Loading...
HomeMy WebLinkAboutShelter House - Audit Financial Review ReportSHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES TABLE OF CONTENTS Independent Auditor's Report 1 Financial Statements Statements of Financial Position 4 Statements of Activities 5 Statements of Functional Expenses 7 Statements of Cash Flows 9 Notes to Financial Statements 10 Supplementary Information Schedule of Expenditures of Federal Awards 27 Notes to Schedule of Expenditures of Federal Awards 28 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 29 Independent Auditor's Report on Compliance for Each Major Federal Program and on Internal Control over Compliance Required by the Uniform Guidance 31 Schedule of Findings and Questioned Costs 34 1 INDEPENDENT AUDITOR'S REPORT Board of Directors Shelter House Community Shelter and Transition Services Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Shelter House Community Shelter and Transition Services, which comprise the statements of financial position as of December 31, 2021 and 2020, and the related statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Shelter House Community Shelter and Transition Services as of December 31, 2021 and 2020, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS)and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Shelter House Community Shelter and Transition Services and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Shelter House Community Shelter and Transition Services'ability to continue as a going concern for one year after the date that the financial statements are issued. 2 Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit 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 Shelter House Community Shelter and Transition Services'internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Shelter House Community Shelter and Transition Services'ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. 3 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 Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 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 schedule of expenditures of federal awards 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 August 16, 2022,on ourconsideration of Shelter House Community Shelter and Transition Services'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 the effectiveness of Shelter House Community Shelter and Transition Services'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 Shelter House Community Shelter and Transition Services'internal control over financial reporting and compliance. Waterloo, Iowa August 16, 2022 See notes to financial statements. 4 2021 2020 Assets Current assets Cash 568,610$ 847,828$ Cash equivalents, restricted 113,596 103,888 Contract and grant receivables 1,441,703 480,539 Insurance proceeds receivable -117,000 Other current assets 96,719 14,848 Total current assets 2,220,628 1,564,103 Beneficial interest in assets held by Community Foundation 1,853,141 1,633,722 Property and equipment, net 10,943,176 6,836,876 Total assets 15,016,945$ 10,034,701$ Liabilities and Net Assets Current liabilities Current maturities of long-term debt 350,091$ 296,030$ Accounts payable 1,240,432 45,397 Accrued expenses 136,280 113,830 Total current liabilities 1,726,803 455,257 Long-term debt 1,121,255 640,764 Net assets Without donor restrictions Designated by Board for operating reserve 13,683 54,818 Invested in property and equipment, net 2,697,571 1,775,361 Undesignated 740,106 1,166,188 Total without donor restrictions 3,451,360 2,996,367 With donor restrictions 8,717,527 5,942,313 Total net assets 12,168,887 8,938,680 Total liabilities and net assets 15,016,945$ 10,034,701$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2021 AND 2020 See notes to financial statements. 5 Without With Donor Donor Restrictions Restrictions Total Revenue, gains and other support Business and individual contributions 872,874$ 116,060$ 988,934$ United W ay 40,498 40,500 80,998 Johnson County 82,819 36,200 119,019 City of Iowa City 481,446 74,615 556,061 City of Coralville 10,371 -10,371 City of North Liberty 8,500 -8,500 Federal, state and other grants 2,257,327 2,526,357 4,783,684 In-kind donations 439,561 -439,561 Program service revenue 624,701 -624,701 Gross special events revenue, less cost of direct benefit to donors 109,469 -109,469 Change in value of beneficial interest 83,662 135,757 219,419 Miscellaneous income 99,707 9,708 109,415 Net assets released from restrictions 163,983 (163,983) - Total revenue, gains and other support 5,274,918 2,775,214 8,050,132 Expenses Program 4,195,513 -4,195,513 Management and general 378,965 -378,965 Fundraising 245,447 -245,447 Total expenses 4,819,925 -4,819,925 Change in net assets 454,993 2,775,214 3,230,207 Net assets, beginning of year 2,996,367 5,942,313 8,938,680 Net assets, end of year 3,451,360$ 8,717,527$ 12,168,887$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2021 See notes to financial statements. 