Audit 12691

Title: BASIS OF PRESENTATION Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: First Step Apartments, Inc. has elected not to use the 10-percent de minimus indirect cost rate allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards includes the federal award activity of First Step Apartments, Inc., HUD Project No. 082-HD029, and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of First Step Apartments, Inc., it is not intended to and does not present the financial; position, changes in net assets, or cash flows of First Step Apartments, Inc.

Title: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: First Step Apartments, Inc. has elected not to use the 10-percent de minimus indirect cost rate allowed under the Uniform Guidance. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. First Step Apartments, Inc. has elected not to use the 10-percent de minimus indirect cost rate allowed under the Uniform Guidance.

Title: U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT CAPITAL ADVANCE PROGRAM Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: First Step Apartments, Inc. has elected not to use the 10-percent de minimus indirect cost rate allowed under the Uniform Guidance. First Step Apartments, Inc. has received a U.S. department of Housing and Urban Development Capital Advance under Section 811 of the National Housing Act. The capital advance outstanding at the beginning of the year is included in the federal expenditures presented in the schedule. First Step Apartments, Inc. received no additional capital advances during the year. The balance of the capital advance outstanding at June 30, 2023, consists of: See the Notes to the SEFA for chart/table