Audit 360657

Title: 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 OMB Circular A-122, Cost Principles for Non-Profit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: No de minimis cost rate was used The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal loan activity of Innis Water Corporation, Inc. (Innis Water) under programs of the federal government for the year ended December 31, 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 Innis Water, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Innis Water.

Title: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 OMB Circular A-122, Cost Principles for Non-Profit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: No de minimis cost rate was used Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMB Circular A-122, Cost Principles for Non-Profit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement.

Title: U.S. DEPARTEMENT OF AGRICULTURE LOANS 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 OMB Circular A-122, Cost Principles for Non-Profit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: No de minimis cost rate was used The expenditures noted above for the Water and Waste Disposal Systems for Rural Communities are related to a loan with an original amount of $1,571,000. The loan balance at December 31, 2024 was $1,366,861. Monthly payments to the USDA are made in the amount of $5,593 and began in October of 2016. This loan is scheduled to be repaid over a period of 40 years at an interest rate of 2.875%.