alpha homes, inc. hud project no. 085-hd020-np ......alpha homes, inc. hud project no....

ALPHA HOMES, INC. HUD PROJECT NO.

085-HD020-NP-WDD-PRAC

INDEPENDENT AUDITOR’S REPORT

For the Year Ended March 31, 2021

TABLE OF CONTENTS

PAGE

INDEPENDENT AUDITOR'S REPORT 1 – 2

FINANCIAL STATEMENTS:

Statement of Financial Position 3

Statement of Activities 4

Statement of Functional Expenses 5

Statement of Cash Flows 6

NOTES TO THE FINANCIAL STATEMENTS 7 – 12

SUPPLEMENTARY INFORMATION:

Federal Compliance Section

Schedule of Expenditures of Federal Awards 13

Independent Auditor's Report on Compliance for

Each Major Program and on Internal Control over

Compliance Required by The Uniform Guidance

14 – 15

Independent Auditor's Report on Internal Control

over Financial Reporting and on Compliance and

Other Matters Based on an Audit of Financial

Statements Performed in Accordance with

Government Auditing Standards

16 – 17

Schedule of Findings 2 CFR Section 200.515 18 – 19

Summary Schedule of Prior Audit Findings 20

OTHER INFORMATION:

Independent Accountant's Report On Applying

Agreed-Upon Procedure

21 – 22

SUPPLEMENTARY DATA REQUIRED BY HUD 23 – 24

CERTIFICATION OF PROJECT OWNER 25

MANAGEMENT AGENT'S CERTIFICATION 26

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors of

Alpha Homes, Inc.

Jefferson City, Missouri:

Report on the Financial Statements

We have audited the accompanying financial statements of Alpha Homes, Inc. (the “Project”) (a

nonprofit corporation), which comprise the Statement of Financial Position as of March 31, 2021,

and the related Statements of Activities, Functional Expenses, and Cash Flows for the year then

ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in

accordance with accounting principles generally accepted in the United States of America; this

includes the design, implementation, and maintenance of internal control relevant to the preparation

and fair presentation of financial statements that are free from material misstatement, whether due

to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We

conducted our audit in accordance with auditing standards generally accepted in the United States

of America and the standards applicable to financial audits contained in Government Auditing

Standards, issued by the Comptroller General of the United States. Those standards require that we

plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,

including the assessment of the risks of material misstatement of the financial statements, whether

due to fraud or error. In making those risk assessments, the auditor considers internal control

relevant to the entity’s preparation and fair presentation of the financial statements in order to

design audit procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express

no such opinion. An audit also includes evaluating the appropriateness of accounting policies used

and the reasonableness of significant accounting estimates made by management, as well as

evaluating the overall presentation of the financial statements.

1

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis

for our audit opinion.

Opinion

In our opinion the financial statements referred to above present fairly, in all material respects, the

financial position of the Project as of March 31, 2021, and the changes in its net assets and its cash

flows for the year then ended in accordance with accounting principles generally accepted in the

United States of America.

Other Matters

Supplementary Information

Our audit was conducted for the purpose of forming an opinion on the financial statements as a

whole. The accompanying Schedule of Expenditures of Federal Awards, as required by Title 2 U.S.

Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost

Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional

analysis and is not a required part of the financial statements. Such information is the responsibility

of management and was derived from and relates directly to the underlying accounting and other

records used to prepare the financial statements. The information has been subjected to the auditing

procedures applied in the audit of the financial statements and certain additional procedures,

including comparing and reconciling such information directly to the underlying accounting and

other records used to prepare the financial statements or to the financial statements themselves, and

other additional procedures in accordance with auditing standards generally accepted in the United

States of America. In our opinion, the information is fairly stated, in all material respects, in relation

to the financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated June 7,

2021, on our consideration of the Project’s internal control over financial reporting and on our

tests of its compliance with certain provisions of laws, regulations, contracts, and grant

agreements and other matters. The purpose of that report is to describe the scope of our testing of

internal control over financial reporting and compliance and the results of that testing, and not to

provide an opinion on internal control over financial reporting or on compliance. That report is

an integral part of an audit performed in accordance with Government Auditing Standards in

considering the Project’s internal control over financial reporting and compliance.

GRAVES AND ASSOCIATES, CPAs, LLC

Jefferson City, Missouri

June 7, 2021

2

ALPHA HOMES, INC.

HUD PROJECT NO. 085-HD020-NP-WDD-PRAC

STATEMENT OF FINANCIAL POSITION

MARCH 31, 2021

Account ASSETS

No.

