FINDLEY PLACE APARTMENTS (AN ILLINOIS NONPROFIT CORPORATION) SUPPORTIVE HOUSING FACILITY HUD PROJECT NO. 072-EE187

Transcription

1 FINDLEY PLACE APARTMENTS (AN ILLINOIS NONPROFIT CORPORATION) SUPPORTIVE HOUSING FACILITY HUD PROJECT NO. 072-EE187 FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2016 Program: Section 202 of the National Housing Act

2 TABLE OF CONTENTS Independent Auditor s Report 1 Financial Statements Statement of Financial Position 3 Statement of Activities 4 Statement of Cash Flows 5 Notes to Financial Statements 6 Supplementary Information Required by HUD Balance Sheet Data 11 Profit and Loss Data 12 Statement of Cash Flows Data 13 Computation of Surplus Cash, Distributions and Residual Receipts 14 Schedule of Expenditures of Federal Awards and Footnotes to Schedule 15 Schedule of Changes in Fixed Asset Accounts 16 Schedule of Replacement Reserves 17 Schedule of Residual Receipts 17 Independent Auditor s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 18 Independent Auditor s Report on Compliance For Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance 20 Schedule of Findings and Questioned Costs 22 Certification of Project Owner 23 Management Agent s Certification 24 Independent Accountant s Report on Applying Agreed-Upon Procedure 25 Page

3 Elizabeth A. Haire, Certified Public Accountant Elizabeth A. Haire, CPA, P.C. INDEPENDENT AUDITOR S REPORT To the Board of Directors of Findley Place Apartments Report on the Financial Statements We have audited the accompanying financial statements of Findley Place Apartments, which comprise the statement of financial position as of June 30, 2016, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Findley Place Apartments as of June 30, 2016, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information shown on pages 11 to 17 is presented for purposes of additional - 1 -

4 analysis as required by the Uniform Financial Reporting Standards issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General, and is not a required part of the financial statements. The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 27, 2016, on our consideration of Findley Place Apartments internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Findley Place Apartments internal control over financial reporting and compliance. Elizabeth Haire Elizabeth A. Haire, Certified Public Accountant Quincy, IL September 27,

5 FINDLEY PLACE APARTMENTS (AN ILLINOIS NONPROFIT CORPORATION) STATEMENT OF FINANCIAL POSITION June 30, 2016 ASSETS Cash $ Cash Restricted to Replacement Reserve Cash Restricted to Residual Receipts Cash Restricted to Tenant Security Deposits Cash Restricted to Real Estate Tax Escrow Cash Restricted to Minimum Capital Investment Prepaid Expenses Tenant Accounts Receivable Land Building and Furnishings, Net of Accumulated Depreciation Deferred Development Costs, Net of Accumulated Amortization TOTAL ASSETS $ LIABILITIES Accounts Payable $ Tenant Security Deposits Due to West Central Illinois Area Agency on Aging TOTAL LIABILITIES NET ASSETS Temporarily Restricted Unrestricted TOTAL NET ASSETS TOTAL LIABILITIES AND NET ASSETS $ The accompanying notes are an integral part of these financial statements

6 FINDLEY PLACE APARTMENTS (AN ILLINOIS NONPROFIT CORPORATION) STATEMENT OF ACTIVITIES Year Ended June 30, 2016 Temporarily Unrestricted Restricted Increases in Net Assets Rent Income $ $ Other Income 635 Interest Income 5 TOTAL INCREASE IN NET ASSETS Decreases in Net Assets Program Services Depreciation Amortization Electricity Maintenance Management Contract Services Supplies Trash Snow Removal & Mowing Water Supporting Services Advertising & Promotion Audit & Legal Bookkeeping Insurance Office TOTAL DECREASE IN NET ASSETS INCREASE (DECREASE) IN NET ASSETS ( ) 5 Transfers ( ) NET ASSETS AT BEGINNING OF YEAR NET ASSETS AT END OF YEAR $ $ The accompanying notes are an integral part of these financial statements

