04.07 Consider BLADC's 2002 & 2003 Audit

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BRAINERD LAKES AREA DEVELOPMENT CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 AND 2002 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONCLUDED) Contributions The Organization reports contributions in accordance with SFAS No. 116, "Accounting for Contributions Received and Contributions Made". Under SFAS No. 116, contributions are recognized when the donor makes a promise to give to the Organization that is, in substance, unconditional. Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the fiscal year in which the contributions are recognized. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. Income Taxes The Organization is exempt from FedeFal and State income taxes under section 501(c)(3)of the Internal Revenue Code.The Organization has received a determination notice from the Internal Revenue Service that contributions to the Organization are tax deductible. Use of Estimates - The Organization uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities,the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. Cash and Cash Equivalents For purposes of the statements of cash flows,the Organization considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statements of activities. Costs are allocated between program services and management and general expenses based on evaluations of the related benefits. Management and general expenses include those expenses that are not directly identifiable with any other specific function but provide for the overall support and direction of the Organization. Compensated Absences Employees of the Organization are entitled to paid vacations, sick days and personal days off, depending on job classification,length of service, and other factors. The Organization has accrued the estimated amount of compensation for future absences. Reclassifications Certain accounts relating to the prior year have been restated to conform to the current year's presentation. These reclassifications have no effect on increase in net assets.