CURRENT ASSETS:

1120 Cash 18,104$

1200 Miscellaneous Prepaid Expenses 2,388

Total Current Assets 20,492

1191 Tenant Deposits Held in Trust 4,004

RESTRICTED DEPOSITS:

1320 Replacement Reserve 27,488

1340 Residual Receipts Reserve 4,005

Total Restricted Deposits 31,493

PROPERTY AND EQUIPMENT:

1410 Land 52,398

1420 Buildings 1,102,540

1440 Building Equipment (Portable) 3,792

1460 Donated Furnishings 12,554

1465 Computer Equipment 1,734

Total Property and Equipment 1,173,018

ACCUMULATED DEPRECIATION:

1495 Accumulated Depreciation-Buildings (816,865)

1495 Accumulated Depreciation-Building Equipment (Portable) (3,033)

1495 Accumulated Depreciation-Furniture and Fixtures (12,554)

1495 Accumulated Depreciation-Computer (1,734)

Total Accumulated Depreciation (834,186)

Net Property and Equipment 338,832

Total Assets 394,821$

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES:

2110 Accounts Payable 15,799$

2210 Prepaid Revenue 4,284

Total Current Liabilities 20,083

2191 Tenant Deposits Held in Trust (CONTRA) 3,952

Total Liabilities 24,035

NET ASSETS

Without Grantor Restrictions

3131 Undesignated (1,035,539)

Invested in Property and Equipment, Net 338,832

(696,707)

With Grantor Restrictions

Purpose Restriction 31,493

Time Restriction 1,036,000

1,067,493

Total Net Assets 370,786

Total Liabilities and Net Assets 394,821$

The accompanying notes are an integral part of these financial statements.

3

ALPHA HOMES, INC.


STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED MARCH 31, 2021

Account REVENUES

No.

5120 Rent-Revenue-Gross Potential 75,054$

5121 Tenant Assistance Payments 25,554

5191 Excess Rent 1,978

Total Rent Revenue 102,586

5220 Vacancies-Apartments (2,625)

Net Rent Revenue 99,961

5430 Revenue from Investments-Residual Receipts 2

5440 Revenue from Investments-Reserve for Replacements 12

5490 Revenue from Investments-Other 2

Total Financial Revenue 16

Total Revenue 99,977

EXPENSES

Program 79,561

Management and General 34,098

Total Cost of Operations 113,659

7190 Gain (Loss) on Disposal of Property and Equipment (833)

Total Gain(Loss) on Disposal of Property and Equipment (833)

Change in Net Assets without Grantor Restrictions (18,896)

Change in Net Assets with Grantor Restrictions 4,381

NET ASSETS, BEGINNING OF YEAR 385,301

NET ASSETS, END OF YEAR 370,786$


4

ALPHA HOMES, INC.


STATEMENT OF FUNCTIONAL EXPENSES


Account

No. Program

Management

and General Total

6310 Office Salaries 1,903$ 816$ 2,719$

6311 Office Expense 1,735 744 2,479

6320 Management Fees 5,697 2,441 8,138

6330 Manager Salaries 847 363 1,210

6350 Audit Expense 2,744 1,176 3,920

6390 Miscellaneous Administrative Expenses 179 77 255

Total Administrative Expenses 13,105 5,616 18,721

6450 Electricity 8,401 3,600 12,001

6451 Water 910 390 1,300

6452 Gas 4,080 1,749 5,829

6453 Sewer 1,735 743 2,478

Total Utilities Expenses 15,126 6,482 21,608

6510 Janitorial Payroll 3,081 1,320 4,401

6515 Supplies 2,962 1,269 4,231

6520 Contracts 2,295 983 3,278

6525 Garbage and Trash Removal 676 290 966

6530 Security Payroll/Contract 498 214 712

6546 Heating/Cooling Repair and Maintenance 1,929 827 2,756

6548 Snow Removal 2,139 917 3,056

6590 Miscellaneous Operating and Maintenance Expenses 46 20 66

Total Operating and Maintenance Expenses 13,626 5,840 19,466

6711 Payroll Taxes 284 122 406

6720 Insurance Expense 4,540 1,946 6,486

6723 Health Insurance and Other Employee Benefits 1,649 707 2,356

Total Taxes and Insurance 6,474 2,774 9,248

Total Cost of Operations Before Depreciation 48,330 20,713 69,043

6600 Depreciation-Buildings 30,966 13,271 44,237

6660 Depreciation-Buildings Equipment-Portable 265 114 379

Total Depreciation Expense 31,231 13,385 44,616

Total Cost of Operations 79,561$ 34,098$ 113,659$


5

ALPHA HOMES, INC.


