Notes to SEFA
Title: NOTE 3. BASIS OF PRESENTATION
Accounting Policies: The Schedule of Expenditures of Federal Awards (the Schedule) was prepared on the modified accrual basis of accounting. The modified accrual basis differs
from the full accrual basis of accounting in that expenditures for property and equipment are expensed when incurred, rather than being capitalized and
depreciated over their useful lives, and expenditures for the principal portion of debt service are expensed when incurred, rather than being applied to reduce
the outstanding principal portion of debt, which conforms to the basis of reporting to grantors for reimbursement under the terms of the Utilities'' federal grant.
De Minimis Rate Used: N
Rate Explanation: The Utilities has elected to not use the ten percent de minimis indirect cost rate.
The amounts reported in the accompanying Schedule were obtained from the Utilities’ general ledger. Because the Schedule presents only a selected portion of the operations, it is not intended to and does not present the financial position, changes in net assets and cash flows of the Utilities. For purposes of the schedule, federal awards include all grants, contracts, and similar agreements entered into directly with the federal government and other pass through entities. Payments received for goods or services provided as a vendor do not constitute federal awards for purposes of the Schedule. The Utilities has obtained Assistance Listing Numbers (ALN) to ensure that all programs have been identified in the Schedule. ALNs have been appropriately listed by applicable programs. Federal programs with different ALNs that are closely related because they share common compliance requirements are defined as a cluster by the Uniform Guidance. One cluster was identified in the Schedule: Drinking Water State Revolving Fund - This cluster includes providing low interest loans to eligible recipients for drinking water infrastructure projects.
Title: NOTE 4. RELATIONSHIP OF THE SCHEDULE TO PROGRAM FINANCIAL REPORTS
Accounting Policies: The Schedule of Expenditures of Federal Awards (the Schedule) was prepared on the modified accrual basis of accounting. The modified accrual basis differs
from the full accrual basis of accounting in that expenditures for property and equipment are expensed when incurred, rather than being capitalized and
depreciated over their useful lives, and expenditures for the principal portion of debt service are expensed when incurred, rather than being applied to reduce
the outstanding principal portion of debt, which conforms to the basis of reporting to grantors for reimbursement under the terms of the Utilities'' federal grant.
De Minimis Rate Used: N
Rate Explanation: The Utilities has elected to not use the ten percent de minimis indirect cost rate.
The amounts pass-through reflected in the financial reports submitted to the awarding federal and/or agency and the schedule may differ. Some of the factors that may account for any difference include the following:* The Utilities’ fiscal year end may differ from the program’s year end.* Accruals recognized in the Schedule, because of year end procedures, may not be reported in the program financial reports until the next program reporting period. * Fixed asset purchases and the resultant depreciation charges are recognized as property and equipment, net in the Utilities’ financial statements and as expenditures in the program financial reports.
Title: NOTE 5. SUBRECIPIENTS
Accounting Policies: The Schedule of Expenditures of Federal Awards (the Schedule) was prepared on the modified accrual basis of accounting. The modified accrual basis differs
from the full accrual basis of accounting in that expenditures for property and equipment are expensed when incurred, rather than being capitalized and
depreciated over their useful lives, and expenditures for the principal portion of debt service are expensed when incurred, rather than being applied to reduce
the outstanding principal portion of debt, which conforms to the basis of reporting to grantors for reimbursement under the terms of the Utilities'' federal grant.
De Minimis Rate Used: N
Rate Explanation: The Utilities has elected to not use the ten percent de minimis indirect cost rate.
The Utilities did not provide federal funds to subrecipients for the fiscal year ended September 30, 2023.
Title: NOTE 6. LOANS OUTSTANDING
Accounting Policies: The Schedule of Expenditures of Federal Awards (the Schedule) was prepared on the modified accrual basis of accounting. The modified accrual basis differs
from the full accrual basis of accounting in that expenditures for property and equipment are expensed when incurred, rather than being capitalized and
depreciated over their useful lives, and expenditures for the principal portion of debt service are expensed when incurred, rather than being applied to reduce
the outstanding principal portion of debt, which conforms to the basis of reporting to grantors for reimbursement under the terms of the Utilities'' federal grant.
De Minimis Rate Used: N
Rate Explanation: The Utilities has elected to not use the ten percent de minimis indirect cost rate.
The Utilities had an ending loan balance of $24,175,000 as of September 30, 2023 under the Drinking Water State Revolving Fund loan program under ALN 66.468 passed through the Alabama Department of Environmental Management.