Audit 400589

Note A - Basis Of Presentation The accompanying schedule of expenditures of federal awards includes the federal award activity of Mercy Housing Development Fund Company, Inc. (Mercy Apartments), Project No. 014-11196, 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 Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of Mercy Apartments, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Mercy Apartments.

Note B - Summary of Significant 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 Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Mercy Housing Development Fund Company, Inc. has elected not to use the 15-percent de minimis indirect cost rate allowed under the Uniform Guidance.

Note C - U.S Department of Housing and Urban Development Loan Program Mercy Housing Development Fund Company, Inc. has received a U.S. Department of Housing and Urban Development insured loan under Section 207/223(f) of the National Housing Act on February 27, 2013. The loan balance outstanding at the beginning of the year is included in the federal expenditures presented in the Schedule. Mercy Housing Development Fund Company, Inc. received no additional loans during the year. The balance of the loan outstanding at September 30, 2025 consists of the following: ALN: 14.155; Program Name: Mortgage Insurance - Multifamily Housing Projects [Section 207/223(f)]; Outstanding balance at September 30, 2025: $1,958,299.