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Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2003 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Indian River County, Florida, (the "County") is a political subdivision of the State pursuant to Article VIII Section 1 (a) of the Constitution of the State of Florida. Created on June 29, 1925 by an act of the Legislature , separating it from St . Lucie County, the County encompasses approximately 497 square miles of land with an estimated population of 118 , 149 . The County is governed by the Board of County Commissioners and five elected constitutional officers (Clerk ofthe Circuit Court, PropertyAppraiser, Sheriff, Supervisor ofElections, and Tax Collector) in accordance with state statutes and regulations . The constitutional officers maintain separate accounting records and budgets from the Board of County Commissioners . The Constitution ofthe State of Florida, Article VIII, Section 1 (d) created the constitutional officers and Article VIII, Section 1 (e), created the Board of County Commissioners . The financial statements of the County have been prepared in accordance with generally accepted accounting principles (GAAP) as applied to governmental units . The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and financial reporting . Pronouncements of the Financial Accounting Standards Board (FASB) issued after November 30, 1989 are not applied in the preparation of the financial statements of the proprietary fund types in accordance with GASB Statement 20 . The GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting Standards which, along with subsequent GASB pronouncements (Statements and Interpretations) , constitutes GAAP for governmental units . In June 1999 , the Governmental Accounting Standards Board (GASB ) unanimously approved Statement 34 - Basic Financial Statements and Management 's Discussion and Analysis - for State and Local Governments . This statement provides for the most significant change in financial reporting in over twenty years and is scheduled for a phased implementation (based on the size of government) starting with the fiscal year ending 2002 . As part of this statement, there is a new reporting requirement regarding the local government's infrastructure (roads, bridges, traffic signals , etc .) . This requirement permits an optional four-year further delay for implementation of the infrastructure related portion to the fiscal year ending in 2006. The County has fully implemented the basic model and the infrastructure- related portion in the fiscal year 2001 -2002 . A. Reporting Entity The concept underlying the definition ofthe reporting entity is that elected officials are accountable to their constituents for their actions . The reporting entity's financial statements should allow users to distinguish between the primary government (the County) and its component units . However, some component units, because ofthe closeness of their relationships with the County, should be blended as though they are part ofthe County. Otherwise, most component units should be discretely presented. As required by generally accepted accounting principles, the financial reporting entity consists of ( 1 ) the primary government (the County), (2) organizations for which the County is financially accountable, and (3) other organizations for which the nature and significance of their relationship with the County are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete . The County is financially accountable if it appoints a voting majority ofthe organization's governing body and (a) it is able to impose its will on that organization or (b) there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the County. 38