HomeMy WebLinkAbout20111746.tiff apMcGee, Hearne & Paiz, LLP
Certified Public Accountants and Consultants
314 West 18th Street,Cheyenne,Wyoming 82001-4404
To the Board of County Commissioners
Weld County,Colorado
P.O. Box 758
Greeley,Colorado 80632
Attention: Barbara Kirkmeyer,Chair
We are pleased to present this report related to our audit of the financial statements and compliance of
Weld County, Colorado (the "County") for the year ended December 31, 2010. This report summarizes
certain matters required by professional standards to be communicated to you in your oversight
responsibility for the County's financial and compliance reporting process.
Statement on Auditing Standards No. 114 requires the auditor to communicate certain matters to keep
those charged with governance adequately informed about matters related to the financial statement audit
that are, in our professional judgment, significant and relevant to the responsibilities of those charged
with governance in overseeing the financial reporting process. The following summarizes these
communications.
The Auditor's Responsibility under Professional Standards
Our responsibility under auditing standards generally accepted in the United States of America;
Government Auditing Standards issued by the Comptroller General of the United States;the provisions of
the Single Audit Act; OMB Circular A-133; and OMB's Compliance Supplement has been described to
you in our arrangement letter dated January 7, 2011.
Accounting Practices
• Adoption of or Change in, Accounting Policies: Management has the ultimate responsibility for the
appropriateness of the accounting policies used by the County. In the current year, the County
adopted Governmental Accounting Standards Board (GASB) Statement No. 51, Accounting and
Financial Reporting for Intangible Assets. The objective of Statement No. 51 is to establish
accounting and financial reporting requirements for intangible assets to reduce inconsistencies in the
accounting and financial reporting of intangible assets among state and local governments. This
Statement requires that all intangible assets not specifically excluded by its scope provisions be
classified as capital assets. This Statement did not have a material impact on the County's financial
statements.
• Significant or Unusual Transactions: We did not identify any significant or unusual transactions or
significant accounting policies in controversial or emerging areas for which there is a lack of
authoritative guidance or consensus.
• Alternative Treatments Discussed with Management: We did not discuss with management any
alternative treatments within accounting principles generally accepted in the United States of America
for accounting policies and practices related to material items during the current audit period.
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-7_020- 201( CSC. f I , Auk. 2011-1746
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Management's Judgments and Accounting Estimates
Accounting estimates are an integral part of the preparation of financial statements and are based upon
management's current judgment. The process used by management encompasses their knowledge and
experience about past and current events and certain assumptions about future events. Management has
informed us that they used all the relevant facts available to them at the time to make the best judgments
about accounting estimates, and we considered this information in the scope of our audit. Estimates
significant to the financial statements include the items listed below. The Board may wish to monitor
throughout the year the process used to compute and record these accounting estimates.
1. Significant Estimate: Allowance for Uncollectible Accounts Receivable in the Paramedic
Enterprise Fund
- Accounting Policy: Accounts are written off when deemed uncollectible.
Uncollectible accounts are estimated using historical information.
- Estimation Process: The County uses a five-year average of its bad-debt write offs to
calculate its current year allowance.
- Comments: We reviewed the calculation of the allowance for doubtful accounts
based on management's estimate.
2. Significant Estimate: Pension and Net Other Post-Employment Benefits(OPEB)
Obligations
- Accounting Policy: These liabilities are calculated in accordance with GASB
Statement No. 27, Accounting for Pensions by State and Local Governmental
Employers, and GASB Statement No. 45, Accounting and Financial Reporting by
Employers for Postemployment Benefits Other Than Pensions.
- Estimation Process: Estimates are provided by an independent actuary.
- Comments: We received a copy of the actuary's report to evaluate these estimates.
3. Significant Estimate: Health Insurance Liability for Incurred but not Reported Claims
- Accounting Policy: The County records a liability in the Internal Service Health
Insurance Fund arising from services rendered to participants before December 31,
2010 for which a claim had not been submitted for payments.
- Estimation Process: The liability for estimated unpaid claims is provided by the
County's third-party administrator.
- Comments: We received a copy of the third-party administrator's report to evaluate
this estimate.
