Gfwd Final Draft MSR

8 GRAVELLY FORD WATER DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For The Years Ended December 31, 2017 and 2016 (Continued) *** Note 1 - Summary of Significant Accounting Policies, (continued) <b>Net Assets</b> The business-type activities fund financial statements utilize a net assets presentation. Net assets are categorized as invested capital assets (net of related debt), restricted and unrestricted. Invested in Capital Assets - This category groups all capital assets, including infrastructure, into one component of net assets. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvements of these assets reduce the balance in this category. Unrestricted Net Assets - This category represents net assets of the District, not restricted for any project or other purpose. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures / expenses during the reporting period. Actual results could differ from those estimates. Income Taxes No income tax provision has been included in the financial statements as the District has qualified as tax-exempt with the Internal Revenue Service and the Franchise Tax Board. It is the opinion of management that all income earned has been related to the organization's tax exempt status and there has been no unrelated business income. Collection Losses The direct write-off method has been adopted for providing for uncollectible accounts. Postemployment Healthcare Benefits Gravelly Ford Water District does not provide postemployment healthcare benefits. 9 GRAVELLY FORD WATER DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For The Years Ended December 31, 2017 and 2016 (Continued) Note 2 - Cash Cash consists of the following: 2017 Checking Account/Money Market 2016 929,655 L.A.I.F. 732,570 57,352 Certificate of Deposit 56,860 215,173 Total 987,007 1,004,603 Custodial Credit Risk: Custodial credit risk for deposits is the risk that, in the event of the fallure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the District's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other that the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110 percent of the total amount deposited by the public agencies. California law also allows financial institutions to secure District deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits. At December 31, 2016, the District deposits (bank balances) were insured by the Federal Deposit Insurance Corporation up to $250,000 or collateralized as required under California Law. Gravelly Ford Water District has moneys on deposit with the Local Agency Investment Fund (L.A.I.F.), a special fund of the California State Treasury. The funds may be withdrawn upon one day notice. The Gravelly Ford Water District's investments in L.A.I.F., are stated at cost which approximates market. GASB 31 requires reporting of certain investments of governmental entities at fair value. Based on information provided by L.A.I.F., the fair value of the District's investments at December 31, 2017 is $57,352. Note 3 - Capital Assets Distribution System and Equipment activity for the years ended December 31, 2017 and 2016 are as follows: December 31, 2017 Balance Balance January 1 Additions Retirements December 31 Water Distribution System $ 1,307,061 Equipment and Improvements $ 24,783 $ 1,116,884 1,331,844 2,423,945 1,116,884 $ 24,783 $ 2,448,728 10 GRAVELLY FORD WATER DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS For The Years Ended December 31, 2017 and 2016 (Continued) Note 3 - Capital Assets (Continued) December 31, 2016 Balance January 1 Balance Additions Retirements December 31 Water Distribution System $ 1,307,061 Equipment and Improvements $ 1,116,884 1,307,061 2,423,945 1,116,884 $ $ $ 2,423,945 Depreciation charges to business-type activities on the Statement of Activities during the year is $49,486 in 2017 and $48,867 in 2016, respectively. Note 4 - Commitments and Contingencies Availability of Water The availability of water for crop irrigation could be adversely affected by any of several cases in litigation which concern releases from Friant Dam into the San Joaquin River. The financial impact of an unfavorable decision in any of these cases cannot be estimated. .vote 5 - Public Entity Risk Pools This District is exposed to various risks of loss related to torts: theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. To protect against these risks, the District participates in one joint venture under a joint powers agreement (JPA) with the Association of California Water Agencies, Joint Powers Insurance Authorities (ACWAJPIA). The relationship between the District and ACWAJPIA is such that ACWAJPIA is not a component unit of the District for financial reporting purposes.