Audit 305854

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. Guarantees are included in the Schedule in accordance with the guidance under 2 CFR 200.502, which includes beginning outstanding balances plus any new loans placed under guarantee as they are subject to compliance requirements. Root Capital has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Root Capital has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The accompanying Combined Schedule of Expenditures of Federal Awards (the “Schedule”) includes the federal award activity of Root Capital, Inc. (“Root Capital”) under programs of the federal government for the year ended December 31, 2023. 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 (the “Uniform Guidance”). Because the Schedule presents only a selected portion of the operations of Root Capital, it is not intended to and does not present the financial position, changes in net assets or cash flows of Root Capital.

Title: Guarantee Balances Outstanding and Activity 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. Guarantees are included in the Schedule in accordance with the guidance under 2 CFR 200.502, which includes beginning outstanding balances plus any new loans placed under guarantee as they are subject to compliance requirements. Root Capital has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Root Capital has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The USAID guarantee program consists of four separate agreements. Root Capital also maintains a guarantee program with DFC. The outstanding amount of loans under the USAID and DFC guarantee programs as of December 31, 2023 and guarantees paid by grantor on defaulted loans and recoveries on previously paid guarantees for the year ended December 31, 2023 are as follows: SEE FINANCIAL STATEMENTS FOR TABLE.