CALIFORNIA AFFORDABLE HOUSING INITIATIVES, INC. Independent Auditor s Reports, Financial Statements and Single Audit Information

Transcription

1 CALIFORNIA AFFORDABLE HOUSING INITIATIVES, INC. Independent Auditor s Reports, Financial Statements and Single Audit Information

2 Table of Contents Page FINANCIAL SECTION Independent Auditor s Report... 1 Basic Financial Statements: Statement of Net Position... 3 Statement of Revenues, Expenses and Changes in Net Position... 4 Statement of Cash Flows... 5 Notes to Financial Statements... 7 SINGLE AUDIT SECTION 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 Independent Auditor s Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards Schedule of Findings and Questioned Costs Summary Schedule of Prior Year s Findings... 21

3 Century City Los Angeles Newport Beach Oakland Sacramento San Diego Board of Directors California Affordable Housing Initiatives, Inc. Oakland, California Independent Auditor s Report San Francisco Walnut Creek Woodland Hills Report on the Financial Statements We have audited the accompanying financial statements of California Affordable Housing Initiatives, Inc. (CAHI), a component unit of the Housing Authority of the City of Oakland, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise of CAHI s basic financial statements as listed in the table of contents. 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 CAHI, as of June 30, 2016, and the changes in its financial position and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Macias Gini & O Connell LLP th Street, 5th Floor Oakland, CA

4 Other Matters Required Supplementary Information Management has omitted the management s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise CAHI s basic financial statements. The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations 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 basic 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 basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated, in all material respects in relation to the basic 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 December 22, 2016 on our consideration of CAHI s 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 the 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 CAHI s internal control over financial reporting and compliance. Oakland, California December 22,

5 Statement of Net Position June 30, 2016 Assets: Current assets: Unrestricted cash $ 30,220,368 Accounts receivable, net: HUD 1,430,488 Others 131,236 Restricted cash 57,262 Prepaid expenses 53,230 Total current assets 31,892,584 Noncurrent assets: Other assets 39,041 Capital assets: Nondepreciable 4,722,083 Depreciable, net 10,169,435 Total noncurrent assets 14,930,559 Total assets 46,823,143 Liabilities: Current liabilities: Accounts payable 1,918,392 Accrued liabilities 57,264 Due to the Oakland Housing Authority 1,024,097 Total liabilities 2,999,753 Net position: Net investment in capital assets 14,891,518 Unrestricted 28,931,872 Total net position $ 43,823,390 See accompanying notes to financial statements. 3

6 Statement of Revenues, Expenses and Changes in Net Position Operating revenues: Housing assistance payment revenues and fees $ 487,174,952 Administrative fees 14,394,487 Non-dwelling rental 566,589 Other 2,918 Total operating revenues 502,138,946 Operating expenses: Program: Housing assistance payments 487,174,952 Supporting services: Management and general: Salaries and benefits 327,374 Administrative 10,998,731 Other expenses 426,765 Depreciation and amortization 388,376 Utilities 2,326 Total operating expenses 499,318,524 Operating income 2,820,422 Nonoperating revenues: Gain on sale of capital assets 1,531,736 Change in net position 4,352,158 Net position, beginning of year 39,471,232 Net position, end of year $ 43,823,390 See accompanying notes to financial statements. 4

7 Statement of Cash Flows Cash flows from operating activities: Receipts from housing assistance payments and administrative fees $ 501,389,157 Receipts from customers and others 569,507 Payments to vendors and suppliers for goods and services (12,374,644) Housing assistance payments on behalf of tenants (487,174,952) Net cash provided by operating activities 2,409,068 Cash flows from capital and related financing activities: Acquisition of capital assets (2,956,152) Proceeds from sales of capital asset 2,350,000 Net cash used in capital and related financing activities (606,152) Net increase in cash 1,802,916 Cash, beginning of year 28,474,714 Cash, end of year $ 30,277,630 Financial statement presentation: Unrestricted cash $ 30,220,368 Restricted cash 57,262 Cash, end of year $ 30,277,630 Reconciliation of operating income to net cash provided by operating activities: Operating income $ 2,820,422 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 388,376 (Increase) decrease in: Receivables (180,282) Prepaid expenses 3,897 Other assets 32,877 Increase (decrease) in: Accounts payable 682,596 Accrued liabilities 20,801 Due to Oakland Housing Authority 617,912 Administrative fees liabilities (1,977,531) Net cash provided by operating activities $ 2,409,068 See accompanying notes to financial statements. 5

