Audit 19203

Title: Loan/loan guarantee outstanding balances Accounting Policies: NOTE 2 SUMMARY OF SIGNIFICANT 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: The auditee did not use the de minimis cost rate. HUD INSURED MORTGAGE RENTAL AND COOPERATIVE HOUSING FOR LOWER INCOME FAMILIES (SECTION 236) (14.999) - Balances outstanding at the end of the audit period were 5693751. COMMUNITY DEVELOPMENT BLOCK GRANTS/ENTITLEMENT GRANTS (14.218) - Balances outstanding at the end of the audit period were 590201.

Title: NOTE 1 BASIS OF PRESENTATION Accounting Policies: NOTE 2 SUMMARY OF SIGNIFICANT 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: The auditee did not use the de minimis cost rate. The accompanying Schedule of Expenditures of Federal Awards (Schedule) includes the federal grant and loan activity of Arastradero Park Apartments Corporation 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). Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. The purpose of the Schedule is to present a summary of those activities of Arastradero Park Apartments Corporation for the year ended December 31, 2022, which have been financed by the U.S. Government. For purposes of the Schedule, federal awards include all federal assistance entered into directly and indirectly between Arastradero Park Apartments Corporation and the federal government. Arastradero Park Apartments Corporation did not elect to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance.

Title: NOTE 3 PRIOR YEARS EXPENDITURES Accounting Policies: NOTE 2 SUMMARY OF SIGNIFICANT 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: The auditee did not use the de minimis cost rate. The accompanying Schedule includes $6,521,765 in expenditures from prior years for which continuing compliance is required.