4. Significant Estimate: Workers' Compensation Liability for Estimated Claims Payable
- Accounting Policy: The County records a liability in the Internal Service Liability
Insurance Fund for claims payable as of December 31,2010.
- Estimation Process: The liability for estimated claims payable is provided by the
County's third-party administrator.
- Comments: We received a copy of the third-party administrator's report to evaluate
this estimate.
5. Significant Estimate: Value and Condition of Gravel Roads
- Accounting Policy: The County uses the modified approach to account for gravel
roads. Under this approach, these roads are not depreciated but the condition of the
roads is continuously monitored. Improvements to the roads are capitalized but
maintenance is not.
- Estimation Process: The County has a policy which includes criteria for what is
considered an improvement to a gravel road. The County continuously monitors day-
to-day conditions of the gravel roads.
6. Significant Estimate: Medicare Adjustments to Revenue in the Paramedic Enterprise Fund
- Accounting Policy: The County creates an allowance against Paramedic Enterprise
Fund revenue for estimated amounts that will not be collected from Medicare or
Medicaid.
- Estimation Process: Amounts expected to be collected are determined by fee
structures set by the centers for Medicare and Medicaid Services.
Audit Adjustments
Audit adjustments were made to the original trial balances presented to us to begin our audit. A summary
of audit adjustments made to the original trial balance is attached to the audit representation letter.
Uncorrected Misstatements
During the course of our audit, we accumulated uncorrected misstatements that were determined by
management to be immaterial, both individually and in the aggregate, to the statements of financial
position, results of operations, and cash flows and to the related financial statement disclosures. A
summary of uncorrected misstatements is included in the attached audit representation letter.
Based on discussions with County personnel, the uncorrected cash cut-off misstatement as of December
31, 2010 within the Agency Fund of$1,670,418 related to the timing of recognition of DMV payments
received and has subsequently been corrected and going forward will not be an issue.
Disagreements with Management
We encountered no disagreements with management over the application of significant accounting
principles, the basis for management's judgments on any significant matters, the scope of the audit, or
significant disclosures to be included in the financial statements.
Consultation with Other Accountants
We are not aware of any consultations management had with other accountants about accounting or
auditing matters.
Significant Issues Discussed with Management
No significant issues arising from the audit were discussed or were the subject of correspondence with
management.
Difficulties Encountered in Performing the Audit
We did not encounter any difficulties in dealing with management during the audit. The County provided
us with our own electronic access to supporting documentation while in the field,which facilitated timely
completion of the audit.
Certain Written Communications between Management and Our Firm
A copy of the audit representation letter between our firm and the management of the County is attached
to this letter.
This report is intended solely for the information and use of the Board of County Commissioners and
management and is not intended to be and should not be used by anyone other than these specified
parties. It will be our pleasure to respond to any questions you have regarding this report. We appreciate
the opportunity to be of service to Weld County, Colorado.
7// 4,oE.- /-,'qnvnt Ifu( 14AP
Cheyenne,Wyoming
June 21,2011
1861 - 2011 Weld County Government
915 10th Street
PO Box 758 Greeley CO 80632-0758
W E L DEC O U N T Y 970-356-4000
I I www.co.weld.co.us
June 15, 2011
McGee, Hearne& Paiz, LIP
P.O. Box 1088
Cheyenne,Wyoming 82003
In connection with your audit of the basic financial statements of Weld County,Colorado(the"County")
as of and for the year ended December 31, 2010, we confirm that we are responsible for the fair
presentation in the financial statements of financial position, changes in financial position, and cash
flows in conformity with accounting principles generally accepted in the United States of America.
We confirm to the best of our knowledge and belief as of June 15, 2011, the following representations
made to you during your audit:
I. The financial statements referred to above are fairly presented in conformity with accounting
principles generally accepted in the United States of America.
2. We have identified for you all organizations that are a part of this reporting entity or with which
we have a relationship, as these organizations are defined in Section 2100 of the Governmental
Accounting Standards Board's Codification of Governmental Accounting and Financial Reporting
Standards,that are:
a. Component units.
b. Jointly governed organizations in which we participated.
3. We have identified for you all of our funds, governmental functions, and identifiable business-
type activities.