STATEMENT OF CASH FLOWS


S1200-010 Rental Receipts 100,111$

S1200-020 Interest Receipts 16

S1200-040 100,127

S1200-050 Administrative (15,749)

S1200-070 Management Fees (8,138)

S1200-090 Utilities (21,608)

S1200-100 Salaries and Wages (7,520)

S1200-110 Operating and Maintenance (15,065)

S1200-140 Property Insurance (1,622)

S1200-150 Miscellaneous Taxes and Insurance (7,626)

S1200-160 Tenant Deposit Activity (52)

S1200-230 Total Disbursements (77,380)

S1200-240 Net Cash Provided by Operating Activities 22,747

(5,496)

Withdrawals from Account 1,128

(12)

S1200-250 Net Deposits to the Reserve for Replacement Account (4,380)

(2)

S1200-260 Net Deposits to the Residual Receipts Account (2)

S1200-330 Purchase of Property and Equipment (6,215)

S1200-350 Net cash used in investing activities (10,597)

S1200-470 Net (decrease) in cash and cash equivalents 12,150

S1200-480 Cash - Beginning of Year 5,954

S1200-T Cash - End of Year 18,104$

3250 Decrease in net assets (14,515)$

6600 Depreciation 44,616

S1200-600 (Gain)Loss on Disposal of Property and Equipment 833

Increase or Decrease in:

S1200-520 Prepaid Expenses (544)

S1200-530 Tenant Deposits Held in Trust (99)

S1200-540 Accounts Payable (6,235)

S1200-560 Accrued Expenses (1,506)

S1200-580 Tenant Deposits Held in Trust (contra) 47

S1200-590 Prepaid Revenue 150

S1200-610 Net Cash Provided by Operating Activities 22,747$

Reconciliation of change in net assets to net cash provided by operating activities:

Adjustments to Reconcile Change in Net Assets to Cash Provided by Operating

Activities:

Cash Flows From Operating Activities:

Cash Flows From Investing Activities:

Deposits to Reserve for Replacement Retained in Account

Interest Earned But Retained in Reserve for Replacements

Interest Earned But Retained in Residual Receipts Account


6

ALPHA HOMES, INC.


NOTES TO THE FINANCIAL STATEMENTS


7

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Organization

Alpha Homes, Inc. (the “Project”) is a not-for-profit corporation organized under the laws of the

State of Missouri, for the purpose of developing and operating the Lewella Estes Apartments, a 16-

unit project located in Jefferson City, Missouri. The Project operates under two provisions of

Section 221(d)(4) of the National Housing Act, with mortgage insurance provided by the Federal

Housing Administration (“FHA”) and the Department of Housing and Urban Development

(“HUD”). The Project’s major program is its Section 811 Capital Advance.

As further discussed in Note 9, the responsibility for management of the affairs of the Project is

vested with Cole County Residential Services, Inc. (“CCRSI”).

The Project also is subject to Section 8 Housing Assistance Payment agreements with the HUD, and

a portion of the Project’s rental income is received from HUD.

Basis of Accounting

The financial statements have been prepared on the accrual basis of accounting. Accordingly,

revenue is recognized when earned and expenses are recognized when incurred.

Basis of Presentation

The Project is required to report information regarding its financial position and activities according

to two classes of net assets: without grantor restrictions and with grantor restrictions.

Depreciation

Property and equipment are recorded at cost, if purchased, or fair market value, if donated, and

depreciated over the estimated useful lives of the respective assets on a straight-line basis as

follows:

Buildings and improvements 10 to 30 years

Furnishings and equipment 5 to 7 years

Major repairs which increase the assets value are capitalized. The capitalization threshold of $2,500

is used to report and depreciate capital assets.

Income Taxes

The Project is a not-for-profit entity exempt from income taxes under Internal Revenue Code

Section 501(c)(3).

ALPHA HOMES, INC.




8

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

Prepaid Revenue

Rental income received in advance is deferred and recognized over the periods to which the rent

relates.

Distributions

The Project’s regulatory agreement with HUD stipulates, among other things, that the Project will

not make distributions of assets or income to any of its officers or directors.

Cash and Cash Equivalents

For purposes of the Statement of Cash Flows, the Project considers all unrestricted, highly liquid

investments with an initial maturity of three months or less to be cash equivalents. Excluded from

this definition of cash equivalents are amounts representing funds that have been designated by

the Board of Directors (the “Board”) or grantor restricted.