7 FINDLEY PLACE APARTMENTS (AN ILLINOIS NONPROFIT CORPORATION) STATEMENT OF CASH FLOWS Year Ended June 30, 2016 CASH FLOWS FROM OPERATING ACTIVITIES Increase (Decrease) in Net Assets $ ( ) Adjustments to Reconcile Increase (Decrease) in Net Assets to Net Cash Provided by Operating Activities: Depreciation & Amortization Decrease (Increase) in Operating Assets: Decrease (Increase) in Tenant Accounts Receivable ( 639) Decrease (Increase) in HUD Accounts Receivable Decrease (Increase) in Prepaid Expenses ( ) Decrease (Increase) in Cash Restricted to Tenant Security Deposits ( 1 001) Increase (Decrease) in Operating Liabilities: Increase (Decrease) in Tenant Security Deposits 297 Increase (Decrease) in Accounts Payable ( ) NET CASH PROVIDED BY OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Net Withdrawals (Deposits) from (to) Minimum Capital Investment Escrow ( 5) Net Withdrawals (Deposits) from (to) Residual Receipts ( 7 508) Net Withdrawals (Deposits) from (to) Replacement Reserve ( 7 638) NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ( ) NET INCREASE (DECREASE) IN CASH ( ) BEGINNING CASH ENDING CASH $ The accompanying notes are an integral part of these financial statements

8 FINDLEY PLACE APARTMENTS (AN ILLINOIS NONPROFIT CORPORATION) NOTES TO FINANCIAL STATEMENTS For the Year Ended June 30, Summary of Significant Accounting Policies a. Nature of Organization and Operations Findley Place Apartments (the Corporation ) is a corporation formed in the State of Illinois for the purpose of constructing, financing, leasing, owning, and operating a 15 unit apartment community known as the Findley Place Apartments (the Project ) located in Pittsfield, Illinois. The Project is operated under Section 202 of the National Housing Act and regulated by the U.S. Department of Housing and Urban Development (HUD) with respect to rental charges and operating methods. The Project s major program is its Section 202 direct loan. The Project also is subject to Project Rental Assistance agreements with the U.S. Department of Housing and Urban Development (HUD), and a significant portion of the Project s rental income is received from HUD. The Project s nonmajor program is its Project Rental Assistance Contract (PRAC) rent subsidy. b. Method of Accounting The accrual method of accounting is used for financial statement purposes. c. Income Taxes A provision for income taxes has not been included in the financial statements since neither the Project nor its nonprofit corporate owner are subject to income taxes. The Corporation is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. d. Building and Furnishings Building and furnishings are recorded at cost. The Corporation provides for depreciation of buildings using the straight-line method with an estimated useful life of 27.5 years. Furnishings are depreciated using the straight-line method with an estimated useful life of 5 years. The Corporation capitalizes purchases over $ The cost of maintenance and repairs is charged to income as incurred. e. Deferred Development Fees Development fees incurred in connection with the construction of the Project in the amount of $ are amortized using the straight-line method over a life of fifteen years. f. Basis of Presentation The Project reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets

9 g. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. Financing, Operations and Related Parties a. Financing The Project received a capital advance in the amount of $ under Section 202 of the National Housing Act and a predevelopment grant in the amount of $ The capital advance bears no interest and is not required to be repaid so long as the housing remains available to eligible very low income households for a period of 40 years and in accordance with Section 202. The capital advance is secured by a first mortgage on the property. Occupancy commenced in November 2014, and final closing occurred June 16, b. Replacement Reserve As set forth above and pursuant to the terms of the Regulatory Agreement, the Project was required to make monthly deposits in the amount of $ 636 to the Replacement Reserve account. The Replacement Reserve is held in a separate account and is not available for operating purposes. During the year ended June 30, 2016, there were no disbursements from the Replacement Reserve account. c. Management Agreement and Bookkeeping Agreement The Project has entered into a management fee agreement with a related party, West Central Illinois Area Agency on Aging, the Agent, for its services. The compensation is based on a set rate of $ 69 per occupied unit per month through August The set rate then increased to $ 73 per occupied unit per month effective September The Project has entered into a bookkeeping arrangement with West Central Illinois Aging and Disabilities Resource Center, the Agent, for its services. The compensation is set at $ 270 per month. d. Maintenance Agreement The Project has entered into a maintenance fee agreement with West Central Illinois Aging and Disabilities Resource Center, the Agent, for its services. The compensation is set at $ 565 per month. e. Service Coordinator Agreement The Project has entered into a service coordinator agreement with West Central Illinois Aging and Disabilities Resource Center, the Agent, for its services. The compensation is set at $7 500 per year, or $ 625 per month. The service coordinator is to assist elderly individuals to obtain needed supportive services from community agencies

