Audit 361698

Title: NOTE 3. CONTINGENCIES Accounting Policies: Basis of Presentation: The accompanying schedule of expenditures of federal awards (SEFA) includes the federal award activity of the City of Union City (the “City”) under programs of the federal government for the six month transition year ended December 31, 2024. The information in the SEFA 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 SEFA represents only a selected portion of the operations of the City, it is not intended to and does not present the financial position or changes in fund balance of the City. The accompanying schedule of expenditures of State financial assistance (SESFA) includes New Jersey State (the “State”) award activity of the City under programs of the State government for the six month transition year ended December 31, 2024. The information in the SESFA is presented in accordance with the requirements of New Jersey Office of Management and Budget Circular 15-08, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid (NJ OMB Circular 15-08). Because the SESFA represents only a selected portion of the operations of the City, it is not intended to and does not present the financial position or changes in fund balance of the City. Reporting Entity Administration of the federal and State grant programs awarded to the City is performed by the various departments of the City. The City is the reporting entity for these federal and State grant programs. The City, for purposes of the SEFA and SESFA, includes all of the primary government as defined criteria established by the Governmental Accounting Standards Board. The City administers certain federal and state award programs through subrecipients. Those subrecipients are not considered part of the City’s reporting entity. Basis of Accounting The accounting policies of the City conform to the accounting principles and practices prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the “Division”). Such principles and practices are designed primarily for determining compliance with legal provisions and budgetary restrictions and as a means of reporting on the stewardship of public officials with respect to public funds. Under this method of accounting, the City accounts for federal awards and state financial assistance through accounting practices which differ from those required by accounting principles generally accepted in the United States of America, as described in the following paragraph. In accordance with directives from the Division, the City fully realizes revenues and charges appropriations when grants are adopted by the governing body in the budget of its Current Fund. Grant revenues are realized in the Current Fund and the amount awarded is accounted for as a receivable. Appropriations are charged in the Current Fund and the amount allotted for spending is accounted for as an appropriated grant reserve. Programs within the General Capital Fund and various trust funds are accounted for within the equivalent revenue accounts for those respective funds. Expenditures are measured from payments charged directly to specific grant programs. Local Contributions Local matching contributions are required by certain federal and state grants. The amount or percentage of matching contributions varies with each program. Local matching contributions are generally raised in the Current Fund budget. De Minimis Rate Used: N Rate Explanation: The City has elected not to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. Entitlement to grant funds is generally conditional upon compliance with terms and conditions of the grant agreements and applicable laws and regulations. Federal and state grants, entitlements and cost reimbursements are subject to financial and compliance audits by grantors. Such contingencies are fully disclosed in the Notes to the Financial Statements.

Title: NOTE 4. MONITORING OF SUB-RECIPIENTS Accounting Policies: Basis of Presentation: The accompanying schedule of expenditures of federal awards (SEFA) includes the federal award activity of the City of Union City (the “City”) under programs of the federal government for the six month transition year ended December 31, 2024. The information in the SEFA 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 SEFA represents only a selected portion of the operations of the City, it is not intended to and does not present the financial position or changes in fund balance of the City. The accompanying schedule of expenditures of State financial assistance (SESFA) includes New Jersey State (the “State”) award activity of the City under programs of the State government for the six month transition year ended December 31, 2024. The information in the SESFA is presented in accordance with the requirements of New Jersey Office of Management and Budget Circular 15-08, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid (NJ OMB Circular 15-08). Because the SESFA represents only a selected portion of the operations of the City, it is not intended to and does not present the financial position or changes in fund balance of the City. Reporting Entity Administration of the federal and State grant programs awarded to the City is performed by the various departments of the City. The City is the reporting entity for these federal and State grant programs. The City, for purposes of the SEFA and SESFA, includes all of the primary government as defined criteria established by the Governmental Accounting Standards Board. The City administers certain federal and state award programs through subrecipients. Those subrecipients are not considered part of the City’s reporting entity. Basis of Accounting The accounting policies of the City conform to the accounting principles and practices prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the “Division”). Such principles and practices are designed primarily for determining compliance with legal provisions and budgetary restrictions and as a means of reporting on the stewardship of public officials with respect to public funds. Under this method of