Audit 40015

Title: Loan/loan guarantee outstanding balances 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. The Organization has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. The Organization did not incur any expenditures to subrecipients. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. COMMUNITY DEVELOPMENT BLOCK GRANTS/ENTITLEMENT GRANTS (14.218) - Balances outstanding at the end of the audit period were 225000. COMMUNITY DEVELOPMENT BLOCK GRANTS/ENTITLEMENT GRANTS (14.218) - Balances outstanding at the end of the audit period were 2628621. COMMUNITY DEVELOPMENT BLOCK GRANTS/STATE'S PROGRAM AND NON-ENTITLEMENT GRANTS IN HAWAII (14.228) - Balances outstanding at the end of the audit period were 180000. LEAD-BASED PAINT HAZARD CONTROL IN PRIVATELY-OWNED HOUSING (14.900) - Balances outstanding at the end of the audit period were 18000.

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. The Organization has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. The Organization did not incur any expenditures to subrecipients. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Main South Community Development Corporation and Subsidiaries (the Organization) under programs of the federal government for the year ended June 30, 2022. 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 the Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization.

Title: Loans 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. The Organization has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. The Organization did not incur any expenditures to subrecipients. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. (CDBG) Entitlement Grants Cluster (CDBG Cluster), CDBG State/Non-Entitlement and Lead-Based Paint Hazard Control in Privately-Owned Housing grants in prior years, which include continuing compliance requirements. The amounts reported on the Schedule reflect the outstanding balance of principal and interest as of July 1, 2021. The balance of the loans and advances outstanding as of June 30, 2022, are as follows: CDBG Cluster - Housing Stabilization Program $2,853,621, CDBG - State/Non-Entitlement - $180,000, Lead-Based Paint Hazard Control in Privately-Owned Housing - $18,000 - Total $3,051,621.