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SOUTHEASTERN COLORADO WATER CONSERVANCY DISTRICT <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2005 <br />NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.) <br />The government-wide focus is more on the sustainability of the District as an entity and the change in <br />aggregate financial position resulting from the activities of the fiscal period. The focus of the fund financial <br />statements is on the major individual funds of the governmental and business-type categories. Each <br />presentation provides valuable information that can be analyzed and compared to enhance the usefulness of <br />the information. <br />C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT <br />PRESENTATION <br />The government-wide financial statements are reported using the economic resources measurement focus and <br />the accrual basis of accounting, as are the fund financial statements for the proprietary fund. Revenues are <br />recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the <br />related cash flows. Property taxes are recognized as revenues in the year for which they are levied, while <br />grants and similar items are recognized as revenue when all eligibility requirements are met. <br />Govermnental fund financial statements are reported using the current financial resources measurement focus <br />and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and <br />available. Revenues are considered to be available when they are collected within the current period or soon <br />enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenue to be <br />available if collected within 60 days of the end of the fiscal year. Expenditures generally are recorded when a <br />liability is incurred as is the case with accrual accounting. However, debt service expenditures, as well as <br />expenditures related to compensated absences and claims and judgments, are recorded only when the liability <br />has matured and payment is due. General capital asset acquisitions are reported as expenditures in <br />governmental funds, while proceeds of long-term debt and acquisitions under capital leases are reported as <br />other financing sources. <br />Property taxes, specific ownership taxes, interest and charges for services are considered revenues susceptible <br />to accrual. Contributions and miscellaneous revenue are recorded as revenues when received in cash because <br />they are not generally measurable until received in cash. <br />Business-type activities and the proprietary fund are accounted for using the flow of economic resources <br />measurement focus. With this measurement focus, all assets and liabilities associated with the operation of the <br />fund is included on the balance sheet. The proprietary fund-type operating statement presents increases <br />(revenues) and decreases (expenses) in net total assets. The proprietary fund distinguishes operating revenues <br />and expenses from nonoperating items. Operating revenues and expenses generally result from providing <br />services and producing and delivering goods in connection with the proprietary funds' principal ongoing <br />operation. The principal operating revenues of the District's water activity enterprise is charges to customers <br />for sales and services. Operating expenses for the enterprise fiend includes the cost of sales and services, along <br />with administrative expenses. All revenues and expenses not meeting this definition are reported as <br />nonoperating revenues and expenses. <br />-18- <br />