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C47 <br />JOHNSTON- LEE - HARNETT COMMUNITY ACTION, INCORPORATED <br />Note to Schedule of Expenditures of Federal Awards <br />for the year ended June 30, 2013 <br />1. BASIS OF PRESENTATION <br />The accompanying schedule of expenditures of federal awards includes the federal awards <br />activity of Johnston - Lee - Harnett Community Action, Incorporated and is presented on the <br />modified -cash basis of accounting. The modified -cash basis used by management differs in <br />many respects from accounting principles generally accepted in the United States of America as <br />detailed below: <br />(a) the acquisition of property and equipment is shown as an expense, which means that <br />depreciation expense is never shown as such, nor is there ever a gain or loss to recognize <br />on the disposal of property and equipment during its estimated useful life. <br />(b) this schedule does not recognize prepaid expenses; rather, payments made in advance <br />are shown as expenses of the reporting period. <br />(c) no accrual has been made for unpaid vacation time even though such time has vested; <br />instead, the expense is recognized in the period the vacation time is actually used. <br />The information in this schedule is presented in accordance with the requirements of OMB <br />Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations. Amounts <br />presented in the schedule differ from amounts presented in, or used in, the preparation of the <br />basic financial statements. <br />20 <br />