6 Without With Donor Donor Restrictions Restrictions Total Revenue, gains and other support Business and individual contributions 681,170$ -$681,170$ United W ay 40,252 40,250 80,502 Johnson County 106,952 36,200 143,152 City of Iowa City 100,383 57,990 158,373 City of Coralville 2,711 -2,711 City of North Liberty 5,000 -5,000 Federal, state and other grants 1,642,300 17,879 1,660,179 In-kind donations 345,833 -345,833 Program service revenue 473,219 -473,219 Gross special events revenue, less cost of direct benefit to donors 400,880 -400,880 Change in value of beneficial interest 97,257 118,006 215,263 Miscellaneous income 17,011 -17,011 Net assets released from restrictions 154,567 (154,567) - Total revenue, gains and other support 4,067,535 115,758 4,183,293 Expenses Program 3,242,272 -3,242,272 Management and general 330,847 -330,847 Fundraising 224,092 -224,092 Total expenses 3,797,211 -3,797,211 Change in net assets 270,324 115,758 386,082 Net assets, beginning of year 2,726,043 5,826,555 8,552,598 Net assets, end of year 2,996,367$ 5,942,313$ 8,938,680$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2020 See notes to financial statements. 7 SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2021 Emergency Housing Supported Total Management Total Services Services Employment Program and General Fundraising Expenses Salaries and wages 535,621$ 850,514$ 117,825$ 1,503,960$ 299,617$ 168,726$ 1,972,303$ Employee benefits 53,427 84,838 11,753 150,018 30,384 17,111 197,513 Payroll taxes 46,166 73,306 10,155 129,627 26,965 15,185 171,777 Total salaries and related expenses 635,214 1,008,658 139,733 1,783,605 356,966 201,022 2,341,593 Professional services and fees 16,804 26,682 3,696 47,182 3,302 3,302 53,786 Advertising 4,920 7,813 1,082 13,815 -21 13,836 Office 63,769 23,556 3,406 90,731 -18,073 108,804 Printing 1,744 --1,744 -8,733 10,477 Information technology 23,514 37,338 5,173 66,025 6,429 4,822 77,276 Occupancy 68,271 44,536 -112,807 2,503 1,878 117,188 Repairs and maintenance 37,869 52,081 -89,950 --89,950 Staff development 24,492 477 81 25,050 213 54 25,317 Interest -26,169 -26,169 --26,169 Insurance 23,433 28,038 1,036 52,507 4,424 3,318 60,249 Property taxes -7,573 -7,573 36 27 7,636 Miscellaneous 5,679 3,203 -8,882 -378 9,260 Special events -----4,974 4,974 Food for residents and catering 36,252 42 -36,294 --36,294 Participant assistance - rental and utilities 3,293 1,307,214 -1,310,507 --1,310,507 Participant assistance - clothing and furniture 64,930 --64,930 --64,930 Participant assistance - medical services 131,785 156 -131,941 --131,941 Participant assistance - COVID hoteling 42,587 --42,587 --42,587 Participant assistance - transportation 893 20,485 4,744 26,122 --26,122 Total expenses before depreciation 1,185,449 2,594,021 158,951 3,938,421 373,873 246,602 4,558,896 Depreciation 91,561 145,390 20,141 257,092 5,092 3,819 266,003 Total expenses by function 1,277,010 2,739,411 179,092 4,195,513 378,965 250,421 4,824,899 Less expenses included with revenues on the statement of activities Cost of direct benefits to donors -----(4,974)(4,974) Total expenses included in the expense section on the statement of activities 1,277,010$ 2,739,411$ 179,092$ 4,195,513$ 378,965$ 245,447$ 4,819,925$ Program Expenses See notes to financial statements. 8 SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2020 Emergency Housing Supported Total Management Total Services Services Employment Program and General Fundraising Expenses Salaries and wages 362,948$ 858,743$ 121,993$ 1,343,684$ 259,261$ 149,141$ 1,752,086$ Employee benefits 30,401 71,930 10,218 112,549 22,293 12,824 147,666 Payroll taxes 30,047 71,090 10,099 111,236 24,442 14,060 149,738 Total salaries and related expenses 423,396 1,001,763 142,310 1,567,469 305,996 176,025 2,049,490 Professional services and fees 9,783 23,145 3,288 36,216 4,179 4,179 44,574 Advertising 1,572 3,719 528 5,819 -88 5,907 Office 44,405 13,133 2,198 59,736 120 14,492 74,348 Printing 1,358 42 -1,400 -8,526 9,926 Information technology 19,048 45,070 6,403 70,521 8,137 8,137 86,795 Occupancy 69,250 39,731 -108,981 2,151 2,151 113,283 Repairs and maintenance 33,966 29,652 114 63,732 --63,732 Staff development 4,440 2,008 460 6,908 134 113 7,155 Interest 1,508 16,400 -17,908 --17,908 Insurance 25,577 21,732 1,218 48,527 5,599 5,599 59,725 Property taxes -1,551 -1,551 31 31 1,613 Miscellaneous 5,514 9,290 -14,804 125 376 15,305 Special events -----7,619 7,619 Food for residents and catering 64,947 --64,947 --64,947 Participant assistance - rental and utilities 251 570,818 -571,069 --571,069 Participant assistance - clothing and furniture 102,918 --102,918 --102,918 Participant assistance - medical services 217,122 297 -217,419 --217,419 Participant assistance - COVID hoteling 25,542 --25,542 --25,542 Participant assistance - transportation -12,225 2,248 14,473 --14,473 Total expenses before depreciation 1,050,597 1,790,576 158,767 2,999,940 326,472 227,336 3,553,748 Depreciation 65,458 154,873 22,001 242,332 4,375 4,375 251,082 Total expenses by function 1,116,055 1,945,449 180,768 3,242,272 330,847 231,711 3,804,830 Less expenses included with revenues on the statement of activities Cost of direct benefits to donors -----(7,619)(7,619) Total expenses included in the expense section on the statement of activities 1,116,055$ 1,945,449$ 180,768$ 3,242,272$ 330,847$ 224,092$ 3,797,211$ Program Expenses See notes to financial statements.9 2021 2020 Cash Flows - Operating Activities Change in net assets 3,230,207$ 386,082$ Adjustments to reconcile change in net assets to net cash flows - operating activities Depreciation 266,003 251,082 Loan discounts (351,829)(8,733) Noncash interest expense 26,169 17,909 Change in value of beneficial interest (219,419)(215,263) Donated land (207,340)- Grants and contributions restricted for long-term purposes (2,642,417)- Changes in operating assets and liabilities Contract and grant receivables (961,164)(193,012) Insurance proceeds receivable 117,000 (117,000) Other current assets (81,871)(5,402) Accounts payable 1,195,035 10,404 Accrued expenses 22,450 (32,983) Net cash flows - operating activities 392,824 93,084 Cash Flows - Investing Activities Proceeds from sale of property and equipment -118,690 Purchases of property and equipment (3,235,237)(38,379) Distributions received from beneficial interest -52,195 Net cash flows - investing activities (3,235,237) 132,506 Cash Flows - Financing Activities Grants and contributions restricted for long-term purposes 2,642,417 - Proceeds from long-term debt -321,300 Payments on long-term debt (69,514)(35,593) Net cash flows - financing activities 2,572,903 285,707 Net change in cash and cash equivalents, unrestricted and restricted (269,510)511,297 Cash and Cash Equivalents, Unrestricted and Restricted Beginning of year 951,716 440,419 End of year 682,206$ 951,716$ Cash and Cash Equivalents, Unrestricted and Restricted Cash 568,610$ 847,828$ Cash equivalents, restricted 113,596 103,888 Total cash and cash equivalents, unrestricted and restricted 682,206$ 951,716$ Supplemental Schedule of Noncash Investing and Financing Activities Financing of property and equipment 929,726$ 36,900$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2021 AND 2020 SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 10 NOTE 1 –ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Nature of Organization and Description of Services Shelter House Community Shelter and Transition Services (Shelter House) is a not-for-profit corporation that provides safe shelter and helps people improve the quality of their lives as they move beyond homelessness. Services are aligned with a Housing First approach and based on the belief that housing is both a right and essential to health. Shelter House envisions being a catalyst and voice for systemic change in the pursuit of ending homelessness and enacts this vision through excellence in service, financial stewardship, and development of strong community partnerships. Shelter House offers the following services: Emergency Services: Shelter House provides emergency shelter for single adults and families experiencing homelessness in Johnson County and is the designated Coordinated Entry lead for Johnson and Washington Counties in Iowa. Through Coordinated Entry,people experiencing a housing crisis in the service region are quickly identified, assessed for, referred, and connected to housing assistance based on their strengths and needs.Shelter House manages a 70-bed emergency shelter comprised of men and women’s dormitories for single adults and a family wing of six family bedrooms. Emergency Shelter capacity is increased each winter with overflow spaces made available in the shelter lobby and in partnership with Johnson County through the use of a designated satellite location. Through