Audit 291893

Title: NOTE 1. BASIS OF PRESENTATION Accounting Policies: Expenditures reported on the SEFA are reported on the accrual basis of accounting with modification for disbursements under the modified accrual basis of accounting. The prior year schedule was reported under the cash basis of accounting, and this year the Schedule is prepared under the modified accrual basis of accounting, the same presentation as the County's financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as reimbursement. Negative amounts shown on the SEFA represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The County has not elected to utilize the 10 percent de minimis indirect cost rate. The accompanying Schedule of Expenditures of Federal Awards includes federal grant activity of Hot Springs County. The County receives federal awards both directly from federal agencies and indirectly through pass-through entities. Federal program expenditures included in the accompanying schedule are presented on the modified accrual basis of accounting. The information in the schedule is presented in accordance with requirements of Title 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the basic financial statements.

Title: NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: Expenditures reported on the SEFA are reported on the accrual basis of accounting with modification for disbursements under the modified accrual basis of accounting. The prior year schedule was reported under the cash basis of accounting, and this year the Schedule is prepared under the modified accrual basis of accounting, the same presentation as the County's financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as reimbursement. Negative amounts shown on the SEFA represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The County has not elected to utilize the 10 percent de minimis indirect cost rate. Expenditures reported on the SEFA are reported on the accrual basis of accounting with modification for disbursements under the modified accrual basis of accounting. The prior year schedule was reported under the cash basis of accounting, and this year the Schedule is prepared under the modified accrual basis of accounting, the same presentation as the County's financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as reimbursement. Negative amounts shown on the SEFA represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.

Title: NOTE 3. INDIRECT COST RATES Accounting Policies: Expenditures reported on the SEFA are reported on the accrual basis of accounting with modification for disbursements under the modified accrual basis of accounting. The prior year schedule was reported under the cash basis of accounting, and this year the Schedule is prepared under the modified accrual basis of accounting, the same presentation as the County's financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as reimbursement. Negative amounts shown on the SEFA represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The County has not elected to utilize the 10 percent de minimis indirect cost rate. The County has not elected to utilize the 10 percent de minimis indirect cost rate.

Title: NOTE 4. LOAN GUARANTEES Accounting Policies: Expenditures reported on the SEFA are reported on the accrual basis of accounting with modification for disbursements under the modified accrual basis of accounting. The prior year schedule was reported under the cash basis of accounting, and this year the Schedule is prepared under the modified accrual basis of accounting, the same presentation as the County's financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as reimbursement. Negative amounts shown on the SEFA represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The County has not elected to utilize the 10 percent de minimis indirect cost rate. There are no loans/ loan guarantees.

Title: NOTE 5. MAJOR PROGRAMS Accounting Policies: Expenditures reported on the SEFA are reported on the accrual basis of accounting with modification for disbursements under the modified accrual basis of accounting. The prior year schedule was reported under the cash basis of accounting, and this year the Schedule is prepared under the modified accrual basis of accounting, the same presentation as the County's financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as reimbursement. Negative amounts shown on the SEFA represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The County has not elected to utilize the 10 percent de minimis indirect cost rate. Items with asterisk * are the major program tested in accordance with Uniform Guidance.