10 f. Transportation Agreement The Project has entered into a transportation agreement with West Central Illinois Aging and Disabilities Resource Center, the Agent, for its services. Effective December 1, 2014, the Project will pay a set rate of $ 135 per month, which provides for two days of vehicle usage. If additional days are needed, the rate is set at $ 60 per day. In addition to vehicle usage rates, the Project will pay a set rate of $ 15 per hour for driver services when the driver is provided by the Agent. Insurance and maintenance is the responsibility of the Agent, while gasoline is the responsibility of the Project. This agreement is designed to provide a multi-passenger mode of transportation for residents of the Project within the tri-state region. g. Site Coordinator Agreement The Project has entered into a contract labor agreement with West Central Illinois Aging and Disabilities Resource Center, the Agent, for its services. Effective March 1, 2015, the compensation is set at $ per month. The contract labor agreement provides a site coordinator for the Project. h. Related Party The Project has an agreement in place, as described in note 2.c., with West Central Illinois Area Agency on Aging (WCIAAA), which is a related party. The Director and Assistant Director of WCIAAA are the President and Treasurer of the Project. i. Corporation Equity The Corporation s beginning balance was $ at July 1, The balance was reduced by the current year operating deficit. There were no other additions or withdrawals to Corporation Equity. j. Current Year Operating Deficit The Corporation had a current year operating deficit of $ Distributions The Project s Regulatory Agreement with HUD stipulates, among other things, that the Project will not make distributions of assets or income to any of its officers or directors. 4. Rent Increases Under the regulatory agreement, the Project may not increase rents charged to tenants without HUD approval. 5. Cash and Cash Equivalents Cash and cash equivalents include all monies in banks with maturity dates of one year or less, other than those that are subject to withdrawal restrictions as discussed in Note 6. There are no cash equivalents or restricted cash equivalents. At June 30, 2016, cash and cash equivalents consists of cash held in two operating checking accounts, petty cash, and an insurance reserve checking account. At June 30, 2016, the balances were $ , $ 200, $ 50, and $ There were no cash equivalents

11 6. Restricted Cash and Cash Equivalents The Project is required to establish and maintain a Replacement Reserve account, which is under the control of the mortgagee, by making monthly deposits in the amount of $ 636. Withdrawals from the fund can only be made for the purpose of effecting replacement of structural elements and mechanical equipment of the Project and must be approved by the Secretary of the U.S. Department of HUD. There were twelve months of deposits made for the year ended June 30, There were no withdrawals during the year ended June 30, The ending balance was $ The owner of the Project placed in escrow $ which represents the minimum capital investment as required by the Department of Housing and Urban Development. The funds are to be held in escrow for a period of three years from the date of completion as evidenced by a HUD certificate of occupancy and shall not be released without the prior written approval of HUD. The Project also established a Security Deposit account, which is an interest-bearing account. These security deposits are held in trust, and the balance is required to be equal to or greater than tenant security deposits. The ending balance in this account at June 30, 2016 was $ The tenant security deposits liability was $ Prepaid Expenses At June 30, 2016, the balance in Prepaid Expenses was $ , and this is for property and liability insurance and contract services. 8. Accounts Receivable At June 30, 2016, the balance in Accounts Receivable was $ This consists of tenant rent receivable. 9. Accounts Payable At June 30, 2016, the balance in Accounts Payable was $ This consists of amounts due for electricity, water, supplies, heating and cooling repairs, monthly services, and contract services. 10. Due to West Central Illinois Area Agency on Aging There is an amount due to the West Central Illinois Area Agency on Aging, a related party (see Note 6 above) of $ This $ represents the initial minimum capital investment escrow funds required at the beginning of the project. Those funds are to be held in escrow for a period of three years, at which time they will be returned to the project, and repaid to the West Central Illinois Area Agency on Aging. There is also an amount due of $ for deferred development fees. This has been approved by HUD and has repayment restrictions. The $ will be repaid on an annual basis, limited to 50 % of residual receipts

12 11. Net Assets Funds held in the Replacement Reserve bank account, Residual Receipts bank account, minimum capital investment escrow, real estate tax escrow, and the restricted portion of the Security Deposit bank account are recorded as temporarily restricted net assets. Funds held in these accounts are not available for operating purposes. All other funds are unrestricted. There are no permanently restricted net assets. At June 30, 2016, the balance in the Replacement Reserve bank account was $ , the Residual Receipts bank account balance was $ 7 508, the minimum capital investment account balance was $ , real estate tax escrow account balance was $ 1 000, and the restricted portion of the Security Deposit bank account was $ These amounts are presented as temporarily restricted net assets. 12. Transfers For the year ended June 30, 2016, there were $ of funds transferred from unrestricted net assets to temporarily restricted net assets. This amount consists of deposits to the Replacement Reserve account ($ 7 638), deposits to the Residual Receipts account ($ 7 508), and net deposits to the Security Deposit account ($ 947). 13. Current Vulnerability Due to Certain Concentrations The Project s sole asset is a 15-unit apartment project. The Project s operations are concentrated in the multifamily real estate market. In addition, the Project operates in a heavily regulated environment. The operations of the Project are subject to the administrative directives, rules and regulations of federal, state and local regulatory agencies, including, but not limited to, HUD. Such administrative directives, rules and regulations are subject to change by an act of congress or an administrative change mandated by HUD. Such changes may occur with little notice or inadequate funding to pay for the related cost, including the additional administrative burden, to comply with a change. 14. Subsequent Events Management has evaluated subsequent events through September 27, 2016, the date which the financial statements were available to be issued. - 10

13 SUPPLEMENTARY INFORMATION

14 Account No. FINDLEY PLACE APARTMENTS (AN ILLINOIS NONPROFIT CORPORATION) Supportive Housing Facility HUD Project No. 072-EE187 BALANCE SHEET DATA June 30, 2016 ASSETS Current Assets: 1120 Cash - Operations $ Tenant / Member Accounts Receivable (Coops) Miscellaneous Prepaid Expenses T Total Current Assets Tenant / Patient Deposits Held in Trust Escrow Deposits Replacement Reserve Residual Receipts Reserve T Total Deposits Fixed Assets: 1410 Land Building Furnishings T Total Fixed Assets Accumulated Depreciation N Net Fixed Assets Deferred Financing Costs T Total Assets $ LIABILITIES AND NET ASSETS Current Liabilities: 2110 Accounts Payable - Operations $ Other Loans and Notes Payable - Surplus Cash (Short Term) T Total Current Liabilities Tenant / Patient Deposits Held in Trust (Contra) Accounts Payable - Entity (Long Term) Other Loans and Notes Payable - Surplus Cash T Total Long Term Liabilities T Total Liabilities Net Assets: 3131 Unrestricted Net Assets Temporarily Restricted Net Assets Total Net Assets T Total Liabilities and Net Assets $ See Independent Auditor's Report

15 FINDLEY PLACE APARTMENTS (AN ILLINOIS NONPROFIT CORPORATION) Supportive Housing Facility HUD Project No. 072-EE187 PROFIT AND LOSS DATA Year Ended June 30, 2016 Account No. REVENUES 5120 Rent Revenue - Gross Potential $ Tenant Assistance Payments T Total Rent Revenue Vacancies - Apartments T Total Vacancies N Net Rental Revenue (Rent Revenue Less Vacancies) Revenue from Investments - Minimum Capital Investment Escrow T Total Financial Revenue Laundry and Vending Revenue T Total Other Revenue T Total Revenue EXPENSES 6210 Advertising and Marketing Office Salaries Office Expenses Management Fee Legal Expense - Project Audit Expense Bookkeeping Fees / Accounting Services T Total Administrative Expenses Electricity Water T Total Utilities Expense Supplies Contracts Garbage and Trash Removal Heating/Cooling Repairs and Maintenance Snow Removal Vehicle and Maintenance Equipment Operation and Repairs Miscellaneous Operating and Maintenance Expenses T Total Operating and Maintenance Expenses Property and Liability Insurance (Hazard) Fidelity Bond Insurance T Total Taxes and Insurance T Total Cost of Operations Before Depreciation T Profit (Loss) Before Depreciation Depreciation Amortization N Operating Profit (Loss) ( ) 3250 Change in Total Net Assets from Operations $ ( ) S The total of all monthly deposits in the audit year into the Replacement Reserve account, as required by the Regulatory Agreement. $ See Independent Auditor's Report

16 FINDLEY PLACE APARTMENTS (AN ILLINOIS NONPROFIT CORPORATION) Supportive Housing Facility HUD Project No. 072-EE187 STATEMENT OF CASH FLOWS DATA Year Ended June 30, 2016 Cash Flows From Operating Activities S Rental Receipts $ S Interest Receipts 5 S Other Operating Receipts 635 S Total Receipts $ S Administrative ( ) S Management Fee ( ) S Utilities ( 7 874) S Operating and Maintenance ( ) S Property Insurance ( 2 732) S Miscellaneous Taxes and Insurance ( 338) S Tenant Security Deposits ( 704) S Total Disbursements ( ) S Net Cash Provided By (Used In) Operating Activities Cash Flows From Investing Activities: S Net Withdrawals (Deposits) to Replacement Reserve ( 7 638) S Net Withdrawals (Deposits) to Residual Receipts ( 7 508) S Net Withdrawals (Deposits) to Insurance Reserve 606 S Net Withdrawals (Deposits) to Minimum Capital Investment Escrow ( 5) S Net Cash Provided By (Used In) Investing Activities ( ) S Net Increase (Decrease) in Cash and Cash Equivalents ( ) S Beginning of Period Cash S1200T End of Period Cash $ Reconciliation of Net Profit (Loss) to Net Cash Provided By (Used In) Operating Activities: 3250 Change in Total Net Assets from Operations $ ( ) Adjustments to Reconcile Net Profit (Loss) to Net Cash Provided By (Used In) Operating Activities: 6600 Depreciation Expense Amortization Expense S Decrease (Increase) in Tenant / Member Accounts Receivable S Decrease (Increase) in Prepaid Expenses ( ) S Decrease (Increase) in Cash Restricted for Tenant Security Deposits ( 1 001) S Increase (Decrease) in Accounts Payable ( ) S Increase (Decrease) in Tenant Security Deposits Held in Trust 297 S Net Cash Provided By (Used In) Operating Activities $ See Independent Auditor's Report

17 FINDLEY PLACE APARTMENTS (AN ILLINOIS NONPROFIT CORPORATION) Supportive Housing Facility HUD Project No. 072-EE187 COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND RESIDUAL RECEIPTS Year Ended June 30, 2016 S Cash $ S Total Cash Current Obligations S Accounts Payable - 30 Days Tenant / Patient Deposits Held in Trust (Contra) S Total Current Obligations S Surplus Cash (Deficiency) $ Amount Available For Distribution During Next Period $ 0 S Deposit Due Residual Receipts $ See Independent Auditor's Report

