Audit 18526

Title: NOTE 3 FEDERAL LOANS Accounting Policies: This schedule is prepared on the same basis of accounting as the City of Prossers financial statements. The City uses cash basis accounting, which is a departure from generally accepted accounting principles (GAAP). De Minimis Rate Used: Both Rate Explanation: The City has elected to use the 10% de minimis indirect cost rate allowed under the uniform guidance. It might be helpful to note that for the following grant awards, the indirect cost rate (or administrative rate) is set at a maximum amount of 8%, per the grant conditions. -Block Grants for Prevention and Treatment of Substance Abuse ALN #93.959-High Intensity Drug Trafficking Areas Program ALN#95.001 A.Street Sweeper Loan: In 2020, the City of Prosser was approved by USDAs Community Facilities Program to receive a loan totaling $177,000 for the purchase of a Street Sweeper The amount listed for this loan includes the beginning of the period loan balance. The balance owing at the end of the period is $149,921.88. also for the purchase of the same Street Sweeper. The current loan is also reported on the City of Prosser Schedule 9: Liabilities.B.Well 7 Loan: In 2020, the City of Prosser was approved by Washington State Department of Health (DOH) Drinking Water State Revolving Fund (DWSRF) to receive a loan in the amount of $2,450,000. The amount listed for this loan reflects expenditures incurred and submitted for reimbursement within the reporting period. The balance of the loan at the end of the reporting period was $1,132,017.11. This project is ongoing and expected to be complete in 2022. It may be helpful to note that State funds were received in the amount of $98,346.96. It is also expected that, at project completion that the City will be awarded a subsidy of 26% for the loan amount. The current loan is also reported on the City of Prosser Schedule 9: Liabilities.

Title: NOTE 4 - PROGRAM COSTS Accounting Policies: This schedule is prepared on the same basis of accounting as the City of Prossers financial statements. The City uses cash basis accounting, which is a departure from generally accepted accounting principles (GAAP). De Minimis Rate Used: Both Rate Explanation: The City has elected to use the 10% de minimis indirect cost rate allowed under the uniform guidance. It might be helpful to note that for the following grant awards, the indirect cost rate (or administrative rate) is set at a maximum amount of 8%, per the grant conditions. -Block Grants for Prevention and Treatment of Substance Abuse ALN #93.959-High Intensity Drug Trafficking Areas Program ALN#95.001 The amounts shown as current year expenditures represent only the federal grant portion of the program costs. Entire program costs, including the City of Prossers portion, are more than shown. Such expenditures are recognized following, as applicable, either the cost principles in the OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement.