Audit 11729

Title: SECTION 202 DIRECT LOAN Accounting Policies: NOTE A.BASIS OF ACCOUNTINGThe Schedule of Expenditures and Federal Awards is presented on the full accrual basis of accounting.NOTE B.BASIS OF PRESENTATIONThe accompanying schedule of expenditures of federal awards includes the federal grant activity of Pilgrim/OEDC Development Corporation, HUD Project No. 103-EE023-NP-WAH and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with 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). Therefore, some amounts presented in this schedule may differ from amounts presented in or used in the preparation of the financial statements.NOTE E.CONTINGENCIESDuring the normal course of business, the Corporation receives funds from the United States Government for program services. Substantially, all of these funds are subject to future audit by the U.S. Department of Housing and Urban Development, however, it is managements opinion that resulting adjustments, if any, would not have a material effect upon the accompanying financial statements. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Corporation entered into a capital advance agreement with the U.S. Department of Housing and Urban Development on June 27, 2002, in the amount of $1,503,100. Under the terms of this agreement, the capital advance shall bear no interest and is not required to be repaid so long as the housing remains available to eligible low-income elderly persons in accordance with Section 202 of the Housing Act of 1959, the Regulatory Agreement and Regulations.