18 FINDLEY PLACE APARTMENTS (AN ILLINOIS NONPROFIT CORPORATION) Supportive Housing Facility HUD Project No. 072-EE187 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended June 30, 2016 FEDERAL FEDERAL GRANTOR/PASS-THROUGH CFDA FEDERAL GRANTOR/PROGRAM TITLE NUMBER EXPENDITURES U.S. Department of Housing and Urban Development Section 202 Direct Loan $ Project Rental Assistance Contracts (PRAC) FOOTNOTE 1 - BASIS OF PRESENTATION This schedule of expenditures of federal awards includes the federal award activity of Findley Place Apartments, HUD Project No. 072-EE187, and is presented on the accrual basis of accounting. The 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 Findley Place Apartments, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Findley Place Apartments. FOOTNOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the Schedule are reported on the 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. Findley Place Apartments has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. FOOTNOTE 3 - CAPITAL ADVANCE Findley Place Apartments has received a U.S. Department of Housing and Urban Development direct loan under Section 202 of the National Housing Act. The loan balance outstanding at the beginning of the year is included in the federal expenditures presented in the Schedule. The capital advance amount represents the total amount received in prior years. Findley Place Apartments received no additional loans during the year. If the Project does not meet certain compliance requirements for a period of 40 years, the balance plus accrued interest must be repaid. See Independent Auditor's Report

19 FINDLEY PLACE APARTMENTS (AN ILLINOIS NONPROFIT CORPORATION) Supportive Housing Facility HUD Project No. 072-EE187 SCHEDULE OF CHANGES IN FIXED ASSET ACCOUNTS Year Ended June 30, 2016 Beginning Ending Balance Additions Deductions Balance 1410P Land $ $ $ $ P Buildings P Furnishings PT TOTAL $ $ 0 $ 0 $ P Accumulated Depreciation $ $ $ 0 $ N Net Book Value $ See Independent Auditor's Report

20 FINDLEY PLACE APARTMENTS (AN ILLINOIS NONPROFIT CORPORATION) Supportive Housing Facility HUD Project No. 072-EE187 SCHEDULE OF REPLACEMENT RESERVES Year Ended June 30, P Balance at Beginning of Year $ DT Total Monthly Deposits Balance at End of Year $ SCHEDULE OF RESIDUAL RECEIPTS Year Ended June 30, P Balance at Beginning of Year $ DT Total Deposits Balance at Current Fiscal Year End $ See Independent Auditor's Report

21 Elizabeth A. Haire, Certified Public Accountant Elizabeth A. Haire, CPA, P.C. INDEPENDENT AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors of Findley Place Apartments We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Findley Place Apartments, which comprise the statement of financial position as of June 30, 2016, and the related statements of activities, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated September 27, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Findley Place Apartments internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Findley Place Apartments internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether Findley Place Apartments financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of Findley Place Apartments in a separate letter dated September 27,

22 Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Elizabeth Haire Elizabeth A. Haire, Certified Public Accountant Quincy, IL September 27,

23 Elizabeth A. Haire, Certified Public Accountant Elizabeth A. Haire, CPA, P.C. INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE To the Board of Directors of Findley Place Apartments Report on Compliance for the Major Federal Program We have audited Findley Place Apartments compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on Findley Place Apartments major federal program for the year ended June 30, Findley Place Apartments major federal program is identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with the federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for Findley Place Apartments major federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit 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). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Findley Place Apartments compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for the major federal program. However, our audit does not provide a legal determination of Findley Place Apartments compliance. Opinion on the Major Federal Program In our opinion, Findley Place Apartments complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended June 30, Report on Internal Control Over Compliance Management of Findley Place Apartments is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Findley Place Apartments internal control over compliance with the types of requirements that could have a direct and material effect on the major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for the major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Findley Place Apartments internal control over compliance

24 A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Elizabeth Haire Elizabeth A. Haire, Certified Public Accountant Quincy, IL September 27,

