Audit 20363

Title: 3. Managements use of Estimates Accounting Policies: 1. BASIS OF PRESENTATION The accompanying Schedule of Expenditures of Federal Awards (the Schedule) summarizes the federal award expenditures disbursed by Community Action of Greater Indianapolis, Inc. received from the federal government for the year ended December 31, 2022.For the purpose of the Schedule, federal awards include pass-through funds from grants and contractsentered into directly between CAGI and state or local agencies and departments of the federalgovernment. Expenditures for these federal pass-through programs, as well as nonpass-throughprograms, are recognized on the accrual basis of accounting.EQUIPMENTProperty and equipment are recorded at cost and capitalized in accordance with generally acceptedaccounting principles. Estimated useful lives range from 5-40 years using the straight-line method.Assets obtained with federal funds are considered to be owned by CAGI while used in the program.Funding agencies obtain a reversionary interest in any proceeds from the sale of equipment when theoriginal acquisition was paid with federal or state grant funds. The use of assets purchased with federalfunds is limited to the purposes intended by the funding source.INVENTORYMaterials and supplies are charged to expense during the period of purchase. As a result, no inventory isrecognized for these items in the accompanying financial statements. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR FEDERAL AWARD EXPENDITURESExpenditures consist of direct and indirect costs. Direct costs are those that can be readily identified withan individual federally sponsored program. Benefit payments made on behalf of an eligible recipient andthe materials consumed by the program are examples of direct costs.Unlike direct costs, indirect costs cannot be readily identified with an individually sponsored project.Indirect costs are the costs of services and resources that benefit many projects as well as nonsponsoredprojects and activities. Indirect costs primarily consist of expenses incurred for administration, payrolltaxes and fringe benefits. De Minimis Rate Used: N Rate Explanation: DE MINIMIS COST RATECAGI does no utilize the 10% de minimis cost rate because the guidance under Part 200.414 IndirectCosts does not apply. The above basis of accounting requires management to make estimates and assumptions that affect thereported amounts of assets, liabilities, revenues and expenses and disclosures of contingent assets andliabilities reported in the schedule of expenditures of federal awards. Actual results could differ from thoseestimates.