CCA ASPEN COURT, L.P. FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Years Ended December 31, 2010 and 2009
CONTENTS Page Certificate of general partner and managing agent 1 Independent auditors' report 2 Financial statements: Balance sheet 3 Statement of operations and partners equity 4 Statement of cash flows 5-6 Notes to financial statements 7-11 Independent auditors' report on supplementary information 13 Supplementary information: Statement of operations details 14-15 Delinquent tenant accounts receivable 16 Reserve for replacements 16 Statement of surplus cash 16 Changes in property and equipment 17 Identity-of-interest/related party transactions 18 Identification of engagement auditor 18 Independent auditors' report on internal control over financial reporting and on compliance and other matters 19-20
CCA - ASPEN COURT, L.P. CERTIFICATE OF GENERAL PARTNER AND MANAGING AGENT We hereby certify that we have examined the accompanying financial statements and supplementary information of CCA - Aspen Court, L.P., and to the best of our knowledge and belief, the same are complete and accurate. ~~CO~=~=p~~~ls-id-e-m--------- Barco, L.L.c. General Partner, CCA - Aspen Court, L.P. Tax Identification Number: 54-0400850 March 22, 2011 Date Todd A. Copeland, CEO Hercules Real Estate Services, Inc. Managing Agent Tax Identification Number: 54-1774315 March 22, 2011 Date Responsible property manager: Curtis Carter - 1 -
Zukennan&Associates,Ltd. CERTIFIED PUBLIC ACCOUND\NTS Independent Auditors' Report March 22, 2011 To the Partners CCA - Aspen Court, L.P. We have audited the accompanying balance sheet of CCA - Aspen Court, L.P. as of December 31, 2010 and 2009, and the related statements of operations, partners' equity and cash flows for the years then ended. These fmancial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with U.S. generally accepted auditing standards 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 fmancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fmancial 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 CCA - Aspen Court, L.P. as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated March 22, 2011, on our consideration of CCA - Aspen Court, L.P.' s internal control over fmancial reporting. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and the results of that testing and not to provide an opinion on the internal control over financial reporting. In accordance with Government Auditing Standards, we have also issued a report dated March 22,2011, on CCA - Aspen Court, L.P. 's compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters that could have a direct and material effect on the determination of financial statement amounts. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. ~k~wj.;, ~ Auo&.~k.):M. - 2-168 Business Par" Dr., Suite 202, \irginia Beach, Va. 23462 (757) 473-3777 Fa\ (757) 473-8313 Web: www.cpa-center.com/zukerrnan
CCA - ASPEN COURT, L.P. BALANCE SHEET ASSETS December 31, 2010 2009 Current assets: Cash and cash equivalents $ 168,484 $ 45,489 Accounts receivable - tenants 9,332 17,596 Prepaid expenses 19,401 24,772 Total current assets 197,217 87,857 Restricted deposits: Tenant security deposits 61,878 65,829 Mortgage escrow deposits 40,210 38,220 Replacement reserve 72,797 61,195 Total restricted deposits 174,885 165,244 Property and equipment 4,602,457 4,778,003 Deferred financing costs 225,571 242,390 Total assets $ 5,200,130 $ 5,273,494 LIABILITIES AND PARTNERS' EQUITY Current liabilities: Accounts payable $ 62,332 $ 44,342 Accrued expenses 41,115 41,283 Asset management fees payable 32,340 46,161 Prepaid rent 544 7,824 Mortgage payable, current 71,152 66,046 Total current liabilities 207,483 205,656 Tenant security deposits 61,152 65,834 Advances from affiliate 256,850 228,375 Mortgage payable, noncurrent 3,600,258 3,671,410 Deferred developer fee 685,299 1,083,612 Total liabilities 4,811,042 5,254,887 Partners' equity 389,088 18,607 Total liabilities and partners' equity $ 5,200,130 $ 5,273,494 The accompanying notes are an integral part of the financial statements. - 3 -
