Notes to SEFA
The accompanying schedule of expenditures of federal awards includes the federal grant activity of Smith County, Texas under programs of the federal government for the year ended September 30, 2025 and is presented on the modified accrual basis of accounting. The information in this 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 (Uniform Guidance). Because the schedule presents only a selected portion of the operations of Smith County, Texas, it is not intended to and does not present the financial position, changes in net assets or cash flows of Smith County, Texas.
Smith County did not receive any non-cash assistance through federal awards during the year ended September 30, 2025. There were no federal loans or loan guarantees outstanding at year end. Certain federal awards require Smith County to maintain adequate insurance coverage. Following is a summary of Smith County’s insurance policies and the liability limits: Type of Coverage Liability Limit Property $277,471,060 Commercial General Liability 100K/300K/100K Automobile 100K/300K/100K Crime 250,000 Equipment 50,000,000 Public Officials Liability 2,000,000 Law Enforcement Liability 2,000,000 Law Enforcement Animals 30,000
During the current fiscal year, the County identified a timing difference related to the recognition of expenditures for the American Rescue Plan Act (ARPA) funds. The error pertained solely to the period in which certain expenditures were recorded and did not affect the total amount or eligibility of expenditures recognized under the ARPA program. As a result, expenditures for ARPA funds reported in the Schedule of Expenditures of Federal Awards (SEFA) for the current year include adjustments to properly reflect the timing of eligible expenditures. The County has reconciled the SEFA amounts to the financial statements and ensured that the total expenditures reported for the ARPA program are accurate for the periods presented. The accounting policy for federal grant revenue and expenditure recognition is to record expenditures in the period in which the underlying activity occurs and to recognize revenue as eligible expenditures are incurred. The County has reviewed and updated procedures to prevent similar timing differences in future periods. This disclosure is made in accordance with Uniform Guidance (2 CFR 200.510(b)) and GASB Statement No. 100, which require disclosure of significant accounting policies and material differences or corrections in the notes to the financial statements and SEFA.
The County did not elect to use the 10 percent de minimis indirect cost rate as covered in 2 CFR § 200.414.