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CITY OF MONTE VISTA, COLORADO <br /> NOTES TO THE BASIC FINANCIAL STATEMENTS <br /> December 31, 2011 <br /> i <br /> NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <br /> The accounting and reporting policies of the City reflected in the accompanying financial statements conform to <br /> accounting principles generally accepted in the United States of America applicable to state and local governments. <br /> Accounting principles generally accepted in the United States of America for local governments are those <br /> promulgated by the Governmental Accounting Standards Board(GASB)in Governmental Accounting and <br /> Financial Reporting Standards. <br /> REPORTING ENTITY <br /> Primary Government <br /> The City of Monte Vista was incorporated July 19, 1886. On March 22, 1922,the City was reorganized as a Home <br /> Rule City under Article 20 of the Colorado Constitution. The current City Charter was adopted at a special election <br /> held December 20, 1921. The City operates under a Council-Manager form of government and provides the <br /> following services as authorized by its charter:public safety, highways and streets, sanitation, culture-recreation, <br /> public improvements,planning and zoning, and general administrative services. <br /> Component Units <br /> The City's combined financial statements include the accounts of all City operations. The criteria for including <br /> organizations as component units within the City's reporting entity, as set forth in Section 2100 of GASB's <br /> Codification of Governmental Accounting and Financial Reporting Standards, include whether. <br /> • The organization is legally separate (can sue and be sued in their own name) <br /> • The City holds the corporate powers of the organization <br /> • The City appoints a voting majority of the organization's board <br /> • The City is able to impose its will on the organization <br /> • The organization has the potential to impose a financial benefit/burden on the City <br /> • There is fiscal dependency by the organization on the City <br /> • The organization is financially accountable to the City <br /> • The organization receives or holds funds that are for the benefit of the City; and the City has access to a <br /> majority of the funds held; and the funds that are accessible are also significant to the City. <br /> The City of Monte Vista administers the Monte Vista Urban Renewal Authority. The Authority is blended into the <br /> City's financial statements as a Special Revenue Fund. <br /> GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS <br /> The Government-wide financial statements include the statement of net assets and the statement of activities. <br /> Government-wide statements report information on all of the activities of the City and its component units, except <br /> for City fiduciary activity. The effect of interfund transfers has been removed from the government-wide <br /> statements but continues to be reflected on the fund statements. Mainly taxes and intergovernmental revenues <br /> support governmental activities. <br /> The statement of activities reflects the degree to which the direct expenses of a given function are offset by program <br /> revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues <br /> include: <br /> • Charges to customers or applicants who purchase,use, or directly benefit from goods, services, or <br /> privileges provided by a given function or segment and <br /> I 25 <br />