Peace Presbyterian Village d/b/a The Village of Peace Manor (a not-for-profit corporation) FHA Project No. 044-EE019

Transcription

1 (a not-for-profit corporation) Financial Report with Supplemental Information June 30, 2009

2 Certificate of Officers We certify that we have examined the attached financial statements and supplemental information of HUD Project No. 044-EE019, d/b/a The Village of Peace Manor, and to the best of our knowledge and belief, the same is a true statement of the financial condition as of June 30, Gwendolyn Parker Chair September 17, 2009 Date Emily Smith, M.D. Vice Chair September 17, 2009 Date ID# Employer Identification Number

3 Management Agent's Certification We certify that we have examined the attached financial statements and supplemental information of HUD Project No. 044-EE019, d/b/a The Village of Peace Manor, and to the best of our knowledge and belief, the same is a true statement of the financial condition as of June 30, Janelle Henderson Management Agent Representative September 17, 2009 Date (248) Telephone Number ID# Management Company Employer Identification Number Lawanda Alexander Property Manager

4 Contents Report Letter 1-2 Financial Statements Balance Sheet 3-4 Statement of Activities 5-6 Statement of Changes in Deficiency in Net Assets 7 Statement of Cash Flows 8-9 Notes to Financial Statements Supplemental Information 14 Report Letter 15 Balance Sheet Data Statement of Activities Data Statement of Changes in Deficiency in Net Assets Data 21 Statement of Cash Flows Data Supplementary Information Schedule of Changes in Fixed Asset Accounts 26 Schedule of Expenditures of Federal Awards 27 Computation of Surplus Cash 28 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 Report on Compliance with Requirements Applicable to the Major Program and on Internal Control Over Compliance with OMB Circular A Schedule of Findings and Questioned Costs 35-37

5 Independent Auditor's Report To the Board of Trustees We have audited the accompanying balance sheet of HUD Project No. 044-EE019, Peace Presbyterian Village (a not-for-profit corporation) (the "Organization"), as of June 30, 2009 and 2008 and the related basic statements of activities, changes in deficiency in net assets, and cash flows for the years then ended. These basic financial statements are the responsibility of the Organization's management. Our responsibility is to express an opinion on these basic financial statements based on our audits. We conducted our audits 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of HUD Project No. 044-EE019, d/b/a The Village of Peace Manor, as of June 30, 2009 and 2008 and the changes in its deficiency in net assets and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. 1

6 To the Board of Trustees In accordance with Government Auditing Standards, we have also issued a report dated September 17, 2009 on our consideration of d/b/a The Village of Peace Manor's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audits. September 17, 2009 By: Robert F. Long, CPA Engagement Partner Northwestern Highway P.O. Box 307 Southfield, MI Federal ID Number: Phone Number: (248)

7 Balance Sheet Assets June 30, 2009 June 30, 2008 Current Assets Cash - Operations $ 5,086 $ 250 Tenant accounts receivable 2,910 4,553 Prepaid expenses 5,578 3,215 Total current assets 13,574 8,018 Deposits - Held in Trust Tenant deposits held in trust 19,966 20,072 Deposits - Funded Replacement reserve 95, ,812 Other reserves 24,940 19,224 Residual receipts reserve 38,630 36,123 Total deposits - Funded 158, ,159 Fixed Assets Land and land improvements 626, ,837 Buildings and building improvements 2,912,361 2,868,863 Building equipment (portable) 88,696 83,108 Furniture for project/tenant use 193, ,529 Maintenance equipment 1, Motor vehicles 40,853 40,853 Total fixed assets 3,864,210 3,809,967 Accumulated depreciation (1,644,138) (1,535,771) Net fixed assets 2,220,072 2,274,196 Total assets $ 2,412,601 $ 2,458,445 See Notes to Financial Statements. 3

8 Balance Sheet (Continued) Liabilities and Deficiency in Net Assets June 30, 2009 June 30, 2008 Current Liabilities Accounts payable - Operations (Note 3) $ 19,952 $ 11,989 Accrued wages payable 3,617 2,078 Accrued payroll taxes payable Total current liabilities 24,000 14,293 Tenant deposits held in trust (contra) 18,817 16,963 Long-term Liabilities Capital advance (Note 2) 3,554,600 3,554,600 Total liabilities 3,597,417 3,585,856 Deficiency in Net Assets Deficiency in unrestricted net assets (1,184,816) (1,127,411) Total deficiency in net assets (1,184,816) (1,127,411) Total liabilities and deficiency in net assets $ 2,412,601 $ 2,458,445 See Notes to Financial Statements. 4

9 Statement of Activities Year Ended June 30, 2009 June 30, 2008 Rent Revenue Rent revenue - Gross potential $ 206,478 $ 205,710 Tenant assistance payments 159, ,750 Total rent revenue (potential at 100% occupancy) 366, ,460 Vacancies Apartments (9,534) (13,064) Total vacancies (9,534) (13,064) Net rent revenue (rent revenue less vacancies) 356, ,396 Financial Revenue Project operations Investments - Residual receipts Revenue from investments - Replacement reserve 742 2,524 Total financial revenue 853 2,925 Other Revenue Laundry and vending revenue 2,984 2,506 Tenant charges Gifts 10,532 3,086 Miscellaneous revenue Total other revenue 14,403 6,312 Total revenue 372, ,633 Administrative Expenses Conventions and meetings 1, Advertising and marketing 799 2,158 Other renting expenses 1, Office salaries 44,817 44,694 Office expenses 3,220 2,585 Management fee (Note 3) 26,208 26,208 Manager or superintendent salaries 27,604 29,307 Legal expenses - 2,425 Auditing expenses 9,300 8,900 Bookkeeping fees/accounting services (Note 3) 2,716 2,716 Miscellaneous administrative expenses 3,297 3,784 Total administrative expenses 121, ,217 See Notes to Financial Statements. 5

10 Statement of Activities (Continued) Year Ended June 30, 2009 June 30, 2008 Utilities Expense Electricity $ 32,050 $ 31,130 Water 14,305 14,740 Gas 20,649 19,540 Total utilities expense 67,004 65,410 Operating and Maintenance Expenses Payroll 31,167 4,903 Supplies 7,461 11,967 Contracts 17,677 44,264 Garbage and trash removal 1,474 1,322 Heating/Cooling repairs and maintenance 1,775 3,080 Snow removal 5,775 4,230 Vehicle and maintenance equipment operation and repairs 1, Miscellaneous operating and maintenance expenses 23,596 13,129 Total operating and maintenance expenses 90,674 83,323 Taxes and Insurance Payroll taxes (FICA) 7,656 5,891 Property and liability insurance (hazard) 22,950 21,123 Workers' compensation Health insurance and other employee benefits 10,745 9,267 Total taxes and insurance 41,637 36,579 Financial Expenses Miscellaneous financial expenses Total financial expenses Total Costs of Operations Before Depreciation 321, ,857 Change in Net Assets Before Depreciation 50,962 36,776 Depreciation Expense 108, ,204 Change in Total Deficiency in Net Assets from Operations $ (57,405) $ (67,428) See Notes to Financial Statements. 6

11 Statement of Changes in Deficiency in Net Assets Deficiency in Net Assets - July 1, 2007 $ (1,059,983) Increase in deficiency in net assets (67,428) Deficiency in Net Assets - June 30, 2008 (1,127,411) Increase in deficiency in net assets (57,405) Deficiency in Net Assets - June 30, 2009 $ (1,184,816) See Notes to Financial Statements. 7

12 Statement of Cash Flows Year Ended June 30, 2009 June 30, 2008 Cash Flows from Operating Activities Receipts: Rental $ 358,409 $ 333,083 Interest 853 2,925 Gifts - 3,086 Other cash receipts 3,871 3,226 Total receipts 363, ,320 Disbursements: Administrative (22,763) (44,798) Management fee (26,208) (26,208) Utilities (66,591) (65,796) Salaries and wages (84,474) (57,706) Operating and maintenance (59,141) (56,857) Property insurance (25,313) (20,424) Miscellaneous taxes and insurance (18,482) (15,587) Tenant security deposits 1, Miscellaneous financial (212) (328) Total disbursements (301,224) (287,660) Net cash provided by operating activities 61,909 54,660 Cash Flows from Investing Activities Net withdrawal from (deposit to) the reserve for replacement account 5,393 (11,972) Net deposit to other reserve (5,716) (4,697) Net deposit to the residual receipts account (2,507) (341) Purchase of fixed assets (54,243) (37,893) Net cash used in investing activities (57,073) (54,903) Cash Flows from Financing Activities Advances from related party Net cash provided by financing activities Net Increase in Cash 4,836 - Cash - Beginning of year Cash - End of year $ 5,086 $ 250 See Notes to Financial Statements. 8

