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000172 UPPER COLORADO RIVER COMMISSION Notes to Financial Statements - Continued June 30, 2001 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.) Property and Equipment Property and equipment is recorded as capital outlay in the general fund at time of purchase and capitalized at cost in the general fixed assets account group. Cost of maintenance, repairs and minor renewals are expensed as incurred. When assets are retired or otherwise disposed of, the related cost is removed from the accounts. No provision for depreciation is provided on assets in the general fixed assets account group. Compensated Absences According to Commission policy each employee accrues annual leave based on years of service with the commission. Employees may accumulate a maximum of 30 days of unused annual leave, which is paid in cash upon termination of employment. The Commission's secretary may grant additional carryover to employees provided that: (1) the employee requests the carryover in writing prior to June 30, and (2) the employee uses the additional carryover within 90 days of the start of the fiscal year. The Obligation for Compensated Absences has been broken down into two components; current and non-current. The current portion is classified as part of the general fund and is an estimate of the amounts that will be paid wi thin the nexc operating year. The non-current portion is classified as pare of the General Long-Term Debt Account Group because the obligation is not expected to be paid from spendable available resources within the next operating year. Total Column on the Combined Statements The total column on the combined statement is captioned "Memorandum Only" to indicate that it is presented only to facilitate financial analysis. The data in this column does noc present financial position in conformity with generally accepted accounting principles. Neithe~ is such daca comparable to a consolidation. Use of Estimates The preparation of financial statements in conformity Wlt:1 generally accepted accounting principles requires management eo make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and tte reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Risk Manaqement The commission is exposed to various risks of loss torts; theft of, damage to and destruction or assets; omissions; and natural disasters for which the carries commercial insurance. related to errors and government 7