Net Assets Without Grantor Restrictions

Net assets available for use in general operations and not subject to grantor restrictions.

Net Assets With Grantor Restrictions

Net assets subject to grantor imposed restrictions. Some grantor-imposed restrictions are temporary

in nature, such as those that will be met by the passage of time or other events specified by the

grantor. Other grantor-imposed restrictions are perpetual in nature, where the grantor stipulates that

resources be maintained in perpetuity. Grantor-imposed restrictions are released when a restriction

expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the

resource was restricted has been fulfilled, or both.

Revenue Recognition

The Project has adopted ASU 2014-09 Revenue from Contracts with Customers and all subsequent

amendments to the ASU (collectively, “ASC 606”), as management believes the standard improves

the usefulness and understandability of the Project’s financial reporting.

Analysis of various provisions of this standard resulted in no significant changes in the way the

Project recognizes revenue and, therefore, no changes to the previously issued audited financial

statements were required on a retrospective basis. The presentation and disclosures of revenue

have been enhanced in accordance with the standard.

ALPHA HOMES, INC.




9

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

Functional Allocation of Expenses

The costs of program and supporting activities have been summarized on a functional basis in the

Statement of Activities. The Statement of Functional Expenses presents the natural classification

detail of expenses by function. Accordingly, certain costs have been allocated among the programs

and supporting services benefitted.

NOTE 2 – LIQUIDITY AND AVAILABILITY:

Financial assets available for general expenditure that is, without grantor or other restrictions

limiting their use, within one year of the balance sheet date are as follows:

Cash and Cash Equivalents $ 18,104

The tenant security deposits represent the balance in the restricted cash account in excess of

outstanding deposit liability. Total financial assets available for general expenditure are

approximately 3.16 months of operating expenses.

NOTE 3 – COMMITMENTS AND CONTINGENCIES:

In 2000, HUD made a capital advance to the Project in the amount of one million thirty six

thousand and no/100 dollars ($1,036,000.00). The amount of the capital advance was not to exceed

the total estimated development of the Project (as determined by HUD), less the incremental

development cost associated with excess amenities and design features to be paid for by the

Sponsor. The capital advance shall bear no interest and is not required to be repaid as long as the

housing: 1) remains available to eligible, very low-income persons with disabilities for a period of

40 years and 2) is operated in accordance with Section 811. The capital advance is secured by a

Deed of Trust (hereinafter called “Mortgage”) on the property. The Mortgage constitutes a valid

first lien on said property and the improvements to be erected thereon and the only lien thereon,

except for liens for taxes and assessments not yet payable and other liens acceptable to HUD. The

Project executed a Use Agreement restricting use of the project to rental housing for eligible

households as approved by HUD for a 40-year period. Failure to comply with the Use Agreement

would require the Project to repay the capital advance in full along with any interest earned since

the date of the first advance.

ALPHA HOMES, INC.




10

NOTE 4 – RESTRICTED DEPOSITS:

The Project requires cash deposits from tenants to protect the Project at least in part from the

default of tenants. These restricted funds, which approximate $3,952, are not available for

general operations.

NOTE 5 – RENT INCREASES:

Under the Regulatory Agreement, the Project may not increase the contract rent without HUD

approval. For the year ended, the Project submitted to HUD a 2% rent increase effectively

increasing rent $10 per month per unit.

NOTE 6 – MANAGEMENT AGREEMENT:

Under an agreement with the Housing Authority of the City of Jefferson (the “Housing Authority”),

the Housing Authority acts as the managing agent for the operations of the Project. In addition, the

Project’s routine expenses are paid by the Housing Authority’s Revolving Fund, with

reimbursements made weekly. The Housing Authority is to be compensated based on 9% of gross

collections received during the preceding month for rents from the Project. The agreement is

automatically renewable each year unless either party gives 60 days’ notice prior to the date of

expiration. Management fees paid to the Housing Authority for the year ended were $8,138.

NOTE 7 – FINANCIAL INSTRUMENTS:

Financial instruments that potentially subject the Project to a concentration of credit risk consist of

cash. Their cash accounts are invested with one creditworthy, high-quality financial institution. The

Project’s cash balances did not exceed FDIC insurance limits as of the year ended.

NOTE 8 – CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS:

The Project’s sole asset is a 16-unit apartment project. The Project’s operations are concentrated in

the multifamily real estate market. In addition, the Project operates in a heavily regulated

environment. The operations of the Project are subject to the administrative directives, rules and

regulations of the federal, state and local regulatory agencies, including, but not limited to, HUD.