13 Statement of Cash Flows (Continued) A reconciliation of change in deficiency in net assets to net cash from operating activities is as follows: Year Ended June 30, 2009 June 30, 2008 Change in deficiency in net assets $ (57,405) $ (67,428) Adjustments to reconcile change in deficiency in net assets to net cash from operating activities: Depreciation 108, ,204 (Increase) decrease in assets: Tenant accounts receivable 1,643 (4,313) Prepaid expenses (2,363) 22,725 Cash restricted for tenant security deposits 106 (198) Increase (decrease) in liabilities: Accounts payable - Operations 7,963 (1,109) Accrued liabilities 1, Tenant security deposits held in trust 1, Net cash provided by operating activities $ 61,909 $ 54,660 See Notes to Financial Statements. 9

14 Notes to Financial Statements June 30, 2009 and 2008 Note 1 - Nature of Business and Significant Accounting Policies Nature of Business - (the "Organization") is a not-for-profit corporation that owns and operates a 56-unit affordable housing rental project for elderly persons (the "Project"). The Project is located in Clinton Township, Michigan, operating under Section 202 of the National Housing Act and is regulated by the U.S. Department of Housing and Urban Development (HUD) with respect to rental charges and operating methods. The Organization is sponsored by Presbyterian Villages of Michigan (PVM). PVM is a comprehensive, diverse, and faith-based organization serving seniors in multiple settings since Its mission, guided by its Christian heritage is to serve older adults of all faiths and to create new possibilities for quality senior livng. PVM's tradition of social accountability and servant leadership are further reflected in its statement of beliefs and values and its various operational philosophies and practices. Significant accounting policies are as follows: Basis of Accounting - The Organization maintains its accounting records and prepares its financial statements on an accrual basis, which is in accordance with accounting principles generally accepted in the United States of America. The accompanying schedule of expenditures of federal awards includes the federal grant activity of and is presented on the same basis of accounting as the basic financial statements. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. Deposits Held in Trust - In accordance with the Regulatory Agreement with HUD, the Organization is required to maintain a tenant security deposit trust account. The amount must at all times be equal to or exceed the aggregate of all outstanding obligations to tenants for refundable security deposits. The tenant security deposits fund consists of cash. Deposits - Funded - The funds held by the mortgagee represent escrows and restricted funds for a replacement reserve, a residual receipts reserve, and a paint reserve. The replacement reserve consists of deposits by the Organization to offset specific expenses and to replace structural elements and mechanical equipment upon consent of HUD. The residual receipts reserve consists of surplus cash deposits by the Organization calculated based on a HUD-prescribed formula and can only be disbursed at HUD's discretion. Other reserves represent funds set aside by the Organization to offset painting and insurance expenses. Future monthly commitments for the funding of the replacement reserve total $2,

15 Notes to Financial Statements June 30, 2009 and 2008 Note 1 - Nature of Business and Significant Accounting Policies (Continued) Fixed Assets - Land, buildings, equipment, and furniture are recorded at cost when purchased or appraised value if donated. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, which range from 5 to 40 years. Maintenance, repairs, and renewals that do not involve any substantial betterments are charged to expense when incurred. Expenditures that increase the useful life of the property are capitalized. Allowance for Bad Debts - No allowance for bad debt is recorded. Tenant accounts are generally collectible as long as the tenant is occupying the unit. When the tenant vacates the unit, any unpaid balance remaining after application of the security deposit is charged to bad debt expense. Classification of Deficiency of Net Assets - Deficiencies in net assets of the Organization are classified as permanently restricted, temporarily restricted, or unrestricted, depending on the presence and characteristics of donor-imposed restrictions limiting the Organization's ability to use or dispose of contributed assets or the economic benefits embodied in those assets. All deficiencies in net assets of the Organization at June 30, 2009 and 2008 are considered unrestricted. Rental Income - Units are designated for occupancy by eligible low-income tenants under a Section 202 Project Rental Assistance Contract (PRAC) which will expire in These tenants contribute a portion of the contract rent based on formulas prescribed by the U.S. Department of Housing and Urban Development (HUD). PRAC payments are received for the balance of contract rent from HUD. Federal Income Taxes - No provision for income taxes has been included in the financial statements since the Organization is exempt from such taxes under Section 501(c)(3) of the Internal Revenue Code. Regulatory Agreement - A Regulatory Agreement with HUD was signed in connection with the capital advance agreement. No violations of this agreement were noted for the years ended June 30, 2009 and Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. 11

