Audit 20760

Title: NOTE 3 REVOLVING LOAN - PROGRAM INCOME Accounting Policies: This schedule is prepared on the same basis of accounting as the City's financial statements. The City uses the modified accrual basis of accounting for governmental funds and the full accrual basis of accounting for proprietary funds. De Minimis Rate Used: N Rate Explanation: The City has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The City has a revolving loan program for low income housing renovation within its CDBG program. Under this federal program, repayments to the City are considered program revenues (income) and loans of such funds to eligible recipients are considered expenditures. The amount of loan funds disbursed to program participants for the year was $0.00. These funds were disbursed from the revolving loan program income. The City uses the deductive method of reporting, so the expenses reported on the SEFA do not include these disbursements. The amount of principal and interest received in loan repayments for the year was $43,418.27. Of this amount, $36,224.28 will continue to build the revolving loan fund. The remaining $7,193.99 were repayments from the City's defunct CDBG down payment assistance program. These funds were reported as program income and applied to other eligible project costs.Under this program, repayments to the City are considered program revenues (income) and disbursement of funds are considered expenditures. In accordance with program guidelines, program income is to be used prior to drawing entitlement funds. The amount of expenditures reported on the SEFA for the CDBG program are net of $7,193.99 in program income and revolving loan.The City of Richland is the lead entity for the Tri-Cities HOME Consortium, consisting of the Cities of Richland, Kennewick and Pasco. The Consortium receives federal HOME funds from the U.S. Department of Housing and Urban Development that are used for first time homebuyer opportunities, housing rehabilitation, acquisition and new construction activities. The objective of the HOME program is to provide affordable housing for lower income persons.Under this program, repayments to the City are considered program revenues (income) and disbursement of funds are considered expenditures. In accordance with program guidelines, program income is to be used prior to drawing entitlement funds. The amount of expenditures reported on the SEFA for the HOME program are net of $161,272.50 in program income. New loans are recorded as expenditures and tracked as a receivable in the HOME Fund.

Title: NOTE 4 PROGRAM COSTS Accounting Policies: This schedule is prepared on the same basis of accounting as the City's financial statements. The City uses the modified accrual basis of accounting for governmental funds and the full accrual basis of accounting for proprietary funds. De Minimis Rate Used: N Rate Explanation: The City has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The amounts shown as current year expenditures represent only the federal grant portion of the program costs. Entire program costs, including the City's 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.

Title: NOTE 5 BENTON COUNTY EMERGENCY SERVICES (BCES) GRANTS Accounting Policies: This schedule is prepared on the same basis of accounting as the City's financial statements. The City uses the modified accrual basis of accounting for governmental funds and the full accrual basis of accounting for proprietary funds. De Minimis Rate Used: N Rate Explanation: The City has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Grants received by BCES are applied for and expended exclusively for BCES activities, as noted by the various grant award agreements.