accounting, the City accounts for federal awards and state financial assistance through accounting practices which differ from those required by accounting principles generally accepted in the United States of America, as described in the following paragraph. In accordance with directives from the Division, the City fully realizes revenues and charges appropriations when grants are adopted by the governing body in the budget of its Current Fund. Grant revenues are realized in the Current Fund and the amount awarded is accounted for as a receivable. Appropriations are charged in the Current Fund and the amount allotted for spending is accounted for as an appropriated grant reserve. Programs within the General Capital Fund and various trust funds are accounted for within the equivalent revenue accounts for those respective funds. Expenditures are measured from payments charged directly to specific grant programs. Local Contributions Local matching contributions are required by certain federal and state grants. The amount or percentage of matching contributions varies with each program. Local matching contributions are generally raised in the Current Fund budget. De Minimis Rate Used: N Rate Explanation: The City has elected not to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. Under the requirements of the Single Audit Act and State regulations, if the City, as a primary recipient, receives federal and state financial assistance and provides $750,000 or more of such assistance to a sub-recipient in a fiscal year, the City is responsible for determining that the expenditures of federal and state monies passed through to sub-recipients are utilized in accordance with applicable laws and regulations. Further, the Uniform Guidance places other related responsibilities upon the City. Those responsibilities may be discharged in any of several ways, including relying on independent audits performed by subrecipients. Subrecipient audit reports for the six month transition year ended December 31, 2024 were reviewed and findings and questioned costs, if any, were disclosed.

Title: NOTE 5. RELATIONSHIP TO FEDERAL FINANCIAL REPORTS Accounting Policies: Basis of Presentation: The accompanying schedule of expenditures of federal awards (SEFA) includes the federal award activity of the City of Union City (the “City”) under programs of the federal government for the six month transition year ended December 31, 2024. The information in the SEFA 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 SEFA represents only a selected portion of the operations of the City, it is not intended to and does not present the financial position or changes in fund balance of the City. The accompanying schedule of expenditures of State financial assistance (SESFA) includes New Jersey State (the “State”) award activity of the City under programs of the State government for the six month transition year ended December 31, 2024. The information in the SESFA is presented in accordance with the requirements of New Jersey Office of Management and Budget Circular 15-08, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid (NJ OMB Circular 15-08). Because the SESFA represents only a selected portion of the operations of the City, it is not intended to and does not present the financial position or changes in fund balance of the City. Reporting Entity Administration of the federal and State grant programs awarded to the City is performed by the various departments of the City. The City is the reporting entity for these federal and State grant programs. The City, for purposes of the SEFA and SESFA, includes all of the primary government as defined criteria established by the Governmental Accounting Standards Board. The City administers certain federal and state award programs through subrecipients. Those subrecipients are not considered part of the City’s reporting entity. Basis of Accounting The accounting policies of the City conform to the accounting principles and practices prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the “Division”). Such principles and practices are designed primarily for determining compliance with legal provisions and budgetary restrictions and as a means of reporting on the stewardship of public officials with respect to public funds. Under this method of accounting, the City accounts for federal awards and state financial assistance through accounting practices which differ from those required by accounting principles generally accepted in the United States of America, as described in the following paragraph. In accordance with directives from the Division, the City fully realizes revenues and charges appropriations when grants are adopted by the governing body in the budget of its Current Fund. Grant revenues are realized in the Current Fund and the amount awarded is accounted for as a receivable. Appropriations are charged in the Current Fund and the amount allotted for spending is accounted for as an appropriated grant reserve. Programs within the General Capital Fund and various trust funds are accounted for within the equivalent revenue accounts for those respective funds. Expenditures are measured from payments charged directly to specific grant programs. Local Contributions Local matching contributions are required by certain federal and state grants. The amount or percentage of matching contributions varies with each program. Local matching contributions are generally raised in the Current Fund budget. De Minimis Rate Used: N Rate Explanation: The City has elected not to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. The regulations and guidelines governing the preparation of federal and State financial reports vary by federal and state agency and among programs administered by the same agency. Accordingly, the amounts reported in the federal and state financial reports do not necessarily agree with the amounts reported in the accompanying schedules of expenditures of federal awards and state financial assistance, which are prepared on the basis of accounting explained in Note 1.