Such administrative directives, rules and regulations are subject to change by an act of congress or

an administrative change mandated by HUD. Such changes may occur with little notice or

inadequate funding to pay for the related cost, including the additional administrative burden, to

comply with a change.

ALPHA HOMES, INC.




11

NOTE 9 – SPONSORING ORGANIZATION:

The Project is specifically organized in support of Cole County Residential Services, Inc.

(“CCRSI”), a Missouri nonprofit corporation exempt from federal income tax under Section

501(c)(3) of the Internal Revenue Code. The Directors of the Project are limited to individuals who

are members of CCRSI. The financial statements of the Project are combined with the financial

statements of CCRSI. The combined financial statements are included in the annual financial

statements of Cole County Special Services (“CCSS”). In accordance with Governmental

Accounting Standards Board Statement 39, CCRSI and the Project, as component units, are an

integral part of CCSS, as a reporting entity, for financial reporting and treated as blended.

NOTE 10 – NET ASSETS WITHOUT GRANTOR RESTRICTONS:

The Project balance in Net Assets (Deficit) Without Grantor Restrictions is comprised of the

following, as of the year ended:

Net Assets (Deficit) Without Grantor Restrictions:

Undesignated $ (1,035,539)

Invested in Rental Property, Net 338,832

$ (696,707)

NOTE 11 – NET ASSETS WITH GRANTOR RESTRICTIONS:

Under the terms of the Regulatory Agreement, the Project is required to set aside specified

amounts for the replacement of property and other project expenses as approved by HUD.

Purpose restricted deposits, which were $31,493, at year end are held in separate accounts and

generally are not available for operating purposes.

Use of the residual receipts account is contingent upon HUD’s prior written approval.

See Note 3 for further information regarding the time restrictions of net assets with grantor

restrictions.

NOTE 12 – RELATED PARTY TRANSACTIONS:

As discussed in Note 9, the Project is a blended component unit of CCSS. A blended component

unit is a separate legal entity that meets the component unit criteria whereby the blended component

unit’s governing body is the same or substantially the same as the Project or the component unit

provides services entirely to the Project. The Project had payments of $50,337 to CCRSI for the

year ended. CCRSI is also a blended component unit of CCSS.

ALPHA HOMES, INC.




12

NOTE 13 – UNCERTAIN TAX POSITIONS:

The Project is exempt from federal and state income taxes under Section 501(c)(3) of the Internal

Revenue Code and applicable state law. The accounting standard on accounting for uncertainty

in income taxes addresses the determination of whether tax benefits claimed or expected to be

claimed on a tax return should be recorded in the financial statements. Under that guidance, the

Project may recognize the tax benefit from an uncertain tax position only if it is more likely than

not that the tax position will be sustained on examination by taxing authorities based on the

technical merits of the position. Examples of tax positions include the tax-exempt status of the

Project and various positions related to the potential sources of unrelated business taxable

income (UBIT). The Project was not subject to UBIT for the year ended.

The Project files a Form 990 in the U.S. federal jurisdiction. The Project is generally no longer

subject to examination by the Internal Revenue Service three years after the forms were filed.

NOTE 14 – EVALUATION OF SUBSEQUENT EVENTS:

The Project has evaluated subsequent events through June 7, 2021, the date which the financial

statements were available to be issued.

On March 11, 2020, Coronavirus (“COVID-19”) was declared a pandemic by the World Health

Organization. As of the date of this report, any potential effects of COVID-19, whether operational

or financial, for the Project are unknown. An estimate of the actual effects, whether operational or

financial, cannot be reasonably determined as of the date of this report.

SUPPLEMENTARY INFORMATION

FEDERAL COMPLIANCE SECTION

Federal Grantor/Program or Cluster Title

Federal CFDA

Number

Federal Expenditures($)

U.S. Department of Housing and Urban Development

Supportive Housing for Persons with Disabilities 14.181

Capital Advance $ 1,036,000

Rent Assistance 25,554

Total Expenditures of Federal Awards $ 1,061,554

There were no subrecipients.

Basis of Presentation:

Summary of Significant Accounting Policies:

Capital Advance:

In 2000, HUD issued a capital advance to the project owner totaling $1,036,000. This amount is included in

the federal expenditures presented in the Schedule and is included in total net assets with donor restrictions in

the financial statements. The capital advance agreement requires the owner to maintain the project for 40

years.

Alpha Homes, Inc.

Schedule of Expenditures of Federal Awards

For the Year Ended March 31, 2021

The accompanying notes are an integral part of this schedule.