16 Notes to Financial Statements June 30, 2009 and 2008 Note 1 - Nature of Business and Significant Accounting Policies (Continued) Impairment of Assets - The Organization measures impairment in accordance with FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-lived Assets, which requires impairment losses to be recorded on specific long-lived assets used in operations where indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. No impairment of the the Organization's rental property has occurred. Subsequent Events - The financial statements and related disclosures include evaluation of events up through and including September 17, 2009, which is the date the financial statements were available to be issued. Note 2 - Capital Advance Funding The Organization has a capital advance agreement with HUD used to assist in financing the construction of the Project in accordance with the provisions of Section 202 of the Housing Act of The capital advance at June 30, 2009 and 2008 is $3,554,600, bears no interest, and is not required to be repaid as long as the housing remains available to eligible very low-income households for a period of 40 years and in accordance with Section 202. It is the Organization's intent to comply with the time requirement and Section 202. However, based on the time requirement, the advance amount is reported as a long-term liability. Note 3 - Related Party Transactions Trustee appointments are approved by Presbyterian Villages of Michigan (PVM), a related not-for-profit organization who is also the HUD-approved management agent. As of June 30, 2009 and 2008, $19,030 and $11,989 is due to PVM for payment of expenditures, and is included in accounts payable. In addition, during the year, PVM Foundation provided the Organization with $10,920 in contribution support through the allocation of funds raised by the Organization and matching grants from the PVM Foundation. The Organization has contracted with PVM to be the management agent of the Organization. Under the management agreement, management fees are calculated at $39 per unit per month. In addition, the Organization pays accounting service fees to PVM, which are included in the annual budget. The Organization incurred management fees of $26,208 and accounting service fees of $2,716 to PVM for the years ended June 30, 2009 and

17 Notes to Financial Statements June 30, 2009 and 2008 Note 4 - Functional Expenses For the years ended June 30, 2009 and 2008, expenses are functionally allocated as follows: Program services $ 307,894 $ 289,844 General and administrative 121, ,217 Total functional expenses $ 429,427 $ 414,061 Costs have been allocated between program services and general and administrative services on several bases and estimates. Although the methods of allocation are considered appropriate, other methods could be used that would produce different amounts. Note 5 - Current Vulnerability Due to Certain Concentrations The Organization's sole asset is d/b/a The Village of Peace Manor. The Organization s operations are concentrated in the senior real estate market. In addition, the Organization operates in a heavily regulated environment. The operations of the Organization 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 additional administrative burden, to comply with a change. Note 6 - Retirement Plan PVM and its affiliates maintain a tax-sheltered retirement plan qualified under Internal Revenue Code Section 403(b). Under this plan, qualified nonunion participants who contribute from 1 percent to 8 percent of compensation to the plan receive an equal match from the Organization. The Organization's contributions to the plan for the years ended June 30, 2009 and 2008 totaled $4,604 and $2,217, respectively. 13

18 Supplemental Information 14

19 To the Board of Trustees We have audited the basic financial statements of HUD Project No. 044-EE019, Peace Presbyterian Village, for the year ended June 30, Our audit was performed for the purpose of forming an opinion on the financial statements of Peace Presbyterian Village taken as a whole. The accompanying supplementary information, including the schedule of expenditures of federal awards, is presented for the purpose of additional analysis as required by HUD and the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the financial statements. Such information utilizes the same basis of accounting as the financial statements and has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. September 17,

20 Balance Sheet Data June 30, 2009 Assets Current Assets 1120 Cash - Operations $ 5, Tenant accounts receivable 2, Prepaid expenses 5, T Total current assets 13,574 Deposits - Held in Trust 1191 Tenant deposits held in trust 19,966 Deposits - Funded 1320 Replacement reserve 95, Other reserves 24, Residual receipts reserve 38, T Total deposits - Funded 158,989 Fixed Assets 1410 Land and land improvements 626, Buildings and building improvements 2,912, Building equipment (portable) 88, Furniture for project/tenant use 193, Maintenance equipment 1, Motor vehicles 40, T Total fixed assets 3,864, Accumulated depreciation (1,644,138) 1400N Net fixed assets 2,220, T Total assets $ 2,412,601 16

