Audit 305753

Title: Hurricane Sandy Community Development Block Grant Disaster Recovery Grants Accounting Policies: Basis of Presentation The accompanying schedule of expenditures of federal awards ("Schedule") includes the federal award activity of the New Jersey Economic Development Authority ("Authority"), a component unit of the State of New Jersey, under programs of the federal government. 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") and is presented on the accrual basis of accounting. The Authority has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Because the Schedule presents only a selected portion of the operations of the Authority, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Authority. Grantee Contributions The Authority, as the grantee, is required to make contributions for certain grants, which provide technical assistance to trade-impacted firms within the State. The Authority had operated the Trade Adjustment Assistance Center (TAAC), on behalf of the State, which provided assistance to manufacturing companies threatened by foreign competition. The program has been discontinued for over ten years. The original grantee share was provided from each company’s, which were a part of the TAAC program, share of the cost of technical assistance and from in-kind payroll costs attributable to the administration of the grant. These funds have been revolving through the life of the program. De Minimis Rate Used: N Rate Explanation: The auditee elected not to use the de minimis cost rate. The Authority was awarded $500 million through the New Jersey Department of Community Affairs (“DCA”) for the Hurricane Sandy Disaster Recovery program under the federal Hurricane Sandy Community Development Block Grant Disaster Recovery Grants (“CDBG-DR”) program. On May 21, 2013, the Authority executed a subrecipient agreement with DCA in which the Authority is responsible for implementing and administering the Stronger NJ Business Grant Program, the Stronger NJ Business Loan Program, the Stronger NJ Neighborhood and Community Revitalization Program and the Energy Resiliency Bank Program (collectively the “Program”). The Program is intended to lend or grant eligible funds to strengthen New Jersey’s economy by retaining and growing businesses and to revitalize communities impacted by Hurricane Sandy. The Energy Resiliency Bank was created to address Statewide energy resilience needs. Loans outstanding at the beginning of the year and loans made during the year are included in the federal expenditures presented in the Schedule. The balance of loans outstanding, net of payments received, at December 31, 2022 is $82,097,974. Total expenditures for the year ended December 31, 2022, for the CDBG-DR program as reported in the accompanying Schedule are made up of the following: Expenditures Loans (beginning balance plus current year expenditures) $93,266,544 Neighborhood and community revitalization 780,815 Administrative and program delivery 1,454,478 $95,501,837 Pursuant to the Agreement with DCA, the Authority may be reimbursed for general administrative costs incurred in conjunction with the program. This amount cannot exceed $2,375,000 of the CDBG-DR budget of $500,000,000 over the life of the agreement. Expenditures on the accompanying Schedule include $0 of general administrative costs incurred by the Authority for the year ended December 31, 2022. Cumulative general and administrative costs to date are $1,415,325. In addition, the Authority may be reimbursed for activity delivery costs incurred up to 15% of the total budget, or $75,000,000, over the life of the agreement. Expenditures on the Schedule include $1,454,478 of activity delivery costs incurred during 2022. Total activity delivery costs incurred during 2022 were $1,130,853. Cumulative activity delivery costs to date are $54,409,864.

Title: Contingencies Accounting Policies: Basis of Presentation The accompanying schedule of expenditures of federal awards ("Schedule") includes the federal award activity of the New Jersey Economic Development Authority ("Authority"), a component unit of the State of New Jersey, under programs of the federal government. 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") and is presented on the accrual basis of accounting. The Authority has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Because the Schedule presents only a selected portion of the operations of the Authority, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Authority. Grantee Contributions The Authority, as the grantee, is required to make contributions for certain grants, which provide technical assistance to trade-impacted firms within the State. The Authority had operated the Trade Adjustment Assistance Center (TAAC), on behalf of the State, which provided assistance to manufacturing companies threatened by foreign competition. The program has been discontinued for over ten years. The original grantee share was provided from each company’s, which were a part of the TAAC program, share of the cost of technical assistance and from in-kind payroll costs attributable to the administration of the grant. These funds have been revolving through the life of the program. De Minimis Rate Used: N Rate Explanation: The auditee elected not to use the de minimis cost rate. Each of the grantor agencies reserves the right to conduct additional audits of the Authority’s grant programs for economy, efficiency, and program results. However, Authority management does not believe such audits would result in material amounts of disallowed costs.