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Northeast Texas Council on Alcohol mud Drug Abuse, Inc. Notes to Financial Statements For t3e Year Ended August 31, 2002 NOTE 1 - ORGANIZATION The Northeast Texas Council on Alcohol and Drug Abuse, Inc. ("NETCADA.") (formerly Lamer County Alcohol/Drug Council, Inc.) was organized in Texas in 1977 as a nonprofit corporation for the purpose of improvlng the health, safety and general welfare of the citizens of Lamer County, Texas, thxough educational and counseling programs. The region served by NETCADA includes Lamar County, Red River County, Delta County, Fannin County, Franklin County, Bowie County, Titus County, Wood County, Hopkins County, and Camp County with some interaction with other adjoining counties in Texas withLu a 100 mile radius. NETCADA is an exempt organization for Federal income tax purposes under Section 501(c)(3) of the Internal Revenue Code. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. ~a~i~ nfAccmmt~nE NETCADA follows standards of accounting and financial reporting for voluntary health and welfare organizations as described in the American Institute of Certified Public Accountants in its "industry Guide for Audits of Voluntary Health and Welfare Orgardzafions." Accordingly, the financial statements are prepared on an accrual basis of accounting. B. ~tlrn~te~- requLres management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ fi.om those estimates. For purposes of the statements of cash flows, the Council considers all ki~ly liquid investments available for current use with an initial maturity of three months or less to be cash equivalents. g. Cash Match Allncatinn In accordance with terms and provisions of the various grant contracts, NETCADA is generally required to provide a specific percentage of local matching funds to support the grant programs. E. grn"perty and lqquipment Donated assets are recorded at their estimated fair market values at the date of donation. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. 10