CCA - ASPEN COURT, L.P. STATEMENT OF OPERATIONS AND PARTNERS' EQUITY Year Ended December 31, 2010 2009 Net rental revenue $ 1,358,663 $ 1,277,938 Other revenue 21,133 10,200 Total revenue 1,379,796 1,288,138 Operating expenses: Administrative 253,185 277,428 Utilities 238,468 234,048 Operating and maintenance 241,855 318,914 Taxes and insurance 122,303 109,540 Financial 341,708 339,572 Total operating expenses 1,197,519 1,279,502 Income before depreciation and amortization 182,277 8,636 Depreciation 219,898 257,732 Amortization 16,819 17,109 Loss from project operations (54,440) (266,205) Partnership expenses: Asset management fee (10,079) (9,786) Net loss (64,519) (275,991) Partners' equity: Beginning of year 18,607 294,598 Contributions 435,000 - End of year $ 389,088 $ 18,607 The accompanying notes are an integral part of the financial statements. - 4 -
CCA - ASPEN COURT, L.P. STATEMENT OF CASH FLOWS Cash flows from operating activities: Revenues: Rental receipts 1,359,647 Year Ended December 31, 2010 2009 $ $ 1,281,807 Interest receipts 102 287 Other receipts 21,031 9,913 Total revenues 1,380,780 1,292,007 Expenditures: Administrative (111,488) (168,576) Management fees (66,538) (60,745) Utilities (226,773) (205,171) Salaries and wages (100,631) (104,614) Operating and maintenance (206,714) (288,246) Real estate taxes (73,495) (75,630) Property insurance (22,114) (22,005) Tenant security deposits (731) 704 Miscellaneous taxes and insurance (26,444) (19,543) Interest on mortgage (276,957) (281,696) Total expenditures (1,111,885) (1,225,522) Net cash provided by operating activities 268,895 66,485 Cash flows from investing activities: Purchase of property and equipment (44,352) (76,664) Deposits to replacement reserve (21,102) (21,287) Withdrawals from replacement reserve 9,500 56,030 Net cash used by investing activities (55,954) (41,921) Cash flows from financing activities: Mortgage principal payments (66,046) (61,307) Deferred developer fee payments (435,000) - Advances from affiliate - 66,162 Partnership expenses (23,900) - Contributions from partners 435,000 - Net cash provided (used) by financing activities (89,946) 4,855 Net increase in cash and cash equivalents 122,995 29,419 Cash and cash equivalents at beginning of year 45,489 16,070 Cash and cash equivalents at end of year $ 168,484 $ 45,489 The accompanying notes are an integral part of the financial statements. - 5 - (Continued)
CCA - ASPEN COURT, L.P. STATEMENT OF CASH FLOWS (Continued) Year Ended December 31, 2010 2009 Reconciliation of net loss to net cash provided by operating activities Net loss $ (64,519) $ (275,991) Adjustments: Partnership expenses 10,079 9,786 Depreciation and amortization 236,717 274,841 Decrease (increase) in: Accounts receivable - tenants 8,264 (3,877) Prepaid expenses 5,371 (5,742) Tenant security deposits held in trust 3,951 (2,026) Mortgage tax and insurance escrows (1,990) (9,729) Increase (decrease) in: Accounts payable 17,990 9,329 Accrued expenses 64,994 59,418 Prepaid rent (7,280) 7,746 Tenant security deposits (4,682) 2,730 Net cash provided by operating activities $ 268,895 $ 66,485 The accompanying notes are an integral part of the financial statements. - 6 -
