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SECWCD ' c' i,T . . ~. i' . . . .. - '., . ,- ..' ....:; . ~~ i~~ - SOUTHEASTERN COLORADO WATER CONSERVANCY DISTRICT SELECTED NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2002 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES The Southeastern Colorado \Vater Conservancy District ;the District) was created in 1958 under Colorado Statutes to manage water resources or t;,e Arkansas River basin and to function as the legal agency for the administration OT the Frvingpan-Arkansas Project and contracting agent with the federal government for repavrnent of reimbursable costs or the Pro;ect. The more significant of the District's accounting policies are described be 10\.\. :\. The Financial Reporting Entitv - For financial reporting purposes, the District includes, if applicable, component units in its financial statements based upon financial accountability. No component units ha\ e been included in 6e financicl statements since no entity meets the criteria for inclusion. B. Fund Accounting Basis of Accounting - The accounts of the District are organized on the basis of funds and account groups. each of which is considered a separate accounting entity. The general fund utilizes the modiiied accrual basis oi accounting wherein revenues are recognized when measurable and a\Oailaole. \\nile expenditures are recognized when the liability is incurred. C. Budget and Budgetarv Accounting - The budget adopted by the District which is prepared in accordance \\ ith state statutes. uses the current rinancial resources measurement focus and the modified accrual basis of accounting. D. Imestments - Imest:nents represent U.S. Treasury and agency securities and are reported at fair value or ap.lortizec cost. NOTE 2 - CONTRACT OBLIGATION The contract between the Dishct and the L'.S. government stipulates that the District is responsible for repannent of a portion or the costs of the Fryingpan-Arkansas reclamation costs. The total estimated repayment obligation of the District is approxirnateiv S 126 million, which includes certain operating and maintenance costs. The repa\ment period is for 40 years \\ith an extension of 1 0 years if necessary. The District has also contracted with the L.5. government to repay approximately 563 million of costs incurred by the L.S. gO\enment in the construction of the Fountain Valley Conduit, which is operated by the Fountain Vallev .'\uthoritv ;the Authority!. A related contract with the Authority provides that the Authority will pay an annu2.1 com e\'ance sef\'ice charge to the District in an amount equai to the payment due to the US gO\ernment. Terms of the contract provide that the District is not responsible for payment in the event of default by tne o-\utnorit\. . 19 .