Selected Significant Accounting Policies

Reporting Entity - El Paso City Ordinance No. 752, adopted May 22, 1952, established a five member board of trustees known as the "Public Service Board" (Board) which was given the complete management and control of the city's water system (System). Ordinance No. 017167 adopted August 11, 2009 increased the number of board members from five to seven. The PSB consists of the Mayor of the City of El Paso and six residents of El Paso County, Texas. With the exception of the Mayor, all other trustees are appointed by the City Council and serve staggered four-year terms.

In evaluating and determining how to define the Board, for financial reporting purposes, the standards contained in GAAP were applied. The Public Service Board was determined to be a component unit of the City of El Paso based upon the selection of the governing authority.

Nature of Activities - The Board provides water, wastewater, and drainage services for the El Paso area residents. In addition to the water, wastewater, and drainage system revenue, the Board receives funding from state and federal government sources and must comply with the requirements of these funding source entities.

Fund Accounting - El Paso Water Utilities is accounted for as an Enterprise Fund. Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that the costs (including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations, maintenance, financing and related debt service, and billing and collection.

EPWU reports the following major enterprise funds:

• Water and Wastewater Utility – This fund is used to account for the activity related to providing water and wastewater services to El Paso area residents.
• Municipal Drainage Utility – This fund is used to account for the utility related to the management and collection of storm water runoff.

Annual Budget - The Board prepares, prior to the beginning of each fiscal year, a detailed comprehensive annual budget reflecting estimates of revenues and expenses and other requirements for the ensuing fiscal year in sufficient detail to indicate the probable Gross Revenues and Pledged Revenues of the System for such fiscal year. The budget is prepared using the accrual basis of accounting. The fiscal year starts March 1 and ends the last day of February of the subsequent year.

Selected historical ten year financial and statistical information and selected significant accounting policies is provided.