Notes to the Schedule of Expenditures of Federal Awards

The Schedule of Expenditures of Federal Awards (the "Schedule") includes the federal award activity of the

Project under programs of the federal government for the year ended. 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 the Project

it is not intended to, and does not, present the financial position, changes in net position, or cash flows of the

Project.

Expenditures reported on the Schedule are reported on the basis of accounting generally accepted in the

United States of America (U.S. GAAP). Such expenditures are recognized following the costs principles

contained in the Uniform Guidance , wherein certain types of expenditures are not allowable or are limited as

to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the

normal course of business to amounts reported as expenditures in prior years. The Project was subject to Part

3.1 of the Uniform Guidance .

13

INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR

PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY

THE UNIFORM GUIDANCE


Alpha Homes, Inc.


Report on Compliance for Each Major Federal Program

We have audited Alpha Home, Inc.’s (the “Project”) compliance with the types of compliance

requirements described in the OMB Compliance Supplement that could have a direct and material

effect on each of the Project’s major federal programs for the year ended March 31, 2021. The

Project’s major federal programs are identified in the Summary of Auditor’s Results section of

the accompanying Schedule of Findings.

Management’s Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and

conditions of its federal awards applicable to its federal programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of the Project’s major federal

programs based on our audit of the types of compliance requirements referred to above. We

conducted our audit of compliance in accordance with auditing standards generally accepted in

the United States of America; the standards applicable to financial audits contained in

Government Auditing Standards, issued by the Comptroller General of the United States; and the

audit 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). Those standards and the Uniform Guidance require that we plan and

perform the audit to obtain reasonable assurance about whether noncompliance with the types of

compliance requirements referred to above that could have a direct and material effect on a major

federal program occurred. An audit includes examining, on a test basis, evidence about the

Project’s compliance with those requirements and performing such other procedures as we

considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each

major federal program. However, our audit does not provide a legal determination of the

Project’s compliance.

14

Opinion on Each Major Federal Program

In our opinion, the Project complied, in all material respects, with the types of compliance

requirements referred to above that could have a direct and material effect on each of its major

federal programs for the year ended March 31, 2021.

Report on Internal Control Over Compliance

Management of the Project is responsible for establishing and maintaining effective internal

control over compliance with the types of compliance requirements referred to above. In

planning and performing our audit of compliance, we considered the Project’s internal control

over compliance with the types of requirements that could have a direct and material effect on

each major federal program to determine the auditing procedures that are appropriate in the

circumstances for the purpose of expressing an opinion on compliance for each major federal

program and to test and report on internal control over compliance in accordance with the

Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of

internal control over compliance. Accordingly, we do not express an opinion on the effectiveness

of the Project’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control

over compliance does not allow management or employees, in the normal course of performing

their assigned functions, to prevent, or detect and correct, noncompliance with a type of

compliance requirement of a federal program on a timely basis. A material weakness in internal

control over compliance is a deficiency, or combination of deficiencies, in internal control over

compliance, such that there is a reasonable possibility that material noncompliance with a type of

compliance requirement of a federal program will not be prevented, or detected and corrected, on

a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a

combination of deficiencies, in internal control over compliance with a type of compliance

requirement of a federal program that is less severe than a material weakness in internal control

over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in

the first paragraph of this section and was not designed to identify all deficiencies in internal

control over compliance that might be material weaknesses or significant deficiencies. We did

not identify any deficiencies in internal control over compliance that we consider to be material

weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of

our testing of internal control over compliance and the results of that testing based on the

requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other

purpose.



June 7, 2021

15

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS


Alpha Homes, Inc.


We have audited, in accordance with the auditing standards generally accepted in the United

States of America and the standards applicable to financial audits contained in Government

Auditing Standards issued by the Comptroller General of the United States, the financial

statements of Alpha Homes, Inc. (the “Project”), which comprise the Statement of Financial

Position as of March 31, 2021, and the related Statements of Activities, Functional Expenses,

and Cash Flows for the year then ended, and the related notes to the financial statements, and

have issued our report thereon dated June 7, 2021.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Project’s

internal control over financial reporting (internal control) to determine the audit procedures that

are appropriate in the circumstances for the purpose of expressing our opinion on the financial

statements, but not for the purpose of expressing an opinion on the effectiveness of the Project’s

internal control. Accordingly, we do not express an opinion on the effectiveness of the Project’s

internal control.

A deficiency in internal control exists when the design or operation of a control does not allow

management or employees, in the normal course of performing their assigned functions, to

prevent, or detect and correct, misstatements on a timely basis. A material weakness is a

deficiency, or a combination of deficiencies, in internal control such that there is a reasonable

possibility that a material misstatement of the entity’s financial statements will not be prevented,

or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a

combination of deficiencies, in internal control that is less severe than a material weakness, yet

important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph

of this section and was not designed to identify all deficiencies in internal control that might be

material weaknesses or significant deficiencies. Given these limitations, during our audit we did

not identify any deficiencies in internal control that we consider to be material weaknesses.

However, material weaknesses may exist that have not been identified.

16

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Project’s financial statements are

free from material misstatement, we performed tests of its compliance with certain provisions of

laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct

and material effect on the determination of financial statement amounts. However, providing an

opinion on compliance with those provisions was not an objective of our audit, and accordingly,

we do not express such an opinion. The results of our tests disclosed no instances of

noncompliance or other matters that are required to be reported under Government Auditing

Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and

compliance and the results of that testing, and not to provide an opinion on the effectiveness of

the entity’s internal control or on compliance. This report is an integral part of an audit

performed in accordance with Government Auditing Standards in considering the entity’s

internal control and compliance. Accordingly, this communication is not suitable for any other

purpose.



June 7, 2021

17

ALPHA HOMES, INC.

SCHEDULE OF FINDINGS 2 CFR SECTION 200.515


SECTION I – SUMMARY OF AUDITOR’S RESULTS:

Financial Statements:

Type of Financial Statement Opinion: Unmodified

Internal Control Over Financial Reporting (GAGAS):

- Material weakness(es) reported? No

- Significant deficiency(ies) reported? No

- Noncompliance material to financial statements

noted (GAGAS)? No

Federal Awards:

Internal Control Over Major Programs:

- Material weakness(es) reported? No

- Significant deficiency(ies) reported? No

Type of Opinion on Compliance

for Major Programs: Unmodified

Are there any reportable findings under

2 CFR Section 200.516(a)? No

18

ALPHA HOMES, INC.

SCHEDULE OF FINDINGS 2 CFR SECTION 200.515


SECTION I – SUMMARY OF AUDITOR’S RESULTS: (Continued)

Identification of Major Programs:

CFDA Number (s) Name of Federal Program or Cluster

14.181 Supportive Housing for Persons with Disabilities

Dollar Threshold: Type A/B Programs Type A: >$750,000

Type B: All Others

Low Risk Auditee under

2 CFR Section 200.520? Yes

SECTION II – FINANCIAL STATEMENTS FINDINGS:

No matters were reported.

SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS:


19

ALPHA HOMES, INC.

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS



20

OTHER INFORMATION

INDEPENDENT ACCOUNTANT’S REPORT

ON APPLYING AGREED-UPON PROCEDURE


Alpha Homes, Inc.


We have performed the procedure described in the second paragraph of this report, which was

agreed to by Alpha Homes, Inc. (the “Project”) and the U.S. Department of Housing and Urban

Development, Public Indian Housing – Real Estate Assessment Center (PIH-REAC), on whether

the electronic submission of certain information agrees with the related hard copy documents within

the audit reporting package. The Project is responsible for the accuracy and completeness of the

electronic submission. The sufficiency of the procedure is solely the responsibility of the Project

and the U.S. Department of Housing and Urban Development, PIH-REAC. Consequently, we

make no representation regarding the sufficiency of the procedure described below either for the

purpose for which this report has been requested or for any other purpose.

We compared the electronic submission of the items listed in the “UFRS Rule Information” column

with the corresponding printed documents listed in the “Hard Copy Documents” column. The

associated finding from the performance of our agreed-upon procedure indicate agreement or non-

agreement of the electronically submitted information and hard copy documents as show in the

chart below.

This agreed-upon procedure engagement was conducted in accordance with attestation standards

established by the American Institute of Certified Public Accountants and the standards applicable

to attestation engagements contained in Government Auditing Standards issued by the Comptroller

General of the United States. We were not engaged to and did not conduct an examination or

review, the objective of which would be the expression of an opinion or conclusion, respectively,

on whether the electronic submission of the items listed in the “UFRS Rule Information” column

agrees with the related hard copy documents within the audit reporting package. Accordingly, we

do not express such an opinion or conclusion. Had we performed additional procedures; other

matters might have come to our attention that would have been reported to you.

We were engaged to perform an audit in accordance with the Consolidated Audit Guide for Audits

of HUD Programs as of and for the year ended March 31, 2021, and have issued our reports

thereon dated June 7, 2021. The information in the “Hard Copy Documents” column was included

within the scope, or was a by-product of that audit. Further, our opinion on the fair presentation of

the Project’s Financial Data Templates dated June 7, 2021, was expressed in relation to the basic

financial statements of the Project taken as a whole.

