Audit 42177

Accounting Policies: 1. BASIS OF PRESENTATIONThe accompanying schedule of expenditures of federal awards include the federal grant activity of the National Rural Water Association, Inc. (the Association), under programs of the federal government for the year ended February 28, 2022. The information in the schedule of expenditures of federal awards is presented in accordance with the requirement 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 Association, it is not intended to and does not present the financial position, changes in net assets or cash flows of the Association. For purposes of the schedule, federal awards include all grants, contracts, and similar agreements the Association entered into directly between the U.S. Environment Protection Agency and the U.S. Department of Agriculture and all sub-awards. The Association is awarded a revolving loan fund grant from the U.S. Department of Agricultures Rural Utilities Service to assist small wastewater systems in water and wastewater improvement projects and with funding predevelopment costs. Under the grant, the Association is required to match 50% of the loan funding. The Association requests and receives reimbursement under the grant when the applicable eligible loans have been funded by the Association. The Association does not charge any expenditures to this program. During 2022, the Association requested and received $206,263 from this grant.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESExpenditures 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 allowable or are limited as to reimbursement. The Association uses a provisional indirect cost rate method throughout the period pending the establishment of a final rate after actual indirect and direct costs are determined. The Association has elected not to use the 10% de minimis indirect costs rate allowed under the Uniform Guidance. The indirect cost rates charged to federal awards in 2022 range from 3.33% to 6.49% of direct costs. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate.