Audit 314885

Title: Basis of presentation Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, 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: Housing and Community Services, Inc. has elected not to use the 10 - percent de minimis indirect cost rate allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of Housing and Community Services, Inc. under programs of the federal government for the year ended December 31, 2023. The information in 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"). Because the Schedule presents only a selected portion of the operations of Housing and Community Services, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Housing and Community Services, Inc. The 2023 schedule of expenditures of federal awards does not include direct and indirect federal awards funded directly to Housing and Community Services, Inc.’s consolidated for-profit subsidiaries.

Title: Loan program Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, 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: Housing and Community Services, Inc. has elected not to use the 10 - percent de minimis indirect cost rate allowed under the Uniform Guidance. Housing and Community Services, Inc. has received pass-through loans under the federal programs as listed below. The loan balances outstanding at the beginning of the year and current year draws on the loans are included in the federal expenditures presented in the Schedule. The balance of the loans outstanding at December 31, 2023 consist of: Federal Assistance Listing Number Program Name Outstanding Balance at December 31, 2023 14.239 HOME Investment Partnerships Program $ 4,480,782 14.135 Mortgage Insurance Rental and Cooperative Housing for Moderate Income $ 0 14.218 Community Development Block Grants/Entitlement Grants $ 919,803 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii $ 1,851,563