Audit 44072

Accounting Policies: NOTE 1 GENERALThe accompanying Schedule of Expenditures of Federal Awards presents the activity of all federal awardprograms of City of Los Fresnos, Texas, for the year ended September 30, 2022. The reporting entity consists ofthe primary government, organizations for which the primary government is financially accountable, and otherorganizations for which the primary government is not accountable, but for which the nature and significance oftheir relationship with the primary government are such that exclusion would cause the reporting entitysfinancial statements to be misleading or incomplete.Financial accountability exists if a primary government appoints a voting majority of an organizations governingBoard and is either able to impose its will on that organization or there is a potential for the organization toprovide specific financial benefits to, or impose specific financial burdens on, the primary government. A primarygovernment may also be financially accountable for governmental organizations with a separately electedgoverning Board, a governing Board appointed by another government, or a jointly appointed Board that isfiscally dependent on the primary government.In accordance with Governmental Accounting Standards Board requirements, the City has reviewed other entitiesand activities for possible inclusion in the reporting entity and determined that there are none; however, federalfinancial assistance passed through other governmental agencies is included on the schedule.NOTE 2 MEASUREMENT FOCUS AND BASIS OF ACCOUNTINGThe federal and state grant funds were accounted for in the Special Revenue Funds and within the General Fund.The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. TheGovernmental Fund types are accounted for using a current financial resources measurement focus. With theGovernmental Fund type measurement focus, only current assets and current liabilities generally are included onthe balance sheet. Operating statements of these funds present increases (i.e., revenues and other financingsources) and decreases (i.e., expenditures and other financing uses) in net current assets.The modified accrual basis of accounting is used for the Governmental Fund types. This basis of accountingrecognizes revenues in the accounting period in which they become susceptible to accrual, i.e., both measurableand available, and expenditures in the accounting period in which the fund liability is incurred, if measurable,except for certain compensated absences and claims and judgments, which are recognized when the obligationsare expected to be liquidated with expendable available financial resources.NOTE 3 SUBRECIPIENTSDuring the year ended September 30, 2022, the City had no subrecipients. NOTE 4 FEDERAL LOANS AND LOAN GUARANTEESDuring the year ended September 30, 2022, the City had no outstanding federal loans payable or loan guarantees.NOTE 5 FEDERALLY FUNDED INSURANCEDuring the year ended September 30, 2022, the City had no federally funded insurance.NOTE 6 NONCASH AWARDSDuring the year ended September 30, 2022, the City did not receive any noncash federal awards.NOTE 7 INDIRECT COST RATEThe City does not utilize the de minimus 10% indirect cost rate. Indirect costs, where applicable, are negotiatedwith the agency providing the grant award to the City. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate.