Audit 350801

Title: BASIS OF PRESENTATION Accounting Policies: SUMMARY OF SIGNIFICANT 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 OMB Circular A-122, “Cost Principles for Non-Profit Organizations” and the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The Organization has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The Organization has elected not to use the 10% 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 Peninsula Housing Development, Inc. XI Sierra Lakes Apartments, HUD Project No. 066-EE044 (the “Organization”). 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”). The Schedule presents only a selected portion of the operations of the Organization and is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization.

Title: CAPTIAL ADVANCE PROGRAM Accounting Policies: SUMMARY OF SIGNIFICANT 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 OMB Circular A-122, “Cost Principles for Non-Profit Organizations” and the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The Organization has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The Organization has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. The Project was financed by a mortgage note (capital advance) from HUD under Section 202 of the Housing Act of 1959. The amount shown represents the current balance owed at the beginning of the year and is included in the federal expenditures presented in the Schedule. The Organization did not receive additional capital advances during the year.