C150232 financial docs

• Contract/PO #: C150232
• Contractor Name: Lower Arkansas Valley WCD
• Contract Type: Grant
• Loan Projects - Doc Type: Report

09/12/2006 TUE 16:06 FAX [phone] LAVWCD Fax ��� Peter Nichols . � 019/029
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LOWER ARKANSAS VALLEY WATER CONSERVANCY DISTRICT
NOTES TO FINAI�iCIAL STA7EMENTS
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES {CONTINUED)
Budqets and Budqetarv Accountinq
The District adheres to the following procedures in establishing budgeting data reflected in the financial
statements:
Public hearings are held to obtain taxpayer comment.
Prior to December 31, the budget is adopted by formal resolution.
Revisions that alter the totai expenditures of any fund generally must be approved by the Board
of Directors.
Appropristions lapse at year end and any open purchase items must be reappropriated in the
following year.
Expenditures may not legally exceed appropriations at the fund level.
Encumbrances
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the
expenditure of monies are recorded in order to reserve that portio� of the applicable appropriation, is no#
employed by the District because at the present time it is not considered necessary to assure effective
budgetary control or to facili#ate effective cash pEanning and control.
Cash and Cash Eauivalents
For purposes of the statement of cash flows, the District considers a8 highly liquid investments (including
restricted assets) with a maturity of six months or less when purchased to be cash equivalents.
Prepaid Water Leases
�: The right to use water from certain canal companies a�d reservoirs in the area is leased from the
stockholders of these entities for a period designated in the leases. The District in turn rents the right #o
the water to individuals or entities that wish to use the water for a fee. The lease is amortized into
� expense over the term of the lease, usualiy one year. The revenue from the use of the water is
ti ' recognized as eamed.
Water Sha�es
Water shares represent an investment in stocks that the District has purchased in canal and reservoir
companies in the area served by the District. The shares are recorded at cost. Based on the fact that the
water shares have a perpetual life and a decrease in value is remote, depreciation is not recognized.
Fund Balance
The fund balances have been reserved for that portion of fhe fund balance that is legally segregated or is
not subject to future appropriations. Designations of unreserved fund balances indicate managemenYs
intentian for future utilization of such funds and are subject to change by managernent.
Restricted Fund Balance
Eme�gency Reserves have been provided for as required by a�ticle X, Section 20 of the Constitution of
the State of Colorado. A portion of the fund balance has been restricted in compliance with this
requireinent.
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