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The accounting and reporting policies of Larimer County, Colorado (the County) conform to generally accepted accounting principles as applicable to governmental units. The following summary of significant accounting policies is presented to assist the reader in evaluating the County's financial statements.

The accounts of the County are organized on the basis of funds and account groups, 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 are grouped into eight generic fund types under three broad fund categories as follows:

Governmental Funds:

All governmental funds are accounted for using a current financial resources measurement focus which means that only current assets and current liabilities are generally included on their balance sheets. Their reported fund balances (net current assets) are considered a measure of available spendable resources. Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of available spendable resources during a period.

General Fund:

The General Fund is the general operating fund of the County which accounts for all financial resources that are not accounted for in other funds.

Special Revenue Funds:

Special revenue funds account for taxes or other earmarked revenues of the County which finance specified activities as required by law or administrative action.

Debt Service Funds:

Debt service funds account for the accumulation of resources for, and the payment of, general long-term debt principal and interest.

Capital Projects Funds:

Capital projects funds account for financial resources to be used for the acquisition, construction, or improvement of major capital facilities, equipment or capital improvements.

Proprietary Funds:

All proprietary funds are accounted for using a flow of economic resources measurement focus, which means that all assets and all liabilities (whether current or noncurrent) associated with their activity are included on their balance sheets. Their reported fund equity (net total assets) is segregated into contributed capital and retained earnings components. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net total assets. The government applies applicable FASB pronouncements issued on or before November 30, 1989, in accounting and reporting for its proprietary operations.

Enterprise Fund:

Enterprise funds account for operations that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (expenses including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes.

Internal Service Funds:

Internal service funds account for the financing of goods or services provided to other departments of the County on a cost-reimbursement basis.

Fiduciary Funds:

All fiduciary funds of the County are accounted for similar to governmental funds using a current financial resources measurement focus. Expendable trust funds are unique, however, in that fixed assets and long-term liabilities are included on their balance sheets.

Expendable Trust Funds:

Expendable trust funds account for the assets and financial transactions of entities for which the County is responsible in a trustee capacity, but whose assets are not available to the County for general operations.

Agency Funds:

Agency funds account for assets held by the County as an agent for individuals, private organizations, other governments, and/or other funds.

In addition to the funds, self-balancing account groups are established to account for the general fixed assets and the general long-term obligations of the County. The two account groups are not "funds". They are concerned only with the measurement of financial position and not the results of operations.

Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied.

Governmental and expendable trust funds utilize the modified accrual basis of accounting. Under this method revenues are recognized in the period in which they become measurable and available as net current assets. Revenues that are susceptible to accrual, that is, are measurable and available to finance the County's current operations, primarily consist of state shared revenues and charges for various routinely provided services. Grant revenues are recognized to the extent of eligible expenditures incurred. Expenditures are generally recognized when the related fund liability is incurred, except that principal and interest on general long-term debt are recognized when due.

Proprietary funds are accounted for using the accrual basis of accounting whereby revenues are recognized in the period in which they are earned and expenses are recognized when liabilities are incurred.

Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Agency fund assets and liabilities are accounted for on the modified accrual basis.

The accounting and reporting treatment applied to the fixed assets and long-term liabilities associated with a fund are determined by its measurement focus as previously discussed.

Fixed Assets:

Fixed assets, excluding software, with an original cost of $1,500 or more and a useful life of more than one year are inventoried. Weapons, Sheriff radios, highway equipment registered with the State, and personal computers are inventoried regardless of cost. All fixed assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated fixed assets are valued at their estimated fair market value on the date donated.

Fixed assets used in governmental fund type operations (general fixed assets) are accounted for in the General Fixed Assets Account Group, rather than in governmental funds. All County fixed assets (excluding grant-funded, proprietary and expendable trust fund fixed assets) are purchased through Replacement and Technology Projects or Capital Expenditures (capital projects funds). Public domain general fixed assets (infrastructure) consisting of certain improvements other than buildings such as roads, bridges, and rights-of-way are not capitalized. No depreciation is recorded on general fixed assets.

Fixed assets used by proprietary and expendable trust funds are capitalized in the appropriate fund. Depreciation is charged as an expense against proprietary fund operations and accumulated depreciation is reported on their balance sheets. Depreciation has been provided over the estimated useful lives of buildings, improvements, and equipment using the straight-line method.

Estimated useful lives range from 10-40 years for buildings and 3-10 years for improvements and equipment. Landfill property is depreciated using the units-of-production method, whereby depreciation is charged as property is consumed for landfill purposes. Depreciation is not recorded in the expendable trust fund.

Transfers of fixed assets between governmental funds are recorded at historical cost, while transfers between governmental and proprietary funds or among proprietary funds are recorded at estimated fair market value at the date of transfer.

Long-Term Liabilities:

Because of their spending measurement focus, expenditure recognition for governmental fund types only includes amounts represented by current liabilities. Long-term liabilities expected to be financed from governmental funds are accounted for in the General Long-Term Obligations Account Group, not in the governmental funds. Long-term liabilities expected to be financed from proprietary and expendable trust funds are accounted for in the appropriate fund.

The County follows these procedures in establishing the budgetary data reflected in the financial statements:

1. Prior to October 15, the Budget Office submits to the County Commissioners a proposed operating budget for the fiscal year commencing the following January 1 for all funds, except Sheriff Special Services (an expendable trust fund) and agency funds. The operating budget includes proposed expenditures/expenses and the means of financing them.

2. Public hearings are conducted to obtain comments.

3. Prior to December 31, the budget is legally adopted through passage of adoption and appropriation resolutions.

4. The level of control (level at which expenditures/expenses may not exceed appropriations) is maintained at three major object classifications: personnel, operating (which includes debt service payments and operating transfers out), and capital outlay. Control of each object classification is maintained at the division/department level in the General Fund, and at the fund level in all other funds. Formal budgetary integration is employed as a management control device during the year for all budgeted funds.

5. Department directors are authorized to transfer budgeted amounts within each of the three major object classifications. However, any revisions that alter the total expenditures/expenses of any of the object classifications must be approved by the County Commissioners.

6. All annual appropriations lapse at year end.

During 2000, one supplemental appropriation resolution was adopted by the County Commissioners. Appropriations reported in the accompanying financial statements are as amended.

The County follows the policy of adopting annual budgets for all funds except fiduciary funds. Annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP), except certain proprietary fund budgets. Budgets for the Self-Insured Dental, Unemployment, Risk Management, and Reserve internal service funds are adopted on a GAAP-basis. All other proprietary fund budgets are adopted on a non-GAAP modified accrual basis as follows: (a) revenues and expenses are recorded as current year activity only if receipt or payment of cash occurs within 30 days after year end (subsequent receipts or disbursements are budgeted for in the following fiscal year); (b) purchases of fixed assets and principal payments of long-term liabilities are treated as expenses; (c) depreciation expense is not budgeted; and (d) inventory purchases are budgeted utilizing the purchase method.

The Larimer County Treasurer maintains a cash and investment pool that is available for use by all County funds except the expendable trust fund and certain agency funds. Each funds' portion of this pool is displayed on the Combined Balance Sheet as "Equity in Treasurer's Pool". Accrued interest receivable is displayed separately. The amount of interest gained through secured investments is credited to the County's General Fund per Colorado State Statutes, with the exception of the Workers Compensation Insurance Trust in the Self-Insured Reserve Fund. 'Equity in Treasurer's Pool' for the General Fund and Self-Insured Reserve Fund is stated at fair value. Any bank accounts not maintained by the Treasurer are displayed as "Restricted Assets" within the appropriate fund and are stated at cost. For purposes of the statement of cash flows, proprietary funds consider the total Equity in Treasurer's Pool as cash because they have the general characteristics of demand deposit accounts; proprietary funds may deposit additional cash at any time and also effectively may withdraw at any time without prior notice or penalty.