Title: NOTE 6. PASS-THROUGH AWARDS AND COMMINGLED ASSISTANCE Accounting Policies: Basis of Presentation: The accompanying schedule of expenditures of federal awards (SEFA) includes the federal award activity of the City of Union City (the “City”) under programs of the federal government for the six month transition year ended December 31, 2024. The information in the SEFA 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 SEFA represents only a selected portion of the operations of the City, it is not intended to and does not present the financial position or changes in fund balance of the City. The accompanying schedule of expenditures of State financial assistance (SESFA) includes New Jersey State (the “State”) award activity of the City under programs of the State government for the six month transition year ended December 31, 2024. The information in the SESFA is presented in accordance with the requirements of New Jersey Office of Management and Budget Circular 15-08, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid (NJ OMB Circular 15-08). Because the SESFA represents only a selected portion of the operations of the City, it is not intended to and does not present the financial position or changes in fund balance of the City. Reporting Entity Administration of the federal and State grant programs awarded to the City is performed by the various departments of the City. The City is the reporting entity for these federal and State grant programs. The City, for purposes of the SEFA and SESFA, includes all of the primary government as defined criteria established by the Governmental Accounting Standards Board. The City administers certain federal and state award programs through subrecipients. Those subrecipients are not considered part of the City’s reporting entity. Basis of Accounting The accounting policies of the City conform to the accounting principles and practices prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the “Division”). Such principles and practices are designed primarily for determining compliance with legal provisions and budgetary restrictions and as a means of reporting on the stewardship of public officials with respect to public funds. Under this method of accounting, the City accounts for federal awards and state financial assistance through accounting practices which differ from those required by accounting principles generally accepted in the United States of America, as described in the following paragraph. In accordance with directives from the Division, the City fully realizes revenues and charges appropriations when grants are adopted by the governing body in the budget of its Current Fund. Grant revenues are realized in the Current Fund and the amount awarded is accounted for as a receivable. Appropriations are charged in the Current Fund and the amount allotted for spending is accounted for as an appropriated grant reserve. Programs within the General Capital Fund and various trust funds are accounted for within the equivalent revenue accounts for those respective funds. Expenditures are measured from payments charged directly to specific grant programs. Local Contributions Local matching contributions are required by certain federal and state grants. The amount or percentage of matching contributions varies with each program. Local matching contributions are generally raised in the Current Fund budget. De Minimis Rate Used: N Rate Explanation: The City has elected not to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. The City receives federal and State awards passed-through different levels of government. As a result, the individual sources of federal and State awards may be commingled and not always separately identifiable. In instances in which the federal amounts received are commingled by the State or other levels of government with other funds and cannot be separately identified, they are reported as federal expenditures. In instances in which the State amounts received are commingled by other levels of government, other than federal, and cannot be separately identified, they are reported as State expenditures. The following awards include both state and federal funding which are not separately identifiable, and which are reported on the schedule of expenditures of federal awards: Strengthening Local Public Health Capacity The City receives grant awards from the New Jersey Department of Health and Human Services which include pass-through Federal funding commingled with State NJ Health and Human Services (NJHHS) funding. The source of the Federal funds is the United States Department of Health and Human Services (USHHS) Strengthening Local Public Health Capacity Grants, specifically, which consists of the Epidemiology and Lab Capacity (Covid 19 Enhanced Detection Expansion) Program (Assistance Listing Number 93.323) and the Public Health Crisis Response (COVID Public Health Workforce) Program (Assistance Listing Number 93.354). The City’s accounting system commingles these programs. A review of the USHHS funding indicates approximately 50% is from each of these Federal programs, then passed through the State NJHHS along with State funds. Accordingly, the SEFA allocates this commingled funding as 50% to each.