Comprehensive Annual Financial Report June 30, 2011 - Western ...

WESTERN VIRGINIA WATER AUTHORITY
Notes to Financial Statements
as of June 30, 2011 and 2010 (Continued)
Note 1— Summary of Significant Accounting Policies: (Continued)
K. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
L. Net Assets
Net assets are the difference between assets and liabilities. Net assets invested in capital assets
represent capital assets, reduced by accumulated depreciation and by any outstanding debt related to
the acquisition, construction or improvement of those assets. The Authority applies restricted resources
first when an expense is incurred for purposes for which both restricted and unrestricted nets assets are
available.
M. Restricted Assets
Certain proceeds of the Authority’s revenue bonds are classified as restricted assets on the statement of
net assets, because they are maintained in separate bank accounts, and their use is limited by
applicable bond covenants. The bond proceeds account receives proceeds from Authority debt issuances
and hold the proceeds until project costs are incurred. These assets are held by a trustee financial
institution in separate accounts and consist of cash and cash equivalents. At year end, $4,587,330 in
bond proceeds was restricted for planned construction projects.
N. Long-Term Obligations
The Authority assumed existing revenue bond obligations of both Roanoke County and the City of
Roanoke upon the formation of the Authority. The obligations of the County and the City which could
not be assumed by the Authority are reported as locality compensation payments. These amounts are
paid to the locality in accordance with the locality’s existing debt service requirements.
Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the
bonds. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance
costs are reported as deferred charges and amortized over the term of the related debt.
O. Self Insurance
The Authority was self-insured for health insurance prior to the end of the fiscal year ending June 30,
2010. Prior to June 30, 2010, the Authority transitioned to a traditional health insurance plan. As of
June 30, 2011, the Authority’s liability under the self-insurance plan is $0.
P. Compensated Absences
The liability for compensated absences reported in the financial statements consists of unpaid
accumulated leave balances. The liability is based on the leave accumulated at June 30. Limited leave
may be accumulated until retirement or termination. Accumulated leave is paid at the employee’s
current wage upon retirement or termination.
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