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CENTRAL COLORADO WATER CONSERVANCY DISTRICT Greelev. Colorado Notes to Financial Statements December 31, 2002 Note 1 - SUIT\Ii\arv of Sianificant Ac:countina Policies On September 15, 1965, pursuant to the applicable provisions of the "Water Conservancy Act" of the State of Colorado, the District Court in and for Weld County, Colorado, approved the creation and establishment of a v~ater conservancy district to be known as "Central Colorado Water Conservancy District," herein referred to as the District. The principal purpose of the District is to provide for the conservation of the water resources of the State of Colorado for the greatest beneficial use of water within this state and the territory within the District. This summary of the Central Colorado Water Conservancy District I s significant accounting policies is to assist the reader int~rpr~ting the financial statements and other data in this report. The policies are considered essential and should be read in conjunction with the accompanying financial statements. Reoortina Entitv The District is an autonomous quasi-municipal entity governed by a Board of Directors appointed by the District Court of each County. As required by generally accepted accounting principles, th~se financial statements present operations of the Central Colorado Water Conservancy District (the primary government) and its component units, if any. Financial accountability on the part of the District over other organizations would result in the organization or governmental unit being reported as part of the District's financial statements. The District does not exercise financial control over nor is it accountable to another entity. The related organi zation discussed below was considered in determining the District's reporting entity because of the significance of its operational relationship. Related Oraanizations The Ground Water Management Subdistrict of Central Colorado Water Conservancy District is an autonomous quasi-municipal entity governed by a Board of Directors appointed by the District Court of each County. In addition to providing for the conservation of the water resources, the Subdistrict is responsible for a plan of augmentation to replace the depletion of surface water by underground water users. Because shared facilities and personnel are administrative in nature and there is no financial interdependency, control or oversight responsibility, the Subdistrict is treated as a related organization rather than a component unit. Basis of Presentation The accounts of the District are organized on the basis of funds and account group, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds and account groups are presented in the financial statements as follows: GOVERNMENTAL FUNDS: All governmental funds are accounted for on a spending or "financial flow" measurement focus. Under this concept, only current assets and current liabilities are generally reported on their respective balance sheets. Their reported fund balance (net current assets) is considered a measure of "available spendable resources." Governmental fund operating statements report increases (revenue and other financing sources) and decreases (expenditures and other financing uses) in net current assets and, accordingly, present a summary of sou~ces and uses of "available spendable resources" during the period. 8