VLAWMO Annual Financial Report 2006

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VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2006 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 are 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. In accordance with the provisions of GASB No. 31, the Organization reports investments at fair value in the financial statements. The Organization reports all investments income, including changes in fair value of investments, as revenue in the operating statements. 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, are reported in the governmental activities columns in the government -wide fmancial statements. Capital assets are defined by the government 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. As of December 31, 2006, the Organization does not own any capital assets as previously defined. H. LONG-TERM OBLIGATIONS r-; In the government -wide financial statements long-term debt is reported as a liability in the applicable governmental activities fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are immaterial and are expensed in the year of bond issuance. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other fmancing sources 18