02-08-17 Regular Meeting of the La Porte Area Water Authority

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r - A LA PORTE AREA WATER AUTHORITY NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The La Porte Area Water Authority (the "Authority) was created on May 30, 1981 by Chapter 729, Page 2678, Acts of the 671h Legislature of the State of Texas. This bill authorizes the Authority to purchase, construct or otherwise acquire waterworks systems, sanitary sewer systems, storm sewer systems and drainage facilities or parts of such systems of facilities and to operate and maintain such facilities. The Authority is authorized to set rates for services related to the aforementioned systems and facilities, and issue revenue bonds for the purpose of acquiring and maintaining such systems. The Authority comprises approximately 20,600 acres in Harris County, Texas. The financial statements of the Authority have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard -setting body for establishing governmental accounting and financial reporting principles. The more significant of the Authority's accounting policies are described below. The La Porte Area Water Authority is considered a component unit of the City of LaPorte, Texas by virtue of meeting the criteria noted above. The primary factor in determining component unit status is that the Authority provides approximately 86% of its services for the exclusive benefit of the City of La Porte, The Authority's financial operations are included as an Enterprise Fund in the City's Comprehensive Annual Financial Report as a blended component unit. The City of La Porte is referred to as "Primary Government" throughout the Authority's financial statements. B. Fund Accounting The operations of the Authority are recorded in an enterprise fund. Enterprise funds are used to account for operations (a) that are financed primarily through user charges or (b) where the governing body has decided that determination of net income is appropriate. The enterprise fund is a proprietary fund type. 11