Property taxes are levied in December and attach as an enforceable lien on property as of January 1 of the following year. Taxes are payable either in two installments due on February 28 and June 15 or in full on April 30. The County, through the Larimer County Treasurer, bills and collects its own property taxes as well as property taxes of all other taxing authorities within the County. Taxes levied on December 18, 2000 are recorded in governmental funds as taxes receivable and deferred revenue as of December 31, 2000 since the amount is measurable but not available until 2001. An allowance for uncollectible taxes is not provided as the uncollectible amounts were determined to be negligible based upon an analysis of historical trends.

Colorado State Statutes limit the annual increase in ad valorem tax yield over the previous year and prohibit any increase in the mill levy, except upon the favorable approval of the electorate. For the 2000 budget year, the County did not exceed the restrictions. At an election held on November 7, 2000, County voters approved a measure exempting the County from the annual increase limitation.

Special assessments and other long-term receivables are recognized as revenue when they become measurable and available as a net current asset, while the long-term portion is reflected as deferred revenue. Both the principal and interest on special assessments are received in installments over a term of years that generally matches the estimated payments for the bond issue which financed the project. There was no delinquent special assessment principal or interest at December 31, 2000. There were no unbilled charges for County services at year end.

Inventories are valued at cost which is determined using the first-in, first-out method. Inventories in most governmental funds, consisting of expendable supplies held for consumption, are recorded on the purchase method whereby an expenditure is recorded at the time inventory items are purchased. Reported inventories of governmental funds are equally offset by a fund balance reserve, which indicates that they do not constitute available spendable resources even though they are a component of net current assets. Inventories in Road and Bridge (a special revenue fund) and in proprietary funds are recorded on the consumption method whereby an expenditure or expense is recorded at the time the inventory items are used.

County employees accumulate sick leave and vacation benefits at rates of 8 hours per month and 8 to 16 hours per month, respectively, depending on position and length of service. In the event of retirement or termination, an employee is paid 100% of accumulated vacation pay, and those with five or more years of continuous service are paid for 25% of accumulated sick leave up to a maximum payment of 100 days. Up to one and one-half times the annual vacation accrual rate may be carried over from one year to the next. Compensatory time is granted (except for official, professional, and administrative positions) at the rate of one and one-half hours for each overtime hour worked, not to be accumulated in excess of forty hours.

In governmental funds, employees typically earn more sick leave and vacation pay than are actually utilized during the current period. The County has adopted the policy that employees first use sick leave or vacation pay earned in the current period and then benefits carried over from prior periods. The unpaid sick leave, vacation pay and related benefits at the end of the period will generally not be paid with expendable and available resources and are reported in the General Long-Term Obligations Account Group. Proprietary funds accrue sick leave, vacation pay, and related benefits in the period they are earned by the employees.

Encumbrance accounting - under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation - is employed as an extension of formal budgetary integration. Encumbrances outstanding at year end are canceled and must be reappropriated in the subsequent year. Of the purchase orders canceled at year end, $1,647,803 was re-opened and reappropriated in 2001. Of that amount, $285,054 related to incomplete road and bridge construction projects, $610,871 related to service contracts in progress, and $751,878 was for capital outlay and operating items which had not been received at December 31, 2000.

Transactions between funds that would be treated as revenues, expenditures, or expenses if they involved organizations external to the County are accounted for as revenues, expenditures, or expenses in the funds involved. Transactions which constitute reimbursements of a fund for expenditures or expenses initially made from that fund which are properly applicable to another fund are recorded as expenditures or expenses in the reimbursing fund and as reductions of the expenditure or expense in the fund that is reimbursed.

Nonrecurring or nonroutine transfers of equity between funds are referred to as residual equity transfers and are reported as additions to or deductions from the fund balance of governmental and expendable trust funds. Transfers of equity to proprietary funds are treated as contributed capital and such transfers from proprietary funds are reported as reductions of retained earnings or contributed capital as is appropriate in the circumstances. All other legally authorized transfers are treated as operating transfers and are included in the results of operations of governmental, proprietary, and expendable trust funds.

The General Purpose Financial Statements present a combined overview of all generic fund types, account groups, and component units of the County.

The total columns are captioned "Memorandum Total" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or cash flows in conformity with generally accepted accounting principles. Such data are not comparable to a consolidation as interfund eliminations have not been made in the aggregation of the data.

Back to 2000 Financial Report