CCA ASPEN COURT, L.P. NOTES TO FINANCIAL STATEMENTS NOTE 1 NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES CCA Aspen Court, L.P. (the Partnership) is a Virginia limited partnership that owns and operates Aspen Court Apartments (the Project), a 105-unit apartment complex located in Washington, D.C. The Project is regulated by the District of Columbia Housing Finance Agency (DCHFA) with respect to rental charges, operating methods, and distributions to partners. The Partnership's significant accounting policies are as follows: Use of estimates Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. Cash equivalents For the purposes of the statement of cash flows, investments in money market funds are considered cash equivalents. Tenant accounts receivable Tenant accounts receivable are stated at the amount management expects to collect from outstanding balances, and do not accrue interest. Accounts are charged to bad debts when deemed uncollectible by management. Property and equipment Property and equipment are recorded at cost and depreciated using the straight-line method over estimated useful lives of 3 to 40 years. Construction period interest is capitalized as a component of building cost. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an asset is considered to be impaired, a loss is recognized for the amount by which the carrying amount of the asset exceeds its estimated fair value. Deferred financing costs Costs incurred in connection with obtaining the Project s mortgage are capitalized and amortized over the life of the loan, using the interest method. Costs incurred in connection with obtaining low income housing tax credits are capitalized and amortized over the tax credit period using the straight line method. Income taxes The Partnership is not subject to income taxes. Income or loss of the Partnership is required to be reported in the tax returns of the partners; accordingly, no provision for income taxes is included in these financial statements. Income taxes paid to the District of Columbia by the Partnership on behalf of its partners are reported as distributions. - 7 -
CCA ASPEN COURT, L.P. NOTES TO FINANCIAL STATEMENTS NOTE 1 NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONCLUDED Date of management s review Management has evaluated subsequent events through March 22, 2011, the date on which the financial statements were available for issue. NOTE 2 PROPERTY AND EQUIPMENT Property and equipment consist of the following: December 31, 2010 2009 Land and improvements $ 291,605 $ 291,605 Buildings 5,961,615 5,949,844 Building equipment - portable 100,196 99,452 Office furniture and equipment 8,500 8,500 Maintenance equipment 7,015 7,015 6,368,931 6,356,416 Less: accumulated depreciation 1,766,474 1,578,413 NOTE 3 DEFERRED FINANCING COSTS Deferred financing costs consist of the following: $ 4,602,457 $ 4,778,003 December 31, 2010 2009 Debt issue costs $ 365,526 $ 365,526 Low income housing tax credit costs 10,950 10,950 376,476 376,476 Less: accumulated amortization 150,905 134,086 NOTE 4 ACCRUED EXPENSES Accrued expenses consist of the following: $ 225,571 $ 242,390 December 31, 2010 2009 Interest $ 22,855 $ 23,266 Payroll 1,978 3,312 Real estate taxes 16,282 14,705-8 - $ 41,115 $ 41,283
CCA ASPEN COURT, L.P. NOTES TO FINANCIAL STATEMENTS NOTE 5 ADVANCES FROM AFFILIATE From time to time, the general partner makes advances to the Partnership to fund operating deficits. The advances are payable from cash flow, as defined in the agreement, and bear interest at 14% per annum. Interest of $28,475 and $15,428 accrued on the balance during the years ended December 31, 2010 and 2009, respectively. The reported balance includes accrued interest of $53,464 and $24,989 at December 31, 2010 and 2009, respectively. NOTE 6 MORTGAGE PAYABLE The Project's mortgage is payable in monthly installments of $28,584, including interest at 7.47% per annum, through July 2032. In addition, monthly escrow deposits are required for taxes, insurance and replacement of depreciable assets. The mortgage is secured by substantially all of the Project's assets. Scheduled principal payments on the mortgage note are due as follows: Years Ending December 31, 2011 $ 71,152 2012 76,653 2013 82,580 2014 88,964 2015 95,842 Thereafter 3,256,219 NOTE 7 FEES PAID TO RELATED PARTIES $ 3,671,410 In exchange for development services provided in connection with the rehabilitation of the Project, the Partnership agreed to pay the general partner a developer fee of $901,608. The fee is payable during the tax credit period from cash flow and capital proceeds, as defined in the agreement. Payments of $435,000 were made during the year ended December 31, 2010. Interest accrues at 6% per annum on the unpaid balance. Interest of $36,687 and $42,829 accrued on the balance during the years ended December 31, 2010 and 2009, respectively. The reported liability includes accrued interest of $406,485 and $369,798 at December 31, 2010 and 2009, respectively. The Project is managed by Hercules Real Estate Services, Inc., an affiliate of the general partner, which is paid a management fee of 5% of Project revenue collections. Management fees were $65,720 and $61,399 for the years ended December 31, 2010 and 2009, respectively. The Partnership has agreed to pay an annual asset management fee to an affiliate of the limited partner in exchange for consultation and assistance regarding Project management and operations. The fee is payable from cash flow, as defined in the agreement, is subject to annual adjustment based on the Consumer Price Index (CPI), and is cumulative. - 9 -
CCA ASPEN COURT, L.P. NOTES TO FINANCIAL STATEMENTS NOTE 7 FEES PAID TO RELATED PARTIES (CONCLUDED) The Partnership has agreed to pay an incentive management fee of up to $2,000 per unit per year to the general partner in exchange for administration and management of Partnership operations. The fee is payable in arrears from cash flow remaining after the payment of priority items, as defined in the agreement, and is subject to annual adjustment based on the CPI. No fees were paid during the years ended December 31, 2010 and 2009. NOTE 8 RISKS AND UNCERTAINTIES Market concentration The Project s operations are concentrated in the multifamily real estate market in Washington, D.C. Future operations could be affected by changes in the economic conditions or in the demand for affordable multifamily housing in that market. Regulatory environment The Project operates in a heavily regulated environment, with its operations subject to the administrative directives, rules and regulations of federal and local regulatory agencies including, but not limited to, DCHFA. Such administrative directives, rules and regulations are subject to change by an act of Congress or an administrative change mandated by DCHFA. 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. The Project has been allocated low-income housing tax credits pursuant to Internal Revenue Code Section 42, which regulates the Project as to occupant eligibility and unit gross rent, among other requirements. The Project must meet the provisions of these regulations during each of 15 consecutive years, as well as an extended use period of an additional 15 years, in order to continue to qualify to receive the tax credits. Failure to comply with these regulations, or to correct noncompliance within a specified time period, could result in recapture of previously taken lowincome housing tax credits plus interest. Such potential noncompliance may require an adjustment to the capital contributed by the limited partner. Financial instruments Financial instruments, which potentially subject the Partnership to concentrations of credit risk, consist principally of cash and cash equivalents, tenant accounts receivable, and restricted deposits and funded reserves held by the mortgagee. The Partnership places its cash and cash equivalents with high credit quality financial institutions. At December 31, 2010, the balances on deposit in such financial institutions did not exceed the limits insured by the Federal Deposit Insurance Corporation. Restricted deposits and funded reserves of approximately $113,000 at December 31, 2010 are administered by the mortgagee. - 10 -
