Audit 356785

Title: A. BASIS OF PRESENTATION Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowed or are limited as to reimbursement. De Minimis Rate Used: Y Rate Explanation: The City has elected to use the ten percent de minimis indirect cost rate, as allowed under Uniform Guidance. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the City of Freeport, Florida (the City) under programs of the federal government for the year ended September 30, 2024. The information in the 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 City, it is not intended to and does not present the net position or changes in net position of the City.

Title: D. STATE REVOLVING FUND LOAN PROJECTS Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowed or are limited as to reimbursement. De Minimis Rate Used: Y Rate Explanation: The City has elected to use the ten percent de minimis indirect cost rate, as allowed under Uniform Guidance. The City has entered into various loan agreements with the State Revolving Fund (SRF) administered by the Florida Department of Environmental Protection (FDEP) for the engineering and construction of a wastewater pollution control facility. Expenditures reported on the Schedule related to this project are considered expended when the funds are drawn down, which occurs upon approval of loan draw requests by FDEP, regardless of when the underlying expenditure is incurred under the modified accrual basis of accounting. As a result, a portion of the project expenditures for the state financial assistance reported in the Schedule were incurred in a prior period, but the related loan draw requests for such expenditures were not approved by FDEP until the fiscal year ended September 30, 2024. As of September 30,2024, the City reported total outstanding SRF loan balances of $814,912.