Audit 397967

The accompanying Schedule of Expenditures of Federal and State Awards (Schedule) presents the activity of all applicable federal and state financial assistance programs of the City of Longview (City). The reporting entity is defined in Note 1 to the City’s financial statements. Federal and state financial assistance received directly from federal and state agencies as well as federal and state financial assistance passed through other government agencies is included on the schedule. Federal and state awards are organized by the City of Longview on the basis of funds, each of which is considered a separate accounting entity. The City has created several types of funds and a number of individual funds within each fund type. Special Revenue Funds are used to account for resources restricted to, or designated for, specific purposes by a grantor. The majority of federal and state grant funds were accounted for in the Special Revenue Grants Fund, the Housing Assistance Fund, the Transit System Fund, and the E-911 Fund, components of the Governmental Fund Type. In the current year, construction related grants were accounted for within the Water Utilities Fund and the Capital Projects Fund using project codes to separately track expenditure by project. Also in the current year, Coronavirus Relief Funds were accounted for in the General Fund due to the qualifying public safety expenditures being accounted for in the General Fund. Governmental funds use the modified accrual basis of accounting. Under this method, revenue is recognized in the accounting period in which it becomes both available and measurable. Expenditures are recognized in the accounting period in which the fund liability is incurred, if measurable, as under accrual accounting. The Water Utilities Fund is an enterprise fund, which uses the accrual basis of accounting where expenses are recorded when a liability is incurred, regardless of the timing of the related cash flow. Federal and state grant funds are considered to be earned to the extent of expenditures made under the provisions of the grant, and accordingly, when such funds are received, they are recorded as deferred inflows of resources, or advance of grant funds, until earned. The accompanying Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administration Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and Texas Grant Management Standards. Because the Schedule presents only a selected portion of the activities of the City, it is not intended to and does not present the basic financial statements of the City.

For indirect costs, the amounts expended are claimed as an indirect cost recovery using an approved cost allocation plan. The City has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.