Audit 315858

Title: Note 1 – Basis of Presentation Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (schedule) includes the federal grant activity of City of Blackduck Minnesota and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Therefore, some amounts in this schedule may differ from amounts presented in, or used in the preparation of the financial statements. De Minimis Rate Used: N Rate Explanation: The City of Blackduck, Minnesota has not elected to use the 10 percent de Minimis indirect cost rate as allowed under the Uniform Guidance. The accompanying Schedule of Expenditures of Federal Awards (schedule) includes the federal grant activity of City of Blackduck Minnesota and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Therefore, some amounts in this schedule may differ from amounts presented in, or used in the preparation of the financial statements.

Title: Note 2 – Indirect Cost Rate Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (schedule) includes the federal grant activity of City of Blackduck Minnesota and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Therefore, some amounts in this schedule may differ from amounts presented in, or used in the preparation of the financial statements. De Minimis Rate Used: N Rate Explanation: The City of Blackduck, Minnesota has not elected to use the 10 percent de Minimis indirect cost rate as allowed under the Uniform Guidance. The City of Blackduck, Minnesota has not elected to use the 10 percent de Minimis indirect cost rate as allowed under the Uniform Guidance.

Title: Note 3 – Federal Loans Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (schedule) includes the federal grant activity of City of Blackduck Minnesota and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Therefore, some amounts in this schedule may differ from amounts presented in, or used in the preparation of the financial statements. De Minimis Rate Used: N Rate Explanation: The City of Blackduck, Minnesota has not elected to use the 10 percent de Minimis indirect cost rate as allowed under the Uniform Guidance. The City of Blackduck, Minnesota was approved by the USDA Rural Utilities Service to receive a loan totaling $1,965,000 to build a Maintenance Facility. Interim financing was received for the construction period. The balance owing at the end of the period was $1,965,000.