of the Governmental Funds at the time of purchase. <br />Such assets are capitalized at historical cost or estimated historical cost in the General Fixed Asset <br />Account Group. Public Domain ("infrastructure") general fixed assets consisting of roads, bridges, <br />curbs, gutters, streets, sidewalks, and drainage systems are excluded from general fixed assets as these <br />assets are immovable and of value only to the Organization. No depreciation has been provided on <br />general fixed assets. <br />Note 2 DEPOSITS AND INVESTMENTS <br />A. DEPOSITS <br />In accordance with Minnesota Statutes, the Organization maintains deposits at those depository <br />institutions authorized by the Board of Commissioners. <br />Minnesota Statutes require that all Organization deposits be protected by insurance, surety bond or <br />collateral. The market value of collateral pledged must equal 110% of the deposits not covered by <br />insurance or bonds (140% in the case of mortgage notes pledged). <br />14 <br />