Audit 5274

Title: NOTE 3. BASIS OF PRESENTATION Accounting Policies: The accounting policies of the City of Bayonne (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 the following accounting practices which differ from those required by accounting principles generally accepted in the United States of America. The City, in accordance with the Division’s directives, fully realizes revenues and charges appropriations when grants are adopted by the governing body in the budget of its Current Fund. The revenues are charged and the receivable accounted for in the Federal and State Grant Fund. Appropriations are charged and the amount allotted for spending is accounted for as an appropriated reserve. Programs within the General Capital Fund and various Trust Funds (other than the Federal and State Grants Fund) are accounted for within the equivalent revenue accounts for those respective funds. Expenditures are measured from payments charged directly to specific grant programs. Accounting functions for the grants are performed by the City’s Finance Office. Grant and program cash funds may be commingled with the City’s other funds provided each grant is accounted for separately within the City’s financial records. Local Contributions – Local matching contributions are required by certain federal and state grants. The amount of percentage of matching contributions varies with each program. Local matching contributions are raised in the Current Fund budget REPORTING ENTITY The City, for purposes of the Schedule of Expenditures of Federal Awards and State Financial Assistance, includes all the funds of the primary government as defined by criteria established by the Governmental Accounting Standards Board , but does not include component units, in accordance with accounting practices prescribed by the Division. The City is the reporting entity for federal award and state financial assistance programs received. Administration of the grant programs is performed by the various departments of the City. De Minimis Rate Used: N Rate Explanation: The City is not utilizing the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance The accompanying Schedules of Expenditures of Federal Awards and State Financial Assistance (the “Schedules”) includes the grant award activity of the City under programs of the federal and state government for the year ended December 31, 2022. The information in these schedules 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”) and the provisions of the New Jersey OMB Circular Letter 15-08, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid. All federal awards received directly from federal agencies or passed through other government agencies are included on the Schedule of Expenditures of Federal Awards. All state awards received directly from state agencies or passed through other government agencies are included on the Schedule of expenditures of State Financial Assistance. Because the Schedules present 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.

Title: NOTE 4. PASS-THROUGH AWARDS Accounting Policies: The accounting policies of the City of Bayonne (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 the following accounting practices which differ from those required by accounting principles generally accepted in the United States of America. The City, in accordance with the Division’s directives, fully realizes revenues and charges appropriations when grants are adopted by the governing body in the budget of its Current Fund. The revenues are charged and the receivable accounted for in the Federal and State Grant Fund. Appropriations are charged and the amount allotted for spending is accounted for as an appropriated reserve. Programs within the General Capital Fund and various Trust Funds (other than the Federal and State Grants Fund) are accounted for within the equivalent revenue accounts for those respective funds. Expenditures are measured from payments charged directly to specific grant programs. Accounting functions for the grants are performed by the City’s Finance Office. Grant and program cash funds may be commingled with the City’s other funds provided each grant is accounted for separately within the City’s financial records. Local Contributions – Local matching contributions are required by certain federal and state grants. The amount of percentage of matching contributions varies with each program. Local matching contributions are raised in the Current Fund budget REPORTING ENTITY The City, for purposes of the Schedule of Expenditures of Federal Awards and State Financial Assistance, includes all the funds of the primary government as defined by criteria established by the Governmental Accounting Standards Board , but does not include component units, in accordance with accounting practices prescribed by the Division. The City is the reporting entity for federal award and state financial assistance programs received. Administration of the grant programs is performed by the various departments of the City. De Minimis Rate Used: N Rate Explanation: The City is not utilizing the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance The City receives certain federal awards from pass-through awards of the state. The amounts received are commingled by the state with other funds and cannot be separately identified.