8 This page intentionally left blank. 6

9 Notes to Financial Statements NOTE 1 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (a) Organization California Affordable Housing Initiatives, Inc. (CAHI) was established in March 2001 as a nonprofit public benefit corporation. The purpose of CAHI is to perform the functions of Project- Based Section 8 Program contract administration (Program) for the Northern California area under contract with the U.S. Department of Housing and Urban Development (HUD). CAHI has contracted with CGI-AMS (CGI), a third-party, to assist in administrating the day-to-day operations of the Program. CAHI is a component unit of the Housing Authority of City of Oakland (OHA) reporting entity and is included in OHA s basic financial statements. The major tasks of CAHI include, but are not limited to the following: Monitor compliance of Section 8 project owners with their obligation to provide decent, safe and sanitary housing to assisted residents. Pay Section 8 project owners accurately and timely. Submit required documents accurately and timely to HUD. Comply with HUD regulations and requirements, both current and as amended in the future, governing administration of Section 8 Housing Assistance Payment (HAP) contracts. CAHI submits HAP and Administrative Fee requests to HUD. Upon receipt of funds from HUD, CAHI transmits housing assistance payments to property owners by way of direct bank transfers or Automated Clearing House (ACH) transactions. Administrative fees paid by CAHI to CGI are made by way of wire transfers. The administrative fees received from HUD less payments made to CGI and other CAHI operating expenses are considered CAHI s earned incentive fees, or profits, which are shared equally with CGI under the contractual arrangement. CAHI s financial records are maintained by OHA. CAHI s Treasurer works closely with the OHA staff members to monitor accounting activities. (b) Basis of Accounting The accompanying financial statements are prepared on the accrual basis of accounting. Revenues from administrative fees and housing assistance payments are recognized when earned and when all eligibility requirements have been satisfied, and expenses are recognized when incurred which is in accordance with accounting principles generally accepted in the United States of America. (c) Receivables from HUD All receivables are reported at gross value, which approximates fair value. Due to the nature of the receivable being from a U.S. government department, management considers the entire balance collectible as of year-end, and has not established an allowance for uncollectible accounts. 7

10 Notes to Financial Statements NOTE 1 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) (d) Capital Assets CAHI capitalizes assets with an estimated useful life in excess of one year. Costs of repairs and maintenance are expensed as incurred. Depreciation has been provided over estimated useful lives of the capital assets using the straight-line method. The estimated useful life of the building is 27.5 years. (e) Net Position Net position comprises the various net earnings from operating income, nonoperating revenues and expenses and capital contributions. Net position is classified in the following three components: Net investment in capital assets - This component of net position consists of capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction or improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds are not included in the calculation of net investment in capital assets. Rather, that portion of the debt is included in the same net position component as the unspent proceeds. Restricted - This component of net position consists of constraints on assets imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation, reduced by liabilities related to those restricted assets. Unrestricted - This component of net position consists of amounts that do not meet the definition of restricted or net investment in capital assets. CAHI s net position results from accumulated contract fee revenues earned in excess of cumulative fees and other administrative expenses incurred. Since there are no restrictions imposed on these funds once the fee revenues are released by HUD, management considers the net position as unrestricted. (f) Compensated Absences Under the current organizational structure, CAHI does not have compensated employees and all required tasks are performed by personnel retained under contractual arrangements. Accordingly, no accrued vacation or compensated absences is recognized in the accompanying financial statements. (g) Income Taxes CAHI is a public charity under Internal Revenue Code (IRC) Section 509(a)(2) and is exempt from taxation under Section 501(c)(3) of the IRC and 23701d of the California Revenue and Taxation Code and is generally not subject to federal or state income taxes. However, CAHI is subject to income taxes on any net income that is derived from a trade or business carried on, and not in furtherance of the purposes for which it was granted exemption. No income tax provision has been recorded as the net income, if any, from any unrelated trade or business, in the opinion of management, is not material to the accompanying financial statements taken as a whole. 8