4. We have properly classified all funds and activities.
5. We have properly determined and reported the major governmental and enterprise funds based
on the required quantitative criteria. We have determined the following funds to be major for
public interest reasons: Human Services Fund and Capital Expenditures Fund. We believe that
all judgmentally determined major funds are particularly important to the financial statement
users.
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6. We are responsible for compliance with laws and regulations applicable to the County, including
adopting,approving, and amending budgets.
7. We have identified and disclosed to you all laws and regulations that have a direct and material
effect on the determination of financial statement amounts, including legal and contractual
provisions for reporting specific activities in separate funds.
8. We have made available to you:
a. All financial records and related data of all funds and activities, including those of all
special funds, programs, departments, projects, activities, etc., in existence at any time
during the period covered by your audit.
b. All minutes of the meetings of the governing board and committees of board members or
summaries of actions of recent meetings for which minutes have not yet been prepared.
c. All communications from grantors, lenders, other funding sources or regulatory agencies
concerning noncompliance with:
i Statutory, regulatory or contractual provisions or requirements.
ii Financial reporting practices that could have a material effect on the financial
statements.
9. We have no knowledge of fraud or suspected fraud affecting the County involving:
a. Management.
b. Employees who have significant roles in the internal control.
c. Others where the fraud could have a material effect on the financial statements.
10. We acknowledge our responsibility for the design and implementation of programs and controls
to provide reasonable assurance that fraud is prevented and detected.
11. We have no knowledge of any allegations of fraud or suspected fraud affecting the County,
received in communications from employees, former employees, analysts, regulators, short
sellers,or others.
12. Other than the matter identified as finding 2010-01 in the Schedule of Findings and Questioned
Costs,we are aware of no significant deficiencies, including material weaknesses, in the design or
operation of internal controls that could adversely affect the County's ability to record, process,
summarize, and report financial data.
13. There have been no communications from regulatory agencies concerning noncompliance with,
or deficiencies in, financial reporting practices.
14. We have no plans or intentions that may materially affect the carrying value or classification of
assets and liabilities.
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15. The following have been properly recorded and/or disclosed in the financial statements:
a. Related-party transactions, including those with component units for which the County is
accountable, as defined by Section 2100 of the Governmental Accounting Standard
Board's Codification of Governmental Accounting and Financial Reporting Standards, and
interfund transactions, including interfund accounts and advances receivable and payable,
sale and purchase transactions, interfund transfers, long-term loans, leasing arrangements
and guarantees, all of which have been recorded in accordance with the economic
substance of the transaction and appropriately classified and reported.
b. The fair value of investments.
c. Amounts of contractual obligations for construction and purchase of real property or
equipment not included in the liabilities or encumbrances recorded on the books.
d. All significant estimates and material concentrations known to management which are
required to be disclosed in accordance with the AICPA's Statement of Position 94-6,
Disclosure of Certain Significant Risks and Uncertainties. Significant estimates are
estimates at the balance sheet date that could change materially within the next year.
Concentrations refer to volumes of business, revenues, available sources of supply, or
markets for which events could occur which would significantly disrupt normal finances
within the next year.
e. Assets and liabilities measured at fair value.
f. Deposits and investment securities category of custodial credit risk.
g. Restricted cash.
16. We are responsible for making the accounting estimates included in the financial statements.
Those estimates reflect our judgment based on our knowledge and experience about past and
current events and our assumptions about conditions we expect to exist and courses of action
we expect to take. In that regard,adequate provisions have been made, if necessary:
a. To reduce receivables to their estimated net collectible amounts.
b. To reduce obsolete, damaged, or excess inventories to their estimated net realizable
values.
c. For risk retention, including uninsured losses or loss retentions (deductibles) attributable
to events occurring through December 31, 2010 and/or expected retroactive insurance
premium adjustments applicable to periods through December 31, 2010.
d. For pension obligations, postretirement benefits other than pensions and deferred
compensation agreements attributable to employee services rendered through December
31,2010.