25 FINDLEY PLACE APARTMENTS (AN ILLINOIS NONPROFIT CORPORATION) SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended June 30, 2016 SUMMARY OF AUDITOR S RESULTS 1. The auditor s report expresses an unmodified opinion on the financial statements of Findley Place Apartments. 2. No material weaknesses were identified during the audit of the financial statements. 3. No instances of noncompliance material to the financial statements of Findley Place Apartments were disclosed during the audit. 4. No material weaknesses were identified during the audit of the major federal award program. 5. The auditor s report on compliance for the major federal award program for Findley Place Apartments expresses an unmodified opinion. 6. There were no audit findings required to be reported under 2 CFR Section (a). 7. The program tested as a major program was HUD Section 202, CFDA No The threshold for distinguishing Types A and B programs was $ Findley Place Apartments was not determined to be a low-risk auditee. FINDINGS FINANCIAL STATEMENTS AUDIT There were no findings or questioned costs. FINDINGS AND QUESTIONED COSTS MAJOR FEDERAL AWARD PROGRAMS AUDIT There were no findings or questioned costs. FINDINGS AND QUESTIONED COSTS NONMAJOR FEDERAL AWARD PROGRAMS AUDIT There were no findings or questioned costs. - 22

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28 Elizabeth A. Haire, Certified Public Accountant Elizabeth A. Haire, CPA, P.C. INDEPENDENT ACCOUNTANT S REPORT ON APPLYING AGREED-UPON PROCEDURE To Findley Place Apartments We have performed the procedure described in the second paragraph of this report, which was agreed to by Findley Place Apartments and the U.S. Department of Housing and Urban Development, Public Indian Housing - Real Estate Assessment Center (PIH-REAC), solely to assist them in determining whether the electronic submission of certain information agrees with the related hard copy documents included within the OMB Uniform Administrative Requirements reporting package. Findley Place Apartments is responsible for the accuracy and completeness of the electronic submission. This agreed-upon procedure engagement was conducted in accordance with the attestation standards established by the American Institute of Certified Public Accountants and the standards applicable to attestation engagements contained in Government Auditing Standards issued by the Comptroller General of the United States. The sufficiency of the procedure is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedure described below either for the purpose for which this report has been requested or for any other purpose. We compared the electronic submission of the items listed in the UFRS Rule Information column with the corresponding printed documents listed in the Hard Copy Document(s) column. The results of the performance of our agreed-upon procedure indicate agreement or non-agreement of the electronically submitted information and hard copy documents as shown in the attached chart. We were engaged to perform an audit in accordance with the audit requirements of OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, for Findley Place Apartments as of and for the year ended June 30, 2016, and have issued our reports thereon dated September 27, The information in the Hard Copy Document(s) column was included within the scope, or was a by-product of that audit. Further, our opinion on the fair presentation of the supplementary information dated September 27, 2016, was expressed in relation to the basic financial statements of Findley Place Apartments taken as a whole. A copy of the reporting package required by OMB Uniform Administrative Requirements, which includes the auditor s reports, is available in its entirety from Findley Place Apartments. We have not performed any additional auditing procedures since the date of the aforementioned audit reports. Further, we take no responsibility for the security of the information transmitted electronically to the U.S. Department of Housing and Urban Development, PIH-REAC. This report is intended solely for the information and use of Findley Place Apartments and the U.S. Department of Housing and Urban Development, PIH-REAC, and is not intended to be and should not be used by anyone other than these specified parties. Elizabeth Haire Elizabeth A. Haire, Certified Public Accountant Quincy, IL September 27,

29 ATTACHMENT TO INDEPENDENT ACCOUNTANT S REPORT ON APPLYING AGREED-UPON PROCEDURE UFRS Rule Information Hard Copy Document(s) Findings Balance Sheet, Revenue and Expense and Cash Flow Data (account numbers 1120 to 7100T and the S1200 series) Supplementary Information with Financial Statement Data Agrees Surplus Cash (S1300 series of accounts) Computation of Surplus Cash, Distributions and Residual Receipts (Annual) Agrees Footnotes (S3100 series of accounts) Notes to the Audited Financial Statements Agrees Type of Opinion on the Financial Statements and Auditor Reports (S3400, S3500, and S3600 series of accounts) Auditor s Reports on the Financial Statements, Compliance, and Internal Control Agrees Type of Opinion on Supplemental Data (account S ) Auditor s Report on Supplementary Information Agrees Audit Findings Narrative (S3800 series of accounts) Schedule of Findings and Questioned Costs Agrees General Information (S3300, S3700, and S3800 series of accounts) Schedule of Findings and Questioned Costs and Federal Awards Data Agrees