Audit 336691

Title: Note 1 – Reporting Entity Accounting Policies: Note 1 – Reporting Entity The City of Tracy ("City") is a municipal corporation governed by a five-member city council with the mayor elected by the council itself. The City was incorporated in 1888 under the general laws of the State of California and enjoys all the rights and privileges applicable to a General Law City. The component units discussed below are included in the reporting entity because of their operational or financial relationships with the City. • Tracy Public Improvement Corporation • Tracy Joint Power Public Financing Authority The following entity is a discretely presented component unit in the City’s basic financial statements but federal awards from federal agencies are not included in the Schedule of Expenditures of Federal Awards because they are a separate legal entity. The audit of these federal awards under Uniform Guidance is conducted by other auditors: • South San Joaquin County Fire Authority Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. In addition, component units can be other organizations for which the primary government’s exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. Separate financial statements for the Tracy Public Improvement Corporation and Tracy Joint Power Financing Authority are not available. Note 2 – Basis of Accounting Funds received under the various grant programs have been recorded within the special revenue funds and enterprise funds of the City. The City utilizes the modified accrual method of accounting for the general fund and special revenue funds. The City utilizes the modified accrual basis of accounting for the special revenue funds, and the full accrual basis of accounting for the enterprise funds. The accompanying Schedule of Expenditures of Federal Awards (“Schedule”) is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Therefore, some amounts presented in the schedule may differ from amounts presented in, or used in, the preparation of the City’s basic financial statements. Note 3 – Schedule of Expenditures of Federal Awards The accompanying Schedule presents the activity of all federal financial assistance programs of the City. Federal financial assistance received directly from federal agencies as well as federal financial assistance passed through the State of California and San Joaquin County Community Development Department is included in the Schedule. The Schedule was prepared from only the accounts of various grant programs and, therefore, does not present the financial position, change in fund balance, or results of operations of the City. De Minimis Rate Used: N Rate Explanation: Note 4 – Indirect Cost Rate The City has not elected to use the 10-percent de minimis indirect rate as allowed under the Uniform Guidance. The City of Tracy ("City") is a municipal corporation governed by a five-member city council with the mayor elected by the council itself. The City was incorporated in 1888 under the general laws of the State of California and enjoys all the rights and privileges applicable to a General Law City. The component units discussed below are included in the reporting entity because of their operational or financial relationships with the City. • Tracy Public Improvement Corporation • Tracy Joint Power Public Financing Authority The following entity is a discretely presented component unit in the City’s basic financial statements but federal awards from federal agencies are not included in the Schedule of Expenditures of Federal Awards because they are a separate legal entity. The audit of these federal awards under Uniform Guidance is conducted by other auditors: • South San Joaquin County Fire Authority Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. In addition, component units can be other organizations for which the primary government’s exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. Separate financial statements for the Tracy Public Improvement Corporation and Tracy Joint Power Financing Authority are not available.

Title: Note 2 – Basis of Accounting Accounting Policies: Note 1 – Reporting Entity The City of Tracy ("City") is a municipal corporation governed by a five-member city council with the mayor elected by the council itself. The City was incorporated in 1888 under the general laws of the State of California and enjoys all the rights and privileges applicable to a General Law City. The component units discussed below are included in the reporting entity because of their operational or financial relationships with the City. • Tracy Public Improvement Corporation • Tracy Joint Power Public Financing Authority The following entity is a discretely presented component unit in the City’s basic financial statements but federal awards from federal agencies are not included in the Schedule of Expenditures of Federal Awards because they are a separate legal entity. The audit of these federal awards under Uniform Guidance is conducted by other auditors: • South San Joaquin County Fire Authority Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. In addition, component units can be other organizations for which the primary government’s exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. Separate financial statements for the Tracy Public Improvement Corporation and Tracy Joint Power Financing Authority are not available. Note 2 – Basis of Accounting Funds received under the various grant programs have been recorded within the special revenue funds and enterprise funds of the City. The City utilizes the modified accrual method of accounting for the general fund and special revenue funds. The City utilizes the modified accrual basis of accounting for the special revenue funds, and the full accrual basis of accounting for the enterprise funds. The accompanying Schedule of Expenditures of Federal Awards (“Schedule”) is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Therefore, some amounts presented in the schedule may differ from amounts presented in, or used in, the preparation of the City’s basic financial statements. Note 3 – Schedule of Expenditures of Federal Awards The accompanying Schedule presents the activity of all federal financial assistance programs of the City. Federal financial assistance received directly from federal agencies as well as federal financial assistance passed through the State of California and San Joaquin County Community Development Department is included in the Schedule. The Schedule was prepared from only the accounts of various grant programs and, therefore, does not present the financial position, change in fund balance, or results of operations of the City. De Minimis Rate Used: N Rate Explanation: Note 4 – Indirect Cost Rate The City has not elected to use the 10-percent de minimis indirect rate as allowed under the Uniform Guidance. Funds received under the various grant programs have been recorded within the special revenue funds and enterprise funds of the City. The City utilizes the modified accrual method of accounting for the general fund and special revenue funds. The City utilizes the modified accrual basis of accounting for the special revenue funds, and the full accrual basis of accounting for the enterprise funds. The accompanying Schedule of Expenditures of Federal Awards (“Schedule”) is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Therefore, some amounts presented in the schedule may differ from amounts presented in, or used in, the preparation of the City’s basic financial statements.

