Audit 343050

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. QLS Haven, Ltd. has elected not to use the 10 percent de minimus indirect cost rate as allowed under Uniform Guidance. De Minimis Rate Used: N Rate Explanation: N/A The accompanying schedule of expenditures of federal awards includes the federal award activity of QLS Haven, Ltd., HUD Project No. 061-EE005 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 (CFR) 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 QLS Haven, Ltd. it is not intended to and does not present the financial position, changes in net assets, or cash flows of QLS Haven, Ltd.

Title: Summary of Significant Accounting Policies 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. QLS Haven, Ltd. has elected not to use the 10 percent de minimus indirect cost rate as allowed under Uniform Guidance. De Minimis Rate Used: N Rate Explanation: N/A 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. QLS Haven, Ltd. has elected not to use the 10 percent de minimus indirect cost rate as allowed under Uniform Guidance.

Title: HUD Section 202 Capital Advance 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. QLS Haven, Ltd. has elected not to use the 10 percent de minimus indirect cost rate as allowed under Uniform Guidance. De Minimis Rate Used: N Rate Explanation: N/A The $5,426,900 Section 202 capital advance by HUD is classified as an unrestricted net asset. The capital advance converted to a grant in 1998, and will not be repaid if QLS Haven, Ltd. remains in compliance with HUD stipulations regarding the use of the building. Failure to keep the housing available for the elderly would result in HUD billing the owner for the entire capital advance outstanding plus interest since the date of the first advance.