11 Notes to Financial Statements NOTE 1 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) CAHI follows the accounting for uncertainty in income taxes recognized in a nonpublic entity s financial statements. It details how entities should recognize, measure, present, and disclose uncertain tax positions that have been or are expected to be taken. As such, financial statements will reflect expected future tax consequences of uncertain tax positions presuming the taxing authorities full knowledge of the position and all relevant facts. There was no impact to CAHI s financial statements as a result of these provisions. CAHI is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. CAHI believes it is no longer subject to income tax examinations for years prior to (h) Use of Estimates Management of CAHI has made certain estimates and assumptions relating to the reporting of assets and liabilities and revenues and expenses to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results may differ from those estimates. NOTE 2 CASH CAHI s cash consist of three accounts maintained with a financial institution, and petty cash used for minor operating expenses. At June 30, 2016, CAHI s cash is as follows: Adminstrative fee account $ 5,474,259 Interest bearing checking account 24,746,009 Housing assistance payment (HAP) account (restricted) 57,262 Petty cash 100 Total restricted and unrestricted cash $ 30,277,630 Under HUD s Project-Based Section 8 Program contract administration requirements, CAHI has an established bank account with MUFG Union Bank, N.A. (Union Bank) that is restricted to receiving and disbursing Housing Assistance Payments (HAP) each month. The amount of HAP approved and received from HUD in this account is immediately disbursed to Section 8 property owners under an arrangement with Union Bank, and would normally have no carrying balance. Any income earned in the account is required to be reported and returned to HUD periodically as program income. The HAP account is restricted to payments made for HAP. Any excess cash in this account will be refunded to HUD at termination of the contract. All bank accounts are maintained with one financial institution and insured up to $250,000 by the Federal Depository Insurance Corporation (FDIC). In accordance with the California Government Code, the financial institution has to secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. Although CAHI is a not a governmental entity, its agreement with Union Bank is established as part of an agreement with Union Bank under OHA. Therefore, its deposits are subject to collateralization as required by the California Government Code. California law also allows financial institutions to secure the CAHI deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. 9

12 Notes to Financial Statements NOTE 3 CAPITAL ASSETS CAHI s capital assets activities for the year ended June 30, 2016 are as follows: Balance Balance July 1, June 30, 2015 Additions Deletions Transfers 2016 Captial assets being depreciated: Land $ 5,487,712 $ - $ (790,000) $ - $ 4,697,712 Construction in progress 6,621,611 2,956,152 (28,264) (9,525,128) 24,371 Total capital assets, not being depreciated 12,109,323 2,956,152 (818,264) (9,525,128) 4,722,083 Captial assets being depreciated: Building and improvements 1,155, ,525,128 10,680,333 Less accumulated depreciation (122,522) (388,376) - - (510,898) Total depreciated capital asset, net 1,032,683 (388,376) - 9,525,128 10,169,435 Total capital asssets, net $ 13,142,006 $ 2,567,776 $ (818,264) $ - $ 14,891,518 NOTE 4 ADMINISTRATIVE FEES EXPENSES/LIABILITIES These liabilities consist of administrative fees and the CGI s portion of earned incentive fees due to CGI that have not been paid by CAHI as of June 30, In January 2015, CAHI extended its contract with CGI for administrative services to December 31, 2017, which is consistent with the extentions provided by HUD as its renewals with CAHI under the amended Annual Contribution Contract (ACC). NOTE 5 RELATED PARTY TRANSACTIONS Certain costs charged to CAHI consist of OHA accounting and administrative services. OHA is reimbursed for these charges and also for certain non-payroll expenses it pays on CAHI s behalf. At June 30, 2016, CAHI owes OHA $1,024,097 for accounting and administrative services. On September 1, 2015, CAHI and OHA entered into a twenty year operating lease agreement for office space for its Leased Housing Department and for its main computer server room, in which OHA agreed to pay base lease payments to CAHI as follows: Unit A Unit B 24, Gross Rentable Gross Rentable 7 Parking Fiscal Year Square Feet Square Feet Spaces Total 2017 $ 659,901 $ 18,180 $ 12,797 $ 690, ,099 18,544 13, , ,561 18,914 13, , ,292 19,293 13, , ,298 19,679 13, , ,791, ,456 73,527 3,969, ,867, ,545 74,998 4,048, ,770, ,247 81,191 4,966,669 Total $ 15,863,375 $ 420,858 $ 296,312 $ 16,580,545 The lease commenced on September 19, 2015 and ends on September 18, The OHA has two subsequent options to extend the initial term of the lease, each for a term of five years. 10