these efforts combined nightly shelter capacity is increased by an additional 60 beds. Breakfast and dinner are offered daily for current guests of Shelter House’s emergency shelter. Health services are offered onsite to guests by skilled volunteers from the University of Iowa College of Nursing and University of Iowa Hospitals and Clinics Department of Psychiatry on a weekly and bi-weekly basis. Drop-In services are available daily and include access to showers, laundry, clothing and toiletries,phones, and service navigation. All services are available to anyone from the public in need. In the spring of 2021, Shelter House worked in partnership with the City of Iowa City to launch Street Outreach services. Through Street Outreach, and in partnership with community members and stakeholders, people living in unsheltered locations, such as in cars, parks, abandoned buildings, encampments, and on the streets are engaged to ensure basic needs are met (water, food, and supplies)while offering support toward housing stability and other services as needed and desired. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 11 NOTE 1 –ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Nature of Organization and Description of Services (Continued) Housing Services: Shelter House offers comprehensive housing services tailored to meet individual clients needs. Shelter House Rapid Rehousing services intends to minimize the amount of time an individual or family spends experiencing homelessness and rapidly helps them stabilize in their own housing. Shelter House executes each of the three core components of Rapid Rehousing utilizing a progressive engagement approach: (1) Housing identification, (2) Financial assistance (security deposit, move-in assistance and rent assistance for three to six months),and (3) Housing stability case management through which people are connected to jobs, services and the support needed to successfully maintain their housing. Stability services continue for up to six months after rent assistance ends to ensure a sustained housing placement. For veterans experiencing homelessness, Shelter House provides Bridge Housing services in combination with the full range of support made available through all other programs including navigation and support to secure health care and benefits, employment, and housing. Shelter House offers Permanent Supportive Housing which combines permanent, affordable housing (tenants have the legal right to remain in the unit as long as they wish, as defined by the terms of a renewable lease agreement and pay no more than 30% of income for housing) with flexible, voluntary support services designed to help tenants stay housed and address health issues while building the necessary skills to live as independently as possible. Permanent Supportive Housing is an evidence-based housing intervention prioritized for individuals with complex health and behavioral health issues (higher needs than those typically resolved through Rapid Rehousing and has been proven to significantly reduce returns to jail and homelessness and reliance on emergency health services, while improving overall quality of life. Permanent Supportive Housing is provided through scattered site (Fairweather Lodge and Mainstream Vouchers) and single site (Cross Park Place) approaches. The Fairweather Lodge is a recovery focused, peer driven program for adults experiencing homelessness and diagnosed with a serious persistent mental illness. Mental health services are embedded and supported by both the University of Iowa Counseling Psychology Program and University of Iowa Hospitals and Clinics Department of Psychiatry. The model is predicated on the understanding that people who live and work together, and have significant control over their lives, can overcome homelessness and recover from their mental illnesses. Mainstream Vouchers were utilized in 2021 to expand Permanent Supportive Housing opportunities for both families and single adults in collaboration with the Iowa City Housing Authority and local landlords. Cross Park Place offers 24 one-bedroom apartments with on-site psychiatric (University of Iowa Hospitals and Clinics Department of Psychiatry) and primary health care (University of Iowa College of Nursing)services available weekly and intensive case management and supportive services available daily. The building is staffed 24/7. Housing opportunities are exclusively targeted for chronically homeless adults, who categorically have a disabling condition, and frequently demonstrate high cross-system service utilization. