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PIEDMONT AREA MENTAL HEALTH, DEVELOPMENTAL DISABILITIES AND SUBSTANCE ABUSE AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Financial Statements. The fund financial statements provide information about the Authority's funds. Separate statements for each fund category -governmental -are presented. The emphasis of fund financial statements is on major governmental funds, displayed in a separate column. There are no remaining governmental funds that were aggregated and reported as non-major funds. The Authority reports the following major governmental fund: General Fund. This is the Authority's primary operating fund. It accounts for all financial resources of the general government. Measurement Focus, Basis of Accountins~ In accordance with North Carolina General Statutes, ail funds of the Authority are maintained during the year using the modified accrual basis of accounting. Government-wide Financial Statements. The government-wide financial statements are reported using the economic resources measurement focus. The government-wide financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Non-exchange transactions, in which the Authority gives (or receives) value without directly receiving (or giving) equal value in exchange, include grants, entitlements, and donations. On an accrual basis; revenue from grants, entitlem®nts, and donations is recognized in the fiscal year in which all eligibility requirements have bean satisfied. Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services,ior privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as gen®ral revenues rather than as program revenues. Governmental Fund Financial Statements. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. (~~) G~w