Title: NOTE 5. CONTINGENCIES Accounting Policies: The accounting policies of the City of Bayonne (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 the following accounting practices which differ from those required by accounting principles generally accepted in the United States of America. The City, in accordance with the Division’s directives, fully realizes revenues and charges appropriations when grants are adopted by the governing body in the budget of its Current Fund. The revenues are charged and the receivable accounted for in the Federal and State Grant Fund. Appropriations are charged and the amount allotted for spending is accounted for as an appropriated reserve. Programs within the General Capital Fund and various Trust Funds (other than the Federal and State Grants Fund) are accounted for within the equivalent revenue accounts for those respective funds. Expenditures are measured from payments charged directly to specific grant programs. Accounting functions for the grants are performed by the City’s Finance Office. Grant and program cash funds may be commingled with the City’s other funds provided each grant is accounted for separately within the City’s financial records. Local Contributions – Local matching contributions are required by certain federal and state grants. The amount of percentage of matching contributions varies with each program. Local matching contributions are raised in the Current Fund budget REPORTING ENTITY The City, for purposes of the Schedule of Expenditures of Federal Awards and State Financial Assistance, includes all the funds of the primary government as defined by criteria established by the Governmental Accounting Standards Board , but does not include component units, in accordance with accounting practices prescribed by the Division. The City is the reporting entity for federal award and state financial assistance programs received. Administration of the grant programs is performed by the various departments of the City. De Minimis Rate Used: N Rate Explanation: The City is not utilizing the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance Entitlement to the 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.

Title: NOTE 6. MONITORING OF SUBRECIPIENTS Accounting Policies: The accounting policies of the City of Bayonne (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 the following accounting practices which differ from those required by accounting principles generally accepted in the United States of America. The City, in accordance with the Division’s directives, fully realizes revenues and charges appropriations when grants are adopted by the governing body in the budget of its Current Fund. The revenues are charged and the receivable accounted for in the Federal and State Grant Fund. Appropriations are charged and the amount allotted for spending is accounted for as an appropriated reserve. Programs within the General Capital Fund and various Trust Funds (other than the Federal and State Grants Fund) are accounted for within the equivalent revenue accounts for those respective funds. Expenditures are measured from payments charged directly to specific grant programs. Accounting functions for the grants are performed by the City’s Finance Office. Grant and program cash funds may be commingled with the City’s other funds provided each grant is accounted for separately within the City’s financial records. Local Contributions – Local matching contributions are required by certain federal and state grants. The amount of percentage of matching contributions varies with each program. Local matching contributions are raised in the Current Fund budget REPORTING ENTITY The City, for purposes of the Schedule of Expenditures of Federal Awards and State Financial Assistance, includes all the funds of the primary government as defined by criteria established by the Governmental Accounting Standards Board , but does not include component units, in accordance with accounting practices prescribed by the Division. The City is the reporting entity for federal award and state financial assistance programs received. Administration of the grant programs is performed by the various departments of the City. De Minimis Rate Used: N Rate Explanation: The City is not utilizing the 10-percent 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 subrecipient in a fiscal year, the City is responsible for determining that the expenditures of federal and state monies passed-through to subrecipients are utilized in accordance with applicable laws and regulations.

Title: NOTE 7. STATE SINGLE AUDIT NOT REQUIRED Accounting Policies: The accounting policies of the City of Bayonne (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 the following accounting practices which differ from those required by accounting principles generally accepted in the United States of America. The City, in accordance with the Division’s directives, fully realizes revenues and charges appropriations when grants are adopted by the governing body in the budget of its Current Fund. The revenues are charged and the receivable accounted for in the Federal and State Grant Fund. Appropriations are charged and the amount allotted for spending is accounted for as an appropriated reserve. Programs within the General Capital Fund and various Trust Funds (other than the Federal and State Grants Fund) are accounted for within the equivalent revenue accounts for those respective funds. Expenditures are measured from payments charged directly to specific grant programs. Accounting functions for the grants are performed by the City’s Finance Office. Grant and program cash funds may be commingled with the City’s other funds provided each grant is accounted for separately within the City’s financial records. Local Contributions – Local matching contributions are required by certain federal and state grants. The amount of percentage of matching contributions varies with each program. Local matching contributions are raised in the Current Fund budget REPORTING ENTITY The City, for purposes of the Schedule of Expenditures of Federal Awards and State Financial Assistance, includes all the funds of the primary government as defined by criteria established by the Governmental Accounting Standards Board , but does not include component units, in accordance with accounting practices prescribed by the Division. The City is the reporting entity for federal award and state financial assistance programs received. Administration of the grant programs is performed by the various departments of the City. De Minimis Rate Used: N Rate Explanation: The City is not utilizing the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance The City’s total expenditures of State Financial Assistance did not exceed $750,000, and therefore no Single Audit of State Programs was required pursuant to NJ New Jersey OMB Circular Letter 15-08.