Audit 344558

Title: NOTE 3 – FEDERAL LOAN Accounting Policies: The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal award activity of the Town of Kearny, Arizona under programs of the federal government for the year ended June 30, 2024. The information in this 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). Because the Schedule presents only a selected portion of the operations of the Town of Kearny, Arizona, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Town of Kearny, Arizona. Expenditures reported on the Schedule are reported on the modified accrual/accrual basis of accounting. 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 to reimbursement. De Minimis Rate Used: N Rate Explanation: The Town of Kearny, Arizona has not elected to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. The Town was approved by USDA to receive a loan totaling $1,600,000 to finance capital improvements to rehabilitate the Town’s water system. The amount included on the Schedule of Expenditures of Federal Awards included the proceeds used during the year. The balance outstanding on the loan at as of June 30, 2024 is $1,600,000.