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I <br /> MORGAN COUNTY Q UALITY WATER DISTRICT I <br /> Notes to Financial Statements <br /> I <br /> Note A- Summary of significant accounting policies <br /> I <br /> This summary of the Morgan County Quality Water District's significant accounting policies <br /> is presented to assist the reader in interpreting the financial statements and other data in <br /> this report. The policies are considered essential and should be read in conjunction with <br /> the accompanying financial statements. <br /> The financial statements of the District have been prepared in conformity with accounting <br /> principles generally accepted in the United States of America as applied to local <br /> governmental units. The Governmental Accounting Standards Board (GASB) is the <br /> accepted standard-setting body for establishing governmental accounting and financial I <br /> principles. <br /> Private sector standards of accounting and financial reporting issued prior to December 1, I <br /> 1989, generally are followed in the financial statements to the extent they do not conflict or <br /> contradict guidance of the GASB. Governments also have the option of following <br /> subsequent private sector guidance for their financial statements. The District has elected <br /> to not follow subsequent private sector guidance. , <br /> The more significant of the District's accounting policies are described below. <br /> A.1 -Reporting entity I <br /> The financial reporting entity consists of (1) the primary government, (2) organizations for <br /> which the primary government is financially accountable, and (3) other organizations for <br /> which the nature and significance of their relationship with the primary government are <br /> such that exclusion would cause the reporting entity's financial statements to be <br /> misleading or incomplete. The reporting entity's financial statements should present the <br /> funds of the primary government (including its blended component units, which are, in <br /> substance, part of the primary government) and provide an overview of the discretely <br /> presented component units. <br /> The Morgan County Quality Water District has examined other entities that could be <br /> included as defined in numbers 2 and 3 above. Based on these criteria, the District has no <br /> component units. <br /> I <br /> A.2-Basis of presentation <br /> The basic financial statements are prepared using the economic resources measurement I <br /> focus and the accrual basis of accounting. With this measurement focus, all assets and <br /> all liabilities associated with the operations are included on the statement of net assets. <br /> The statement of revenues, expenses and changes in fund net assets presents increases <br /> (revenues) and decreases (expenses) in net total assets. The statement of cash flows <br /> provides information about how the District finances and meets its cash flow needs. <br /> I <br /> -14- <br /> I <br />