Audit 352090

Title: Note 1 – Reporting Entity Accounting Policies: The activity of the City’s federal award programs is reported within the water fund, capital projects Fund and the special revenue funds of the City. The City utilizes the modified accrual basis of accounting for the capital projects fund and the special revenue funds and full accrual basis of accounting for the water fund as described in Note 1 to the City’s basic financial statements. The accompanying Schedule of Expenditures of Federal Awards (the “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 (the “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. De Minimis Rate Used: N Rate Explanation: The City did not elect to use the 10% de minimis cost rate. The financial reporting entity, as defined by the Governmental Accounting Standards Board (“GASB”) Codification, consists of the primary government, which is the City of Indio, California (the “City”), organizations for which the primary government is financially accountable, and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the City’s financial statements to be misleading or incomplete.

Title: Note 2 – Summary of Significant Accounting Policies Accounting Policies: The activity of the City’s federal award programs is reported within the water fund, capital projects Fund and the special revenue funds of the City. The City utilizes the modified accrual basis of accounting for the capital projects fund and the special revenue funds and full accrual basis of accounting for the water fund as described in Note 1 to the City’s basic financial statements. The accompanying Schedule of Expenditures of Federal Awards (the “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 (the “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. De Minimis Rate Used: N Rate Explanation: The City did not elect to use the 10% de minimis cost rate. Basis of Accounting The activity of the City’s federal award programs is reported within the Water Enterprise Fund, capital projects fund and the special revenue funds of the City. The City utilizes the modified accrual basis of accounting for the capital projects fund and the special revenue funds and full accrual basis of accounting for the Water Enterprise Fund as described in Note 1 to the City’s basic financial statements. The accompanying Schedule of Expenditures of Federal Awards (the “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 (the “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. 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 California Department of Transportation, the California Office of Traffic Safety, and the California Water Resources Control Board are included in the Schedule. The Schedule was prepared from only the accounts of various grant programs and, therefore, does not present the financial position or results of operations of the City. Indirect Cost Rate The City did not elect to use the 10% de minimis cost rate.