Audit 303549

Accounting Policies: Basis Of Presentation - The accompanying Schedule of Expenditures of Federal Awards (the Schedule) presents the activity of all federal award programs of Council Apartments II, Inc. The information on the 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 the Schedule may differ from amounts presented in, or used in preparation of, the financial statements. Basis Of Accounting - The accompanying Schedule is presented using the accrual basis of accounting, which is described in Note 1 to the financial statements. Capital Advance - Council Apartments II, Inc. has a capital advance from HUD in the amount of $6,501,300 for the costs of the building. This capital advance does not have to be paid back under the stipulation that Council Apartments II, Inc. rents only to qualified tenants for 40 years as defined by HUD. Council Apartments II, Inc. has elected to treat the entire proceeds as a component of net assets without donor restrictions. Loans outstanding at the beginning of the year plus loans made during the year are included in the federal expenditures presented in the Schedule. De Minimis Rate Used: N Rate Explanation: Council Apartments II, Inc. has elected not to use the 10% de minimis indirect cost rate as allowed in the Uniform Guidance, Section 414.