02-12-14 Regular Meeting of the La Porte Area Water Authority

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Draft 2-4-2014 LA PORTE AREA WATER AUTHORITY EXHIBIT C-1 NOTES TO THE FINANCIAL STATEMENTS (continued) Note 10 - Economic Dependency The Authority receives all of its support from three municipalities, with the City of La Porte being the largest contributor at approximately 86%. In addition, the Authority contracts with the City of La Porte to provide administrative oversight and operate the Authority’s transmissions system. Note 11 – Implementation of New GASB Standards In June 2011, the GASB issued Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. This statement will improve financial reporting by standardizing the presentation of deferred outflows of resources and deferred inflows of resources and their effects on a government’s net position. The requirements of this statement are effective for financial statements for periods beginning after December 15, 2011. The District has implemented GASB No. 63 in this annual report. In March 2012, the GASB issued Statement No. 65, Items Previously Reported as Assets and Liabilities. This statement will improve financial reporting by reclassifying certain items that were previously reported as assets and liabilities as deferred outflows of resources or deferred inflows of resources or as outflows or inflows of resources. The requirements of this statement are effective for financial statements for periods beginning after December 15, 2012. The District has implemented GASB No. 65 in this annual report. The deferred inflows of resources element of the financial statements represent an acquisition of net position that applies to future periods and will be not be recognized as an inflow of resources until that time. The Authority’s deferred gain on refunding of $7,075 is the only item reported as deferred inflows of resources. Note 12 – Prior Period Adjustment The Authority implemented GASB Statement 65, Items Previously Reported as Assets and Liabilities during the fiscal year ended September 30, 2013. In accordance with GASB 65, debt issuance costs should be recognized as expenses in the period incurred. Previously, debt issuance cost were recorded as assets and amortized over the life of the debt. The implementation of GASB 65 resulted in the following prior period adjustment to the net position of the governmental activities: Net position - beginning of the year: As originally presented $7,156,249 Effect of change in accounting principle (49,057) As restated$7,107,192 19