17. There are no:
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a. Material transactions that have not been properly recorded in the accounting records
underlying the financial statements.
b. Violations or possible violations of laws or regulations whose effects should be considered
for disclosure in the financial statements or as a basis for recording a loss contingency. In
that regard, we specifically represent that we have not been designated as, or alleged to
be, a potentially responsible party by the Federal Environmental Protection Agency or any
equivalent state agencies in connection with any environmental contamination.
c. Other material liabilities or gain or loss contingencies that are required to be accrued or
disclosed by Statement of Financial Accounting Standards No. 5 and/or GASB Statement
No. 10.
d. Guarantees,whether written or oral, under which the County is contingently liable.
e. Line of credit or similar arrangements.
f. Arrangements with financial institutions involving compensating balances.
g. Agreements to repurchase assets previously sold.
h. Security agreements in effect under the Uniform Commercial Code.
i. Liens or encumbrances on assets or revenues or any assets or revenues which were
pledged as collateral for any liability or which were subordinated in any way.
j. Liabilities which are subordinated in any way to any other actual or possible liabilities.
k. Debt issue repurchase options or agreements, or sinking fund debt repurchase ordinance
requirements.
I. Debt issue provisions.
m. Material leases or material amounts of rental obligations under long-term leases.
n. Authorized but unissued bonds and/or notes.
o. Risk financing activities.
p. Derivative financial instruments.
q. Special and extraordinary items.
r. Arbitrage rebate liabilities.
s. Impairment of capital assets.
t. Investments, intangibles, or other assets which have permanently declined in value.
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u. Material losses to be sustained in the fulfillment of, or from the inability to fulfill, any
service commitments.
v. Material losses to be sustained as a result of purchase commitments.
w. Environmental clean-up obligations.
18. There are no unasserted claims or assessments that our lawyer has advised us are probable of
assertion and must be disclosed in accordance with Statement of Financial Accounting Standards
No. 5 and/or GASB Statement No. 10.
19. We have no direct or indirect, legal or moral, obligation for any debt of any organization, public
or private,that is not disclosed in the financial statements.
20. We have satisfactory title to all owned assets.
21. We have complied with all aspects of contractual agreements that would have a material effect
on the financial statements in the event of noncompliance.
22. Net asset components (invested in capital assets, net of related debt; restricted; and
unrestricted)and fund balances are properly classified and, when applicable, approved.
23. Expenses or expenditures have been appropriately classified in or allocated to functions and
programs in the statement of activities,and allocations have been made on a reasonable basis.
24. Revenues are appropriately classified in the statement of activities within program revenues and
general revenues.
25. Capital assets, including infrastructure assets, are properly capitalized, reported and depreciated.
26. Required supplementary information(RSl) is properly measured and presented.
27. We are responsible for and have reviewed and approved the proposed adjustments to the trial
balances identified during the audit, which are included in the summarized schedule of posted
adjustments and will post all adjustments accordingly. These adjustments are attached as
Appendix A. We have reviewed, approved, and are responsible for overseeing the preparation
and completion of the basic financial statements and related notes.
In connection with your audit, conducted in accordance with Government Auditing Standards, we
confirm:
28. We are responsible for:
a. Compliance with the laws, regulations, and provisions of contracts and grant agreements
applicable to the County.
b. Establishing and maintaining effective internal control over financial reporting.
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29. We have identified and disclosed to you all laws, regulations, and provisions of contracts and
grant agreements that have a direct and material effect on the determinations of financial
statement amounts or other financial data significant to audit objectives.
30. There are no violations (or possible violations) of laws, regulations, and provisions of contracts
and grant agreements whose effects should be considered for disclosure in the auditor's report
on noncompliance.
31. We have a process to track the status of audit findings and recommendations.
32. We have identified for you previous audits, attestation engagements, performance audits, or
other studies related to the objectives of the audit being undertaken and the corrective action
taken to address significant findings and recommendations.
33. We have provided you with our views on your reported findings, conclusions, and
recommendations, as well as our planned corrective actions for the report.
In connection with your audit of Federal awards conducted in accordance with OMB Circular A-133,
Audits of States, Local Governments, and Non-Profit Organizations,we confirm:
34. We are responsible for complying, and we have complied, with the requirements of OMB Circular
A-133.
