Notes to SEFA
Title: NOTE 1 Basis of Presentation
Accounting Policies: NOTE 2 - Summary of Significant Accounting Policies Expenditures reported on the schedule are reported on the modified 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 City has elected not to use the 10-percent de minimus indirect cost rate allowed under the Uniform Guidance. State matching share programs follow the federal guidance.
De Minimis Rate Used: N
Rate Explanation: Auditee did not use the de minimis cost rate
The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the Federal award activity of the City of Middletown under programs of the federal government for the year ended December 31, 2022. Federal awards received directly from the Federal agencies as well as Federal awards passed through other government agencies are included in the Schedule. The federal information in this schedule 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”). Because the schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position, or cash flows of the City.
Title: NOTE 3 Loans Outstanding
Accounting Policies: NOTE 2 - Summary of Significant Accounting Policies Expenditures reported on the schedule are reported on the modified 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 City has elected not to use the 10-percent de minimus indirect cost rate allowed under the Uniform Guidance. State matching share programs follow the federal guidance.
De Minimis Rate Used: N
Rate Explanation: Auditee did not use the de minimis cost rate
The City had the following gross loan receivable balances outstanding at December 31, 2022, which were originally funded with federal awards. Loans made during the year are included in the federal expenditures presented in the schedule:
Title: NOTE 4 Reconciliation to Financial Statements
Accounting Policies: NOTE 2 - Summary of Significant Accounting Policies Expenditures reported on the schedule are reported on the modified 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 City has elected not to use the 10-percent de minimus indirect cost rate allowed under the Uniform Guidance. State matching share programs follow the federal guidance.
De Minimis Rate Used: N
Rate Explanation: Auditee did not use the de minimis cost rate
The federal expenditures presented in the Schedule of Expenditures of Federal Awards (the “SEFA”) reconcile to the Federal revenue reported in the Statement of Revenues, Expenditures, and Changes in Fund Balance as follows:
Title: NOTE 5 Section 108 Loans
Accounting Policies: NOTE 2 - Summary of Significant Accounting Policies Expenditures reported on the schedule are reported on the modified 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 City has elected not to use the 10-percent de minimus indirect cost rate allowed under the Uniform Guidance. State matching share programs follow the federal guidance.
De Minimis Rate Used: N
Rate Explanation: Auditee did not use the de minimis cost rate
The City has obtained loans through HUD for the purposes of issuing federally guaranteed loans to local businesses in order to stimulate revitalization of local neighborhoods, and to inspire private economic activity. Current and future Community Development Block Grant (“CDBG”) allocations are required to be pledged as security for these loans, in order to be able to repay the loan without need for current or future CDBG mortgage dollars to be used for repayment. The debt service requirements for loan repayment are as follows: