Audit 38726

Title: Loan/loan guarantee outstanding balances Accounting Policies: Note 1 Basis of PresentationThe accompanying schedule of expenditures of federal awards includes the federal grant activityof Booth Manor Two, Inc. and is presented on the accrual basis of accounting. The informationin this schedule is presented in accordance with the requirements of Title 2 U.S. Code of FederalRegulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and AuditRequirements for Federal Awards. Therefore, some amounts presented in this schedule maydiffer from amounts presented in, or used in the preparation of, the basic financial statements.Note 2 Summary of Significant Accounting PoliciesExpenditures reported on the Schedule of Expenditures of Federal Awards are reported on theaccrual basis of accounting. Such expenditures are recognized following the cost principlescontained in Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certaintypes of expenditures are not allowable or are limited to reimbursement. Pass-through identifyingnumbers are presented where available.Note 3 HUD Section 202 Capital Advance ProgramIn 1995, Booth Manor Two, Inc. received a HUD Section 202 Capital Advance in the amount of$2,032,200. The Capital Advance requires Booth Manor Two, Inc. to remain in compliance withthe Regulatory Agreement as entered into between Booth Manor Two, Inc. and HUD for aperiod of 40-years. In the event Booth Manor Two, Inc. is noncompliant with the RegulatoryAgreement, Booth Manor Two, Inc. could be determined to be in default on the CapitalAdvance and the Regulatory Agreement. In such a case, the Capital Advance would convert to amortgage note. The Capital Advance was classified as an increase in net assets upon its receipt.In the event of default, the Capital Advance will be reclassified as a long-term mortgage notepayable. The Capital Advance will continue to be classified as a Federal Award on an annualbasis until Booth Manor Two, Inc. has fulfilled its 40-year compliance requirement as outlined inthe Regulatory Agreement. Note 4 Indirect Cost RateBooth Manor Two, Inc. has not elected to use the 10% de minimis indirect cost rate as allowedunder the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. SUPPORTIVE HOUSING FOR THE ELDERLY (14.157) - Balances outstanding at the end of the audit period were 2032200.