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<br />, <br /> <br />11-11 <br /> <br />TOWN OF HOTCHKISS <br />Delta County, Colorado <br /> <br />'----" <br />, <br /> <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 1974 <br /> <br />Note 1 - Summary of Significant Accounting Policies: <br />The accounting policies of the Town of Hotchkiss conform to <br />generally accepted accounting principles as applicable to govern- <br />mental units. The following is a summary of the significant policies: <br /> <br />Basis of Accounting <br />General Fund - Modified-Accrual basis <br />Water Fund - Accrual basis on enterprise fund concept <br />Mosquito Control Fund - Modified-Accrual basis <br />Trust and Agency, Policemen Pension Fund - Accrual basis <br />Federal Revenue Sharing - Accrual basis <br /> <br />.' <br /> <br />Investments - Investments are stated at cost. <br /> <br />,~ <br /> <br />Fixed Assets - General Fixed Assets stated at cost, or appraised value <br />where cost not determinable with no provision for depreciation. Fixed <br />assets of the Water Fund (Enterprise Fund) are stated at cost, or <br />appraised value where cost not determinable, with depreciation being <br />currently provided on a straight-line method over the estimated useful <br />lives of the assets. See Note 2. <br /> <br />. <br /> <br />Note 2 - Changes in Accounting Principles: <br />In compliance with a recent industry audit guide issued by the <br />American Institute of Certified Public Accountants on "Audits of State <br />and Local Governmental Units", the following change in accounting prin- <br />ciples has been made effective for the year beginning January 1, 1974. <br /> <br />Depreciation - Prior years were presented on a "General Fundlt concept <br />with the recognition of general fixed assets and no provision for de- <br />preciation on these assets. Conversion to the "Enterprise Fund" con- <br />cept, as required under the above referred to industry audit guide, <br />result in the item of depreciation being recognized as an expense in <br />arriving at the Town's net income for the year ended December 31, 1974. <br />The cumulative effect of this change on prior years, results in an <br />adjustment to retained earnings of $70,276. <br /> <br />Note 3 - Expenditures in Excess of Budget Appropriation: <br />As actual expenditures of the Federal Revenue Sharing Fund and the <br />. Mosquito Control Fund exceed budget appropriations, it appears that the <br />Town may be in violation of the Local Government Budget Law. <br /> <br />'- <br /> <br />< <br />