13 Notes to Financial Statements NOTE 6 INSURANCE CAHI maintains two insurance policies as required by HUD. The Crime Policy, related to employee dishonesty actions, covers incidences of up to $35 million in losses with a $500,000 deductible per incident. The Directors and Officers Liability and Employment Practices Liability Policy covers up to $1 million in losses with a $10,000 deductible per incident. No losses have been incurred or claimed by CAHI under these policies during the past fiscal year. NOTE 7 ECONOMIC DEPENDENCY CAHI is dependent on HUD s appropriation of funds for the Program. In November 2012, a second amendment was made with HUD to renew the ACC until December 31, On May 15, 2014, HUD exercised the sixth and seventh three-month renewal terms under the ACC, as amended by the second amendment, to extend its contract with CAHI until December 31, On December 5, 2014, HUD approved a third amendment of the ACC to extend its contract for six months from January 1, 2015 and ending on June 30, On April 14, 2016, HUD elected to exercise the remaining renewals extending the contract until December 31, 2017, effective May 1,

14 This page intentionally left blank. 12

15 Century City Los Angeles Newport Beach Oakland Sacramento San Diego 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 San Francisco Walnut Creek Woodland Hills Board of Directors California Affordable Housing Initiatives, Inc. Oakland, California 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 California Affordable Housing Initiatives, Inc. (CAHI), a component unit of the Housing Authority of the City of Oakland, as of and for the year ended June 30, 2016, and the related notes to the financial statements, and have issued our report thereon dated December 22, Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered CAHI s 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 CAHI s internal control. Accordingly, we do not express an opinion on the effectiveness of CAHI 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 a 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 CAHI s 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. Macias Gini & O Connell LLP th Street, 5th Floor Oakland, CA

16 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 CAHI 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 CAHI s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Oakland, California December 22,

17 Century City Los Angeles Newport Beach Oakland Sacramento San Diego Independent Auditor s Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance Board of Directors California Affordable Housing Initiatives, Inc. Oakland, California San Francisco Walnut Creek Woodland Hills Report on Compliance for Each Major Federal Program We have audited the California Affordable Housing Initiatives, Inc. s (CAHI) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on CAHI s major federal program for the year ended June 30, CAHI s 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 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 CAHI s 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 CAHI 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 on compliance for the major federal program. However, our audit does not provide a legal determination of CAHI s compliance. Opinion on the Major Federal Program In our opinion, CAHI 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, Macias Gini & O Connell LLP th Street, 5th Floor Oakland, CA

18 Report on Internal Control Over Compliance Management of CAHI 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 CAHI s 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 CAHI s internal control over compliance. 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 were not 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. Oakland, California December 22,

19 Schedule of Expenditures of Federal Awards Federal CFDA Grantor/Pass-Through Grantor/Program Title Number Expenditures U.S. Department of Housing and Urban Development: Direct Program: Section 8 Housing Assistance Payments Program - Special Allocations $ 501,569,439 See accompanying notes to the schedule of expenditures of federal awards. 17

20 This page intentionally left blank. 18

21 Notes to the Schedule of Expenditures of Federal Awards NOTE 1 GENERAL The Schedule of Expenditures of Federal Awards (the Schedule) presents the activity of all federal programs of California Affordable Housing Initiatives, Inc. (CAHI). NOTE 2 BASIS OF ACCOUNTING The Schedule is presented using the accrual basis of accounting. CAHI did not elect to use the 10% de minimus indirect cost rate as covered in Indirect (F&A) Costs. NOTE 3 - RELATIONSHIP TO FEDERAL FINANCIAL REPORTS Amounts reported in the Schedule agree to or can be reconciled with the amounts reported in the related federal financial reports. NOTE 4 - RELATIONSHIP TO FINANCIAL STATEMENTS Federal award revenues and expenditures agree to or can be reconciled with the amounts reported in CAHI s financial statements. 19

22 Schedule of Findings and Questioned Costs Section I Summary of Auditor s Results Financial Statements Type of auditor s report issued: Unmodified Internal control over financial reporting: Material weakness(es) identified? Significant deficiency(ies) identified? Noncompliance material to the financial statements noted? No None reported. No Federal Awards Internal control over major federal program: Material weakness(es) identified? Significant deficiency(ies) identified? Type of auditor s report issued on compliance for major program: Any audit findings disclosed that are required to be reported in accordance with the Uniform Guidance? No None reported. Unmodified No Identification of major program: U.S. Department of Housing and Urban Development: Section 8 Housing Assistance Payments Program Special Allocations (CFDA# ) Dollar threshold used to distinguish between type A and type B programs: $3,000,000 Auditee qualified as a low-risk auditee? Yes Section II - Financial Statement Findings None reported. Section III - Federal Award Findings and Questioned Costs None reported. 20

23 Summary Schedule of Prior Year s Findings Prior Year s Findings None reported. 21