VLAWMO Annual Financial Report 2004

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VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2004 r-. The Organization monitors budget performance and all amounts over budget have been approved by the Board through the disbursement approval process. '' The Organization prepares a revenue and expenditure budget for its General Fund. Encumbrance accounting, under which purchase orders, contracts, and other commitments of monies are recorded in order to reserve that portion of the applicable appropriation, is not employed by the Organization. E. CASH AND INVESTMENTS Cash and investment balances from all funds are pooled and invested to the extent available in authorized investments. Investment income is allocated to individual funds on the basis of the fund's equity in the cash and investment pool. Investments are stated at fair value, based upon quoted market prices. Investment income is accrued at the balance sheet date. F. INVENTORIES The original cost of materials and supplies has been recorded as expenditures at the time of purchase. The Organization does not maintain significant amounts of inventories of materials and supplies. G. CAPITAL ASSETS Capital assets, which include property, plant, equipment and infrastructure assets (e.g., storm water, man holes, control structures, and similar items), are reported in the governmental activities columns in the goverment -wide financial statements. Capital assets are defined by the goverment as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. GASB Statement No. 34 requires the Organization to report and depreciate new infrastructure assets effective with the beginning of the current year. Infrastructure assets include lake improvements, dams and drainage systems. Neither their historical cost nor related depreciation has historically been reported in the fmancial statements. For governmental entities with total annual revenues of less than $10 million for the fiscal year ended December 31, 1999 the retroactive reporting of infrastructure is not required under the provisions of GASB Statement No. 34. The Organization has elected to implement the general provisions of GASB Statement No. 34 in the current year and has elected not to report infrastructure assets acquired in years prior to 2004.