21 Balance Sheet Data (Continued) June 30, 2009 Liabilities and Deficiency in Net Assets Current Liabilities 2110 Accounts payable - Operations $ 19, Accrued wages payable 3, Accrued payroll taxes payable T Total current liabilities 24, Tenant deposits held in trust (contra) 18,817 Long-term Liabilities 2310 Notes payable (long-term) 3,554, T Total liabilities 3,597,417 Deficiency in Net Assets 3131 Deficiency in unrestricted net assets (1,184,816) 3130 Total deficiency in net assets (1,184,816) 2033T Total liabilities and deficiency in net assets $ 2,412,601 17

22 Statement of Activities Data Year Ended June 30, 2009 Rent Revenue 5120 Rent revenue - Gross potential $ 206, Tenant assistance payments 159, T Total rent revenue (potential at 100% occupancy) 366,300 Vacancies 5220 Apartments (9,534) 5200T Total vacancies (9,534) 5152N Net rent revenue (rent revenue less vacancies) 356,766 Financial Revenue 5410 Project operations Investments - Residual receipts Investments - Replacement reserve T Total financial revenue 853 Other Revenue 5910 Laundry and vending revenue 2, Tenant charges Gifts 10, Miscellaneous revenue T Total other revenue 14, T Total revenue 372,022 Administrative Expenses 6203 Conventions and meetings 1, Advertising and marketing Other renting expenses 1, Office salaries 44, Office expenses 3, Management fee 26, Manager or superintendent salaries 27, Auditing expenses 9, Bookkeeping fees/accounting services 2, Miscellaneous administrative expenses 3, T Total administrative expenses 121,533 18

23 Statement of Activities Data (Continued) Year Ended June 30, 2009 Utilities Expense 6450 Electricity $ 32, Water 14, Gas 20, T Total utilities expense 67,004 Operating and Maintenance Expenses 6510 Payroll 31, Supplies 7, Contracts 17, Garbage and trash removal 1, Heating/Cooling repairs and maintenance 1, Snow removal 5, Vehicle and maintenance equipment operation and repairs 1, Miscellaneous operating and maintenance expenses 23, T Total operating and maintenance expenses 90,674 Taxes and Insurance 6711 Payroll taxes (FICA) 7, Property and liability insurance (hazard) 22, Workers' compensation Health insurance and other employee benefits 10, T Total taxes and insurance 41,637 Financial Expenses 6890 Miscellaneous financial expenses T Total financial expenses T 5060T Total Costs of Operations Before Depreciation and Amortization 321,060 Change in Net Assets Before Depreciation and Amortization 50, Depreciation Expense 108, Change in Total Deficiency in Net Assets from Operations $ (57,405) 19

24 Statement of Activities Data (Continued) Supplemental Information Year Ended June 30, 2009 S Total principal required under the mortgage, even if payments under a workout agreement are less or more than those required under the mortgage $ 0 S Replacement reserve deposits required by the Regulatory Agreement or amendments thereto, even if payments may be temporarily suspended or waived 30,365 S Replacement reserve or residual receipt releases that are included as expense items on this profit and loss statement 0 S Project improvement reserve releases under the flexible subsidy program that are included as expense items on this profit and loss statement 0 20

25 Statement of Changes in Deficiency in Net Assets Data Year Ended June 30, 2009 S Deficiency in Net Assets - July 1, 2008 $ (1,127,411) 3250 Increase in deficiency in net assets (57,405) 3130 Deficiency in Net Assets - June 30, 2009 $ (1,184,816) 21

26 Statement of Cash Flows Data Year Ended June 30, 2009 Cash Flows from Operating Activities Receipts: S Rental $ 358,409 S Interest 853 S Other cash receipts 3,871 S Total receipts 363,133 Disbursements: S Administrative (22,763) S Management fee (26,208) S Utilities (66,591) S Salaries and wages (84,474) S Operating and maintenance (59,141) S Property insurance (25,313) S Miscellaneous taxes and insurance (18,482) S Tenant security deposits 1,960 S Miscellaneous financial (212) S Total disbursements (301,224) S Net cash provided by operating activities 61,909 Cash Flows from Investing Activities S Net withdrawal from the reserve for replacement account 5,393 S Net deposit to other reserve (5,716) S Net deposit to the residual receipts account (2,507) S Net purchase of fixed assets (54,243) S Net cash used in investing activities (57,073) Cash Flows from Financing Activities S Net Increase in Cash 4,836 S Cash - Beginning of year 250 S1200T Cash - End of year $ 5,086 22