35. We are responsible for understanding and complying with the requirements of laws, regulations,
and the provisions of contracts and grant agreements related to each of our Federal programs.
36. We are responsible for establishing and maintaining, and have established and maintained,
effective internal control over compliance for Federal programs that provides reasonable
assurance that the County is managing Federal awards in compliance with laws, regulations,and
the provisions of contracts or grant agreements that could have a material effect on our Federal
programs.
37. We have prepared the schedule of expenditures of Federal awards in accordance with Circular A-
133 and have included expenditures made during the period being audited for all awards
provided by Federal agencies in the form of grants, Federal cost-reimbursement contracts, loans,
loan guarantees, property (including donated surplus property), cooperative agreements,
interest subsidies, insurance, food commodities,direct appropriations,and other assistance.
38. We have identified and disclosed to you the requirements of laws, regulations, and the
provisions of contracts and grant agreements that are considered to have a direct and material
effect on each major program.
39. We have made available all contracts and grant agreements (including amendments, if any) and
any other correspondence relevant to Federal programs and related activities that have taken
place with Federal agencies or pass-through entities.
40. We have identified and disclosed to you all amounts questioned and all known noncompliance
with the direct and material compliance requirements of Federal awards.
41. We believe that we have complied with the direct and material compliance requirements.
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42. We have made available all documentation related to compliance with the direct and material
compliance requirements, including information related to Federal program financial reports and
claims for advances and reimbursements.
43. We have provided you with our interpretations of any compliance requirements that have
varying interpretations.
44. There have been no communications from grantors and pass-through entities concerning
possible noncompliance with the direct and material compliance requirements, including
communications received from the end of the period covered by the compliance audit to the
date of your report.
45. We have disclosed to you the findings received and related corrective actions taken for previous
audits, attestation engagements, and internal or external monitoring that directly relate to the
objectives of the compliance audit, including findings received and corrective actions taken from
the end of the period covered by the compliance audit to the date of your report.
46. We are responsible for taking corrective action on audit findings of the compliance audit.
47. We have provided you with all information on the status of the follow-up on prior audit findings
by Federal awarding agencies and pass-through entities, including all management decisions.
48. There have been no subsequent events that provide additional evidence with respect to
conditions that existed at the end of the reporting period that affect noncompliance during the
reporting period.
49. There has been no known noncompliance with direct and material compliance requirements
occurring subsequent to the period covered by your report.
50. There has been no changes in internal control over compliance or other factors that might
significantly affect internal control, including any corrective action taken by us with regard to
significant deficiencies in internal control over compliance (including material weaknesses in
internal control over compliance), have occurred subsequent to the date as of which compliance
is audited.
51. Federal program financial reports and claims for advances and reimbursements are supported by
the books and records from which the basic financial statements have been prepared.
52. The copies of Federal program financial reports provided to you are true copies of the reports
submitted, or electronically transmitted, to the Federal agency or pass-through entity, as
applicable.
53. We have charged costs to Federal awards in accordance with applicable cost principles.
54. We are responsible for, and have accurately prepared, the summary schedule of prior audit
findings to include all findings required to be included by Circular A-133.
55. We have accurately completed or reviewed the appropriate sections of the data collection form.
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No events or transactions, other than those disclosed in the financial statements, have occurred
subsequent to the balance sheet date that would require adjustment to, or disclosure in, the financial
statements.
During the course of your audit, you may have accumulated records containing data which should be
reflected in our books and records. All such data have been so reflected. Accordingly, copies of such
records in your possession are no longer needed by us.
As of and for the Year Ended December 31, 2010
We believe that the effects of the uncorrected misstatements aggregated by you and summarized on
the next page are immaterial, both individually and in the aggregate, to the opinion units of the basic
financial statements. For purposes of this representation, we consider items to be material, regardless
of their size, if they involve the misstatement or omission of accounting information that, in light of
surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the
information would be changed or influenced by the omission or misstatement.