CCA ASPEN COURT, L.P. NOTES TO FINANCIAL STATEMENTS NOTE 8 RISKS AND UNCERTAINTIES (CONCLUDED) Project management performs credit evaluations of applicants and obtains a security deposit or surety bond upon rental of each unit. The Project requires no other collateral from the tenants, and therefore has credit risk for any amounts due from tenants in excess of the security deposit or bond obtained. Uncertain income tax positions As required by the Income Taxes Topic of the FASB Accounting Standards Codification, management has evaluated the Partnership s income tax positions and has determined that they are more likely than not to be sustained upon examination by the applicable tax authorities. Accordingly, no liability for unrecognized tax benefits is included in these financial statements. No interest or penalties have been incurred or recognized in the Partnership s financial statements for the years ended December 31, 2010 and 2009. The Partnership s federal and District of Columbia tax returns for the years 2007 through 2010 remain subject to examination by the applicable tax authorities. NOTE 9 SUBSEQUENT EVENT On March 4, 2011, the general and limited partners entered into an agreement to sell 100% of their interests in the Partnership to a third party. The agreement is not binding on the purchaser until a due diligence period, as defined in the agreement, is completed to the satisfaction of the purchaser. Should this sale take place, the related party agreements discussed in Note 7 would terminate upon closing of the transaction. - 11 -
SUPPLEMENTARY INFORMATION
Zukennan&Associates,Ltd. CERTIFIED PUBLIC ACCOUND-\NTS Independent Auditors' Report on Supplementary Information March 22, 2011 To the Partners CCA - Aspen Court, L.P. Our report on our audits of the basic financial statements of CCA - Aspen Court, L.P. for the years ended December 31, 2010 and 2009 appears on page 2. Our audits were conducted for the purpose of forming an opinion on the basic fmancial statements taken as a whole. The accompanying supplementary information shown on pages 14 to 18 is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. - 13-1H8 Business Par" Dr., Suite 202. \ irginia Beach. \a. 23462 (757) 473-3777 Fa\ (757) 473-8313 \\eb: www.cpa-ccnter.com/zukerrnan
CCA - ASPEN COURT, L.P. STATEMENT OF OPERATIONS DETAILS Year Ended December 31, 2010 2009 Rental revenue: Rent revenue - gross potential $ 1,374,877 $ 1,325,947 Vacancies: Apartments 14,489 46,698 Rental concessions 1,725 1,311 Total vacancies 16,214 48,009 Net rental revenue $ 1,358,663 $ 1,277,938 Other revenue: Interest $ 102 $ 287 Laundry and vending 9,516 6,979 Tenant charges 9,415 2,414 Miscellaneous 2,100 520 Total other revenue $ 21,133 $ 10,200 Administrative: Advertising and marketing $ 18,012 $ 20,790 Other renting expenses 3,574 3,265 Office salaries 22,110 21,916 Office expenses 19,747 24,257 Property management fees 65,720 61,399 Manager or superintendent salaries 35,662 32,097 Legal expense - project 9,398 27,998 Audit expense 13,094 14,340 Monitoring fee 3,675 3,675 Bad debts 42,532 47,869 Miscellaneous 19,661 19,822 Total administrative $ 253,185 $ 277,428 Utilities: Electricity $ 20,144 $ 18,557 Water 44,583 40,096 Gas 122,639 130,331 Sewer 51,102 45,064 Total utilities $ 238,468 $ 234,048 (Continued) - 14 -
CCA - ASPEN COURT, L.P. STATEMENT OF OPERATIONS DETAILS (Continued) Year Ended December 31, 2010 2009 Operating and maintenance: Payroll $ 41,525 $ 50,003 Supplies 13,444 22,922 Contracts 154,188 216,354 Garbage and trash removal 30,693 29,635 Miscellaneous 2,005 - Total operating and maintenance $ 241,855 $ 318,914 Taxes and insurance: Real estate taxes $ 72,207 $ 66,078 Payroll taxes 8,358 10,247 Property and liability insurance (hazard) 23,652 24,919 Fidelity bond insurance 307 224 Workmen's compensation 2,245 1,218 Health insurance and other employee benefits 8,455 3,782 Miscellaneous 7,079 3,072 Total taxes and insurance $ 122,303 $ 109,540 Financial: Interest on mortgage payable $ 276,546 $ 281,315 Interest on developer fee 36,687 42,829 Interest on advances from affiliate 28,475 15,428 Total financial $ 341,708 $ 339,572-15 -
