Southeastern Colorado Water Conservancy District 2000 Annual Report

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SOUTHEASTERN COLORADO WATER CONSERVANCY DISTRICT SELECTED NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES The Southeastern Colorado Water Conservancy District (the District) was created in 1958 under Colorado Statutes to manage water resources of the Arkansas River basin and to function as the legal agency for the administration of the Fryingpan- Arkansas Project and contracting agent with the federal government for repayment of reimbursable costs of the Project. The more significant of the District's accounting policies are described below. A. The Financial Reporting Entity - For financial reporting purposes, the District includes, if applicable, component units in its financial statements based upon financial accountability. No component units have been included in the financial 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 modified accrual basis of accounting wherein revenues are recognized when measurable and available, while expenditures are recognized when the liability is incurred. C. Budget and Budgetary Accounting - The budget adopted by the District, which is prepared in accordance with state statutes, uses the modified accrual basis of accounting. D. Investments - Investments represent U.S. Treasury securities and are reported at fair value or amortized cost. NOTE 2 - CONTRACT OBLIGATION The provision of the contract between the District and the U.S. government stipulates that the District is responsible for repayment of a portion of the costs of the Fryingpan- Arkansas Reclamation costs. The total estimated repayment obligation of the District is approximately $126 million, which includes certain operating and maintenance costs The repayment period is for 40 years with an extension of 10 years if necessary. The District has also contracted with the U.S. government to repay approximately $63 million of costs incurred by the U.S. government in the construction of the Fountain Valley conduit which is operated by the Fountain Valley Authority (the Authority). A related contract with the Authority provides that the Authority will pay an annual conveyance service charge to the District in an amount equal to the payment due to the U.S. government. Terms of the contract provide that the District is not responsible for payment in the event of default by the Authority. 16