Notes to SEFA
Title: A. General
Accounting Policies: The accompanying schedule of federal awards is presented using the modified accrual basis of accounting in accordance with the “Requirements of Audit” as promulgated by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Such principles and practices are designed primarily for determining compliance with legal provisions and budgetary restrictions and as a means of reporting on the stewardship of public officials with respect to public funds. Under this method of accounting, the Township accounts for its financial transactions through separate funds, which differ from the funds required by accounting principles generally accepted in the United States of America (“GAAP”).
Modifications to the accrual basis:
a. Expenditures are recorded on the schedule of expenditures of federal awards when encumbered.
b. Prepaid expenditures are not recorded.
c. Obligations for employees’ vested vacation and sick leave are recorded when paid.
d. Grant revenues are recorded when anticipated in the budget.
e. Property and equipment purchased are recorded as expenditures at the time of purchase and are not capitalized.
De Minimis Rate Used: N
Rate Explanation: The auditee did not use the de minimis cost rate.
The accompanying schedule of federal awards presents the activity of all federal awards of the Township of Lawrence, County of Mercer, State of New Jersey (the “Township”). The Township is defined in Note A to the Township’s financial statements – regulatory basis. The Township is the prime sponsor and recipient of various federal grant funds. The Township has delegated the administration of grant programs and the reporting function to various departments within the Township. Substantially all grant and program cash funds are commingled with the Township’s other funds, although each grant is accounted for separately within the Township’s financial records.
Title: B. Indirect Cost Rate
Accounting Policies: The accompanying schedule of federal awards is presented using the modified accrual basis of accounting in accordance with the “Requirements of Audit” as promulgated by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Such principles and practices are designed primarily for determining compliance with legal provisions and budgetary restrictions and as a means of reporting on the stewardship of public officials with respect to public funds. Under this method of accounting, the Township accounts for its financial transactions through separate funds, which differ from the funds required by accounting principles generally accepted in the United States of America (“GAAP”).
Modifications to the accrual basis:
a. Expenditures are recorded on the schedule of expenditures of federal awards when encumbered.
b. Prepaid expenditures are not recorded.
c. Obligations for employees’ vested vacation and sick leave are recorded when paid.
d. Grant revenues are recorded when anticipated in the budget.
e. Property and equipment purchased are recorded as expenditures at the time of purchase and are not capitalized.
De Minimis Rate Used: N
Rate Explanation: The auditee did not use the de minimis cost rate.
The Township does not have an indirect cost allocation plan nor does it use the de minimis rate of 10%.
Title: C. Commitments and Contingencies
Accounting Policies: The accompanying schedule of federal awards is presented using the modified accrual basis of accounting in accordance with the “Requirements of Audit” as promulgated by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Such principles and practices are designed primarily for determining compliance with legal provisions and budgetary restrictions and as a means of reporting on the stewardship of public officials with respect to public funds. Under this method of accounting, the Township accounts for its financial transactions through separate funds, which differ from the funds required by accounting principles generally accepted in the United States of America (“GAAP”).
Modifications to the accrual basis:
a. Expenditures are recorded on the schedule of expenditures of federal awards when encumbered.
b. Prepaid expenditures are not recorded.
c. Obligations for employees’ vested vacation and sick leave are recorded when paid.
d. Grant revenues are recorded when anticipated in the budget.
e. Property and equipment purchased are recorded as expenditures at the time of purchase and are not capitalized.
De Minimis Rate Used: N
Rate Explanation: The auditee did not use the de minimis cost rate.
Each of the grantor agencies reserves the right to conduct additional audits of the Township’s grant programs for economy, efficiency and program results. However, the Township management does
not believe such audits would result in material amounts of disallowed costs.
The Township has entered into various contracts with contractors to perform services or provide goods in the effort to administer such grants. Thus, the Township has commitments to meet various conditions of such contracts.