CCA ASPEN COURT, L.P. SUPPLEMENTARY INFORMATION Year Ended December 31, 2010 DELINQUENT TENANT ACCOUNTS RECEIVABLE Amount Past Due Current Former Days Delinquent Tenants Tenants 30 Days $ 8,028 $ - 31-60 Days 905-61-90 Days 160 239 Totals $ 9,093 $ 239 RESERVE FOR REPLACEMENTS Balance as of January 1, 2010 $ 61,195 Monthly deposits: $1,750 x 12 months 21,000 Interest earned 102 Withdrawals (9,500) Balance as of December 31, 2010, confirmed by mortgagee $ 72,797 STATEMENT OF SURPLUS CASH Cash Cash - operating $ 168,484 Cash - security deposits 61,878 Net HAP receivable 239 Total cash $ 230,601 Current obligations Mortgage interest payable first of next month $ 22,855 Accounts payable (due within 30 days) 62,332 Accrued expenses not escrowed (due within 30 days) 1,978 Prepaid rent 544 Tenant security deposits 61,152 Total current obligations 148,861 Surplus cash $ 81,740-16 -
CCA - ASPEN COURT, L.P. CHANGES IN PROPERTY AND EQUIPMENT Year Ended December 31, 2010 Assets Accumulated Depreciation Net Book Balance Balance Balance Current Balance Value 12/31/09 Additions Reductions 12/31/10 12/31/09 Provision Reductions 12/31/10 12/31/10 Land and improvements $ 291,605 $ - $ - $ 291,605 $ 33,978 $ 4,023 $ - $ 38,001 $ 253,604 Buildings 5,949,844 37,015 (25,244) 5,961,615 1,450,931 204,509 (25,244) 1,630,196 4,331,419 Building equipment - portable 99,452 7,337 (6,593) 100,196 80,644 10,184 (6,593) 84,235 15,961 Office furniture and equipment 8,500 - - 8,500 7,921 300-8,221 279 Maintenance equipment 7,015 - - 7,015 4,939 882-5,821 1,194 Total $ 6,356,416 $ 44,352 $ (31,837) $ 6,368,931 $ 1,578,413 $ 219,898 $ (31,837) $ 1,766,474 $ 4,602,457-17 -
CCA ASPEN COURT, L.P. SUPPLEMENTARY INFORMATION Year Ended December 31, 2010 IDENTITY-OF-INTEREST/RELATED PARTY TRANSACTIONS Company Services Rendered Amount Paid Barco, L.L.C. Development services $ 435,000 FCG Asset Management Co., L.L.C. Asset management 23,900 Hercules Real Estate Services, Inc. Project management 66,538 IDENTIFICATION OF ENGAGEMENT AUDITOR Auditing Firm: Zukerman & Associates, Ltd. Lead Auditor: Peter F. Bariteau, CPA Office Mailing Address: 168 Business Park Drive, Suite 202 Virginia Beach, VA 23462 Office Telephone Number: (757) 473-3777 Office Fax Number: (757) 473-3746 E-mail Address: pbariteau@zukermanassoc.com $ 525,438-18 -
Zukennan&Associates,Ltd. CERTIFIED PUBLIC ACCOUND\NTS Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters March 22, 2011 To the Partners CCA - Aspen Court, L.P. We have audited the financial statements ofcca - Aspen Court, L.P., as of and for the year ended December 31, 2010, and have issued our report thereon dated March 22, 2011. 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. Internal control over financial reporting In planning and performing our audit, we considered the Partnership's internal control over financial reporting 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 Partnership's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Partnership's internal control over fmancial reporting. 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, material 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. Our consideration of the internal control over financial reporting 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 fmancial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. - 19-168 Business Park Dr., Suite 202. \ir~inia Beach, Va. 23462 (757) 473-3777 Fax (757) 473-831:~ Web: www.cpa-center.com/zukerman
Compliance and other matters As part of obtaining reasonable assurance about whether the Partnership'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 Audit Standards. This report is intended solely for the information and use of management, the partners, others within the organization, and the District of Columbia Housing Finance Authority and is not intended to be and should not be used by anyone other than these specified parties. - 20-