21

A copy of the reporting package required by the Consolidated Audit Guide for Audits of HUD

Programs, which includes the auditors’ reports, is available in its entirety from the Project. We

have not performed any additional auditing procedures since the date of the aforementioned audit

reports. Further, we take no responsibility for the security of the information transmitted

electronically to the U.S. Department of Housing and Urban Development, PIH-REAC.

The purpose of this report on applying the agreed-upon procedure is solely to describe the

procedure performed on the electronic submission of the items listed in the “UFRS Rule

Information” column and the associated findings, and not to provide an opinion or conclusion.

Accordingly, this report is not suitable for any other purpose.

UFRS Rule Information Hard Copy Documents Findings

Balance Sheet, Revenue and Expense

and Cash Flow Data (account numbers

1120 to 7100T and the S1200 series)

Financial Data Templates (i.e.,

Supplemental Schedules)

Agrees

Surplus Cash (S1300 series of

accounts)

Financial Data Templates [(i.e.,

Computation of Surplus Cash,

Distributions and Residual Receipts

(Annual)]

Agrees

Footnotes (S3100 series of accounts) Footnotes to Audited Basic

Financial Statements

Agrees

Type of opinion on the Financial

Statement and Compliance (account

number S2100-020, S2300-020)

Auditor’s Reports on the Financial

Statements and Compliance

Agrees

Type of opinion on Financial Data

Templates (i.e., Supplemental Data)

(account S2100-100)

Auditor’s Supplemental Report on

Financial Data Templates

Agrees

Audit findings narrative (S2700 series

of accounts)

Schedule of Findings and

Questioned Costs

Agrees



June 7, 2021

22

ALPHA HOMES, INC.


SUPPLEMENTARY DATA REQUIRED BY HUD


23

Cash – Replacement Reserve, Cash – Residual Receipts, Tenant Deposits Held in Trust:

In accordance with the provisions of the Regulatory Agreement, restricted cash is held to be used

for replacement of property and various other uses with the approval of HUD as follows:

Cash-

Replacement

Reserve

Balance, April 1, 2020 $ 23,108

Monthly Deposits

(6 x $453) 2,718

(6 x $463) 2,778

Interest Earned 12

Withdrawals (1,128)

Balance, March 31, 2021 $ 27,488

Tenant

Cash-

Deposits

Residual

Held in

Receipts

Trust

Total

Balance, April 1, 2020 $ 4,003

$ 3,955

$ 7,958

Deposits - 407 407

Interest Earned 2

2

4

Other Withdrawals - - -

Approved Withdrawals -

(360)

(360)

Balance, March 31, 2021 $ 4,005

$ 4,004

$ 8,009

Less: Current Obligations

Security Deposit Liability -

(3,952)

(3,952)

Surplus Cash $ 4,005

$ 52

$ 4,057

The above accounts are held at Central Bank in Jefferson City, Missouri and were confirmed by the

Depository.

ALPHA HOMES, INC.


SUPPLEMENTARY DATA REQUIRED BY HUD


24

Supplementary Data:

S1000-010 Total mortgage principal payments required during the year $ -

S1000-020 Total of 12 monthly deposits during the year into the Cash - Replacement 5,496

Reserve Account, as required by the Regulatory Agreement

S1000-030 Cash - Replacement Reserve or Cash - Residual Receipts releases which 1,128

are included as Expense Items on the Statement of Activities

S1000-040 Project improvement reserve releases under the Flexible

-

Subsidy Program that are included as Expense Items on the

Statement of Activities

Schedule of Changes in Property and Equipment Accounts:

Beginning

Ending

Balance

Additions

Dispositions

Balance

Land $ 52,398

$ -

$ -

$ 52,398

Buildings 1,099,410

6,215

(3,085)

1,102,540

Equipment 5,526

-

-

5,526

Furniture and Fixtures 12,554

-

-

12,554

Total $ 1,169,888

$ 6,215

$ (3,085)

$ 1,173,018

Accumulated Depreciation $ 791,822

$ 44,616

$ (2,252)

$ 834,186

Computation of Surplus Cash – Annual:

Cash

$ 22,108

Current Obligations:

Accounts Payable due within 30 days $(15,799)

Prepaid Revenue

(4,284)

Tenant Security Deposits

(3,952)

Total Current Obligations

(24,035)

Surplus Cash (Deficiency)

$ (1,927)