Title: Note 3 – Schedule of Expenditures of Federal Awards Accounting Policies: Note 1 – Reporting Entity The City of Tracy ("City") is a municipal corporation governed by a five-member city council with the mayor elected by the council itself. The City was incorporated in 1888 under the general laws of the State of California and enjoys all the rights and privileges applicable to a General Law City. The component units discussed below are included in the reporting entity because of their operational or financial relationships with the City. • Tracy Public Improvement Corporation • Tracy Joint Power Public Financing Authority The following entity is a discretely presented component unit in the City’s basic financial statements but federal awards from federal agencies are not included in the Schedule of Expenditures of Federal Awards because they are a separate legal entity. The audit of these federal awards under Uniform Guidance is conducted by other auditors: • South San Joaquin County Fire Authority Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. In addition, component units can be other organizations for which the primary government’s exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. Separate financial statements for the Tracy Public Improvement Corporation and Tracy Joint Power Financing Authority are not available. Note 2 – Basis of Accounting Funds received under the various grant programs have been recorded within the special revenue funds and enterprise funds of the City. The City utilizes the modified accrual method of accounting for the general fund and special revenue funds. The City utilizes the modified accrual basis of accounting for the special revenue funds, and the full accrual basis of accounting for the enterprise funds. The accompanying Schedule of Expenditures of Federal Awards (“Schedule”) is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Therefore, some amounts presented in the schedule may differ from amounts presented in, or used in, the preparation of the City’s basic financial statements. Note 3 – Schedule of Expenditures of Federal Awards The accompanying Schedule presents the activity of all federal financial assistance programs of the City. Federal financial assistance received directly from federal agencies as well as federal financial assistance passed through the State of California and San Joaquin County Community Development Department is included in the Schedule. The Schedule was prepared from only the accounts of various grant programs and, therefore, does not present the financial position, change in fund balance, or results of operations of the City. De Minimis Rate Used: N Rate Explanation: Note 4 – Indirect Cost Rate The City has not elected to use the 10-percent de minimis indirect rate as allowed under the Uniform Guidance. The accompanying Schedule presents the activity of all federal financial assistance programs of the City. Federal financial assistance received directly from federal agencies as well as federal financial assistance passed through the State of California and San Joaquin County Community Development Department is included in the Schedule. The Schedule was prepared from only the accounts of various grant programs and, therefore, does not present the financial position, change in fund balance, or results of operations of the City.

Title: Note 4 – Indirect Cost Rate Accounting Policies: Note 1 – Reporting Entity The City of Tracy ("City") is a municipal corporation governed by a five-member city council with the mayor elected by the council itself. The City was incorporated in 1888 under the general laws of the State of California and enjoys all the rights and privileges applicable to a General Law City. The component units discussed below are included in the reporting entity because of their operational or financial relationships with the City. • Tracy Public Improvement Corporation • Tracy Joint Power Public Financing Authority The following entity is a discretely presented component unit in the City’s basic financial statements but federal awards from federal agencies are not included in the Schedule of Expenditures of Federal Awards because they are a separate legal entity. The audit of these federal awards under Uniform Guidance is conducted by other auditors: • South San Joaquin County Fire Authority Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. In addition, component units can be other organizations for which the primary government’s exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. Separate financial statements for the Tracy Public Improvement Corporation and Tracy Joint Power Financing Authority are not available. Note 2 – Basis of Accounting Funds received under the various grant programs have been recorded within the special revenue funds and enterprise funds of the City. The City utilizes the modified accrual method of accounting for the general fund and special revenue funds. The City utilizes the modified accrual basis of accounting for the special revenue funds, and the full accrual basis of accounting for the enterprise funds. The accompanying Schedule of Expenditures of Federal Awards (“Schedule”) is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Therefore, some amounts presented in the schedule may differ from amounts presented in, or used in, the preparation of the City’s basic financial statements. Note 3 – Schedule of Expenditures of Federal Awards The accompanying Schedule presents the activity of all federal financial assistance programs of the City. Federal financial assistance received directly from federal agencies as well as federal financial assistance passed through the State of California and San Joaquin County Community Development Department is included in the Schedule. The Schedule was prepared from only the accounts of various grant programs and, therefore, does not present the financial position, change in fund balance, or results of operations of the City. De Minimis Rate Used: N Rate Explanation: Note 4 – Indirect Cost Rate The City has not elected to use the 10-percent de minimis indirect rate as allowed under the Uniform Guidance. The City has not elected to use the 10-percent de minimis indirect rate as allowed under the Uniform Guidance.