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c c c Florida Municipal Insurance Trust NOTES TO FINANCIAL STATEMENTS September 30, 2010 Note 1 - OrQanization and SiQnificant AccountinQ Policies A. Organization and Purpose - The Florida Municipal Insurance Trust (the Trust) is a self- insurance program established to provide certain liability, property, casualty, health, and other coverages to participating units of local government in Florida, pursuant to various provisions of Florida Statutes, Trust underwriting and rate setting policies have been established after consulting with an independent actuary, The Trust is non-assessable, Trust members at year-end included 270 cities, 29 county subdivisions and 304 special districts, all located within Florida. B, Reporting Entity and Basis of Accounting - The Trust is an independent reporting entity accounted for as an enterprise fund in accordance with accounting principles generally accepted in the United States of America for governments as established by the Governmental Accounting Standards Board (GASB), The Trust uses the flow of economic resources measurement focus and the accrual basis of accounting, Under this method, revenues are recorded when earned and expenses are recorded at the time the liabilities are incurred, In accordance with GASB Statement 20, the Trust has elected to apply only those applicable Financial Accounting Standards Board pronouncements issued on or before November 30, 1989, C, The Trust is exempt from income taxes under the provisions of Section 115 of the Internal Revenue Code, D. The Trust considers all unrestricted highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents, E, Investments are reported at fair value in accordance with GASB Statement 31, F, The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, Actual results could differ from those estimates, G, The Trust uses the allowance method to account for uncollectible receivables, The allowance is based on management's estimate of possible bad debts, The allowance for doubtful accounts is $500,000 at September 30, 2010. There were no bad debt write-offs during the year. H, The Trust considers all revenues from premium, investment, and commission income that comprise the Trust's core business activities to be operating revenues, All expenses are considered to be operating expenses, 13