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iiflbct-Debit(Credit)
Beginning
Assets Liabilities Equity Revenue Expenses
FUND LEVEL STATENIINTS
General Fund:
Adjust expenditures for effect of 2009 prepaid
recorded in 2010 $ - $ - $ (101,200) $ - $ 101,200
Public Works Fund:
Record 2010 receipt of highway Users'Tax as
2009 revenue based on date earned $ - $ - $ (1,083,506) $ 1,083,506 $ -
Social Services Fund:
Record current year expenditures removed
due to prior period overstatement $ - $ - $ (605,674) $ - S 605,674
Human Services Fund:
receivable not received within 60 days after
year end $ - $ (30,000) $ - $ 30,000 $ -
Remove accrued compensated absences from
fund level financial statements - 164,454 (172,310) - 7,856
$ - $ 134,454 $ (172,310) $ 30,000 $ 7,856
Aggregate Non-major Governmental Funds:
Record prior period understatement of health
insurance IBNR expensed in current period $ - $ - $ 1,900,000 $ - $ (1,900,000)
Record deferred revenue for accounts
receivable not received within 60 days after
yearend in the Public I lealth Fund - (19,691) - 19,691 -
Record cash and investments cut-off item in
the Agency Fund (233,881) 233,881 - - -
Record cash and investments cut-off item in
the Agency Fund 1,670,418 (1,670,418) - - -
$ 1,436,537 $ (1.456.228) $ 1,900,000 $ 19,691 $ (1900,000)
GOVERNMENT WIDE STATEMENTS
Governmental Activities:
Record prior period understatement of health
insurance 1BNRexpensed in current period $ - $ - $ 1,900,000 $ • $ (1,900,000)
Record current year expenditures removed
due to prior period overstatement - - (605,674) - 605,674
Record 2010 receipt ofllighway Users'Tax as
2009 revenue based on date earned - - (1,083,506) 1,083,506 -
Adjust expenditures for effect of 2009 prepaid
recorded in 2010 - - (101,200) - 101,200
Record unrealized loss on bond investments (433,381) - - - 433,381
Move capitalization of infrastructure in the
current period to the prior period - - (154,233) - 154.233
$ (433,381) $ - S (44,613) $ 1,083,506 $ (605,512)
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WELD COUNTY, COLORADO
44VL
Barbara Kirkme er,Chair of Board of Monic Daniels-Mika, Director of Finance and
County Commissioners Admin tration
Page 10 of 10
APPENDIX A
WELD COUNTY,COLORADO
Adjusting Journal Entries Report
December 31,2010
Account Description Debit Credit
To record en,"'p,'vldedby cl ent.
10-1000-10000-12550-1000 GF01 Accounts Rec-Customer $ - $ 21,753
10-1000-10000-20110-1000 GF01 Accounts Payable-Accrual - 12,683
10-1000-22400-44100-2000 GF01 Charge for Services 34,436 -
$ 34,436 $ 34,436
Adjusting Journal Entries JE# 2
To record`entry provided by client.
62-6200-10000-24300-10001S01 Deferred Grant Revenue $ - $ 1,017,000
62-6200-93100-46900-1500 IS01 Donations 1,017,000 -
$ 1,017,000 $ 1,017,000
Adjusting Journal Entries JE# 3
To adjust highway tax revenue and receivable based on amount confirmed.
20-2000-10000-13200-1000 SRF01 Due from External $ 923,915 $ -
20-2000-90100-43340-3000 SRF01 Highway User - 923,915
$ 923,915 $ 923,915
Adjusting Journal Entries JE# 4
To record construction expenditures for services performed in 2010.
20-2000-10000-20200-1000 SRF01 Accounts Payable $ - $ 323,254
20-2000-32500-64500-3000 SRF01 Strategic Roads 323,254 -
$ 323,254 $ 323,254
Adjusting Journal Entries JE# 5
To remove accounts receivable for funds received prior to year end.
21-2100-10000-12800-1000 SRF02 Grants Receivable $ - $ 209,525
21-2100-42GKI-43360-4000 SRF02 Reimbursements 209,525 -
$ 209,525 $ 209,525
Adjusting Journal Entries JE # 6
To remove accounts receivable for funds received prior to year end.
26-2600-10000-12800-1000 SRF03 Grants Receivable $ - $ 49,068
26-2678-60000-43200-5000 SRF03 Federal Grants 49,068 -
$ 49,068 $ 49,068
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