Years Ended 1997 & 1996 Financial Statements

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LOWER RUM RIVER WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS Note 1. Nature of the Oreanization The Organization is a watershed management organization which has been created ro fulfi(1 the requiremenu and purposes of Minnesota Statutes 103B.201 to 103B251. The purpose of such an organization as defined by Minnesota Statutes 103B.201 is to; "protect, preserve and use natural surface and gound water storage and retention systems in order to (a) reduce to the greatest practical extent the public capital expenditures necessary to control excessive volumes and rates of runoff, (b) protect and improve surface and ground water quality, (c) prevent flooding and erosion from surface flows, (d) promote ground water recharge, (e) protect and enhance fish and wildlife habitat and water recreational faciliries, and (~ secure the other benefits associated with the proper management of surface and ground water." The ciries of Andover, Anoka, Coon Rapids and Ramsey formed the Organization by executing a joint powers ageement in accordance with Minnesota Statute 103B.211 dated July I5, 1985. Note 2. Summary of sipnificant accounting nolicies 1'he accompanying summary of significant accounting policies is presented to assist the reader in understanding the Organization's fmancial statements. The fmancial statements aze representations of the Organization's management which is responsible for their integrity and objectivity. Cash equivalents - for purposes of the statement of cash flows, the Organiza6on considers all highly liquid investrnents with a maturity of three months or less when purchased to be "cash equivalents". Income taxes - As a joint powers watershed management organizarion, the Organization is exempt from both Federal and Minnesota income taees. Accordingly, no provision for income ta~ces is included in these fmanciai statemenu. -5-