27 Statement of Cash Flows Data (Continued) Year Ended June 30, 2009 A reconciliation of change in deficiency in net assets to net cash from operating activities is as follows: 3250 Change in deficiency in net assets $ (57,405) Adjustments to reconcile change in deficiency in net assets to net cash from operating activities: 6600 Depreciation 108,367 (Increase) decrease in assets: S Tenant accounts receivable 1,643 S Prepaid expenses (2,363) S Cash restricted for tenant security deposits 106 Increase in liabilities: S Accounts payable - Operations 7,963 S Accrued liabilities 1,744 S Tenant security deposits held in trust 1,854 S Net cash provided by operating activities $ 61,909 23

28 Supplementary Information Year Ended June 30, Schedule of Reserve for Replacements - In accordance with the provisions of the Regulatory Agreement, restricted cash is held by JP Morgan Chase, N.A. to be used for replacement of property with the approval of HUD as follows: 1320P Balance - July 1, 2008 $ 100, DT Monthly deposits ($2, x 12) 30, INT Interest WT Approved withdrawals (36,500) 1320 Balance - June 30, 2009 $ 95, Schedule of Residual Receipts - In accordance with the provisions of the Regulatory Agreement, surplus cash is calculated per the HUD formula and deposited into the residual receipts account. Restricted cash is held by JP Morgan Chase, N.A. to be used for any project purpose with the approval of HUD as follows: 1340P Balance - July 1, 2008 $ 36, ODT Other deposits 2, INT Interest Balance - June 30, 2009 $ 38, Computation of Surplus Cash - Form HUD See attached 4. Schedule of Changes in Fixed Asset Accounts - See attached 5. Schedule of 5300 Accounts - N/A 6. Schedule of 6900 Accounts - N/A 7. Nursing Home Data - N/A 24

29 Supplementary Information (Continued) Year Ended June 30, Detail of Accounts: 6390 Dues and subscription $ 1,008 Mileage reimbursement 1,426 Miscellaneous 643 Computer user training 220 Total $ 3, System maintenance, repair, and support $ 9,442 Connectivity 12,138 Software purchase and license 795 Minor system purchase 1,221 Total $ 23,596 25

30 Schedule of Changes in Fixed Asset Accounts Year Ended June 30, 2009 Assets Balance July 1, 2008 Additions Deductions Balance June 30, 2009 Balance July 1, 2008 Accumulated Depreciation Current Provision Deductions Balance June 30, 2009 Net Book Value June 30, Land and land improvements $ 626,837 $ - $ - $ 626,837 $ 384,230 $ 11,003 $ - $ 395,233 $ 231, Buildings and building improvements 2,868,863 43,498-2,912, ,388 83, ,907 1,933, Building equipment (portable) 83,108 5,588-88,696 32,582 11,696-44,278 44, Furniture for project/tenant use 189,529 4, , ,601 2, ,628 9, Maintenance equipment , , Motor vehicles 40, ,853 40, ,853 - Total $ 3,809,967 $ 54,243 $ - $ 3,864,210 $ 1,535,771 $ 108,367 $ - $ 1,644,138 $ 2,220,072 Fixed Asset Addition Detail: Buildings and building improvements: Roof $ 39,500 Window treatment 2,564 Carpet 1,434 Building equipment (portable): Refrigerators 1,413 Unitime terminals 1,038 PC workstation 3,137 Furniture for project/tenant use - Chairs 4,258 Maintenance equipment - Snowthrower 899 Total $ 54,243 26

31 Schedule of Expenditures of Federal Awards Year Ended June 30, 2009 Federal Agency/Pass-through Agency/Program Title CFDA Number Federal Expenditures U.S. Department of Housing and Urban Development: Supportive Housing for the Elderly - Project Rental Assistance Program $ 159,822 Supportive Housing for the Elderly - Capital Advance ,554,600 Total federal awards $ 3,714,422 27

32 Computation of Surplus Cash Year Ended June 30, 2009 S Cash $ 25,052 S Total Cash 25,052 Current Obligations S Accounts Payable - 30 Days 19,952 S Accrued Expenses (Not Escrowed) 4, Tenant/Patient Deposits Held in Trust (Contra) 18,817 S Total Current Obligations 42,817 S Surplus Cash (Deficiency) $ (17,765) S Surplus Cash Available for Distribution (M2M) $ - 28

33 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 29

34 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 Trustees We have audited the basic financial statements of d/b/a The Village of Peace Manor as of and for the year ended June 30, 2009 and have issued our report thereon dated September 17, We have 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered d/b/a The Village of Peace Manor's internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Organization's internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization's internal control. A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Organization's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Organization's financial statements that is more than inconsequential will not be prevented or detected by the Organization's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Organization's internal control. Our consideration of internal control was for the limited purpose described in the second paragraph and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control that we consider to be material weaknesses, as defined above. 30

35 To the Board of Trustees Compliance and Other Matters As part of obtaining reasonable assurance about whether d/b/a The Village of Peace Manor's financial statements are free of 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. This report is intended solely for the information and use of the board of trustees, management, and the U.S. Department of Housing and Urban Development and is not intended to be and should not be used by anyone other than these specified parties. September 17,

36 Report on Compliance with Requirements Applicable to the Major Program and on Internal Control Over Compliance with OMB Circular A

37 Report on Compliance with Requirements Applicable to the Major Program and on Internal Control Over Compliance with OMB Circular A-133 To the Board of Trustees Compliance We have audited the compliance of with the types of compliance requirements described in the U.S. Office of Management and Budget Circular A-133 Compliance Supplement that are applicable to its major federal program for the year ended June 30, 's major federal program is identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to its major federal program is the responsibility of 's management. Our responsibility is to express an opinion on d/b/a The Village of Peace Manor's compliance based on our audit. 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 OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 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 Peace Presbyterian Village 's 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. Our audit does not provide a legal determination on 's compliance with those requirements. In our opinion, complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30,

38 To the Board of Trustees Internal Control Over Compliance The management of is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered d/b/a The Village of Peace Manor's internal control over compliance with requirements that could have a direct and material effect on a major federal program (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of the Organization's internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization's internal control. A control deficiency exists when the design or operation of a control does not allow management or employees within a timely period, in the normal course of performing their assigned functions, to prevent or detect noncompliance with applicable requirements of laws, regulations, contracts, and grants that would have a direct and material effect on a major federal program. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Organization's ability to administer a major federal program in accordance with applicable requirements of laws, regulations, contracts, and grants such that there is more than a remote likelihood that the Organization's noncompliance that is more than inconsequential will not be prevented or detected by the Organization's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with applicable requirements of laws, regulations, contracts, and grants in relation to a major federal program will not be prevented or detected by the Organization's internal control. Our consideration of internal control was for the limited purpose described in the fourth paragraph and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control that we consider to be material weaknesses. This report is intended solely for the information and use of the board of trustees, management, and the U.S. Department of Housing and Urban Development and is not intended to be and should not be used by anyone other than these specified parties. September 17,

39 Schedule of Findings and Questioned Costs 35

40 Schedule of Findings and Questioned Costs Year Ended June 30, 2009 Section I - Summary of Auditor's Results Financial Statements Type of auditor's report issued: Unqualified Internal control over financial reporting: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified that are not considered to be material weaknesses? Yes X No Noncompliance material to financial statements noted? Yes X None reported Federal Awards Internal control over major programs: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified that are not considered to be material weaknesses? Yes X None reported Type of auditor's report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of Circular A-133? Yes X No Identification of major program: CFDA Number Name of Federal Program or Cluster Opinion Supportive Housing for the Elderly Unqualified Dollar threshold used to distinguish between type A and type B programs: $300,000 Auditee qualified as low-risk auditee? X Yes No 36

41 Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2009 Section II - Financial Statement Audit Findings Reference Number Current Year: Reference Number Prior Year: None None Finding Finding Questioned Costs Questioned Costs Section III - Federal Program Audit Findings Reference Number Current Year: Reference Number Prior Year: None None Finding Finding Questioned Costs Questioned Costs 37