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 12 NOTE 1 –ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Nature of Organization and Description of Services (Continued) Housing Services (Continued):Eviction Prevention and Diversion services continued to grow in 2021. Shelter House leveraged state and local public funds to provide emergency rent and utility assistance for hundreds of households to ensure housing retention and prevent entry into the homeless response system. In addition to financial support (rental and utility arrears payments made directly to landlords and utility companies to prevent evictions and utility disconnections), Shelter House staff provided outreach to landlords and tenants facing eviction providing landlord/tenant mediation, advocacy, and tenant education. Shelter House provides Supported Employment for tenants in our Permanent Supportive Housing through Fresh Starts Janitorial Services (a social enterprise providing contract-based reliable, professional janitorial services for area businesses and organizations). Supported employment is predicated on the understanding that employment is both an outcome and a core component of recovery and ensures all people who want to work are offered work. Services are integrated with comprehensive mental health treatment,personalized benefits counseling is provided to every client, and clients receive job supports for as long as required. Supported Employment Employment is a core component of the Fairweather Lodge and is offered to other Permanent Supportive Housing clients. In order to guarantee employment for all Fairweather Lodge participants, Shelter House initiated Fresh Starts, a social enterprise providing contract-based reliable, professional janitorial services for area businesses and organizations. Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Restricted Cash Equivalents Restricted cash equivalents include highly liquid investments, with original maturities of three months or less, that are recorded at cost plus accrued interest, which approximates market. Shelter House is required to maintain established amounts for capital expenditures and operations of the Cross Park operations. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 13 NOTE 1 –ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Concentrations of Credit Risk Financial instruments which potentially subject Shelter House to concentrations of credit risk consist principally of cash, restricted cash equivalents and receivables. Shelter House places its cash and restricted cash equivalents with high credit quality financial institutions.At times, Shelter House's cash and restricted cash equivalents are in excess of the FDIC insurance limit. Shelter House is subject to a degree of vulnerability due to concentrations of receivables and revenue from major funding sources. Shelter House received approximately 52%and 34% of its total revenue, gains and other support from the federal government for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021,one payor accounted for approximately 76%of contract and grant receivables. As of December 31,2020, two payors accounted for approximately 72%of contract and grant receivables. Beneficial Interest in Assets Held by Community Foundation Shelter House has accounts with the Community Foundation of Johnson County (the Foundation),which are held in permanent designated agency endowment funds, for the benefit of Shelter House. The transactions with the Foundation are deemed to be reciprocal, and therefore,the fair value of the fund held by the Foundation is recognized as an asset by Shelter House. Property and Equipment Property and equipment are carried at cost,or fair value if donated, with depreciation computed primarily under the straight-line method over the economic useful lives of the assets. All property and equipment in excess of $5,000 is capitalized. Long-Lived Assets Shelter House records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. There were no impairment losses for the years ended December 31, 2021 and 2020. Paycheck Protection Program Loan Shelter House follows the Financial Accounting Standards Board's (FASB)Topic 470-Debt in accounting for its Paycheck Protection Program (PPP)loan. The proceeds from the loan remain as a liability until either (1) the loan is, in part or wholly, forgiven and Shelter House has been legally released or (2) Shelter House pays off the loan to the creditor.Shelter House will reduce the liability by the amount forgiven and record a gain on extinguishment. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 14 NOTE 1 –ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Assets Net assets, revenues, gains, and other support are classified based on the existence or absence of donor or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions –Net assets available for use in general operations and not subject to donor or grantor restrictions. The governing board has designated, from net assets without donor restrictions, net assets for an operating reserve. Net Assets With Donor Restrictions –Net assets subject to donor or grantor-imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Other donor-imposed restrictions are perpetual in nature, where the donor stipulates that resources be maintained in perpetuity. Contributions that are restricted by the donor are reported as increases in net assets without donor restrictions if the restrictions expire (that is, when a stipulated time restriction ends,or purpose restriction is accomplished) in the reporting period in which the revenue is recognized. All other donor-restricted contributions are reported as increases in net assets with donor restrictions. When a restriction expires, net assets with donor restrictions are reclassified to net assets without donor restrictions and reported in the statement of activities as net assets released from restrictions. Revenue Recognition Contribution and Grant Revenue Shelter House recognizes contributions when cash, securities or other assets, an unconditional promise to give, or notification of a beneficial interest is received. Conditional promises to give, that is, those with a measurable performance or other barrier, and a right of return, are not recognized until the conditions on which they depend have been substantially met. As of December 31, 2021, Shelter House had a conditional promise to give of $1,848,764 for the construction of a building and $2,560,785 for 2022 programs. No amounts were recognized in 2021 as the conditions had not yet been met. A portion of Shelter House's revenue is derived from cost-reimbursable federal and state contracts and grants, which are conditioned upon certain performance requirements and/ or the incurrence of allowable qualifying expenses. Amounts received are recognized as revenue when Shelter House has incurred expenditures in compliance with specific contract or grant provisions. Program Service Revenue Contracted janitorial service revenue is recognized over time as Shelter House satisfies its performance obligations.Contracts are generally for 12 months with an option for two automatic renewals of two years unless a 90 day written notice of nonrenewal is received. Termination of the contract requires 30 day notice. Under these contracts, Shelter House provides services for a stated monthly fee. Monthly fees are billed within two weeks of the service being provided. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 15 NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Revenue Recognition (Continued) Rental income is recognized over time as Shelter House satisfies its performance obligations. Under Shelter House's rental agreements, which are generally based on 12 month contracts, Shelter House provides housing for a stated monthly fee. Rent is paid by the tenant personally or by housing subsidy held by the tenant and paid directly to Shelter House. Housing subsidies are determined by the provider, such as the Public Housing Authority, which uses an income- based calculation to determine the fees to be paid by the tenant and the fees to be paid through subsidy.Rental fees that are owed by the tenant are not always collected and, as such,Shelter House adjusts revenue based on historical experience, to reflect the estimated transaction price. Shelter House generally receives payment at the beginning of each month for services during the month. In-kind contributions Donated materials, rental activities, and contributed services are reflected as contributions in the accompanying statements at their estimated values at date of receipt. The value of donated materials, rental activities, and services included as contributions and corresponding expenses,in the accompanying statements for the years ended December 31, 2021 and 2020, is as follows: 2021 2020 Materials 64,190$ 72,318$ Rental activities 36,281 25,915 Land 207,340 - Services 131,750 247,600 Total in-kind contributions 439,561$ 345,833$ Functional Allocation of Expenses The costs of program and supporting services 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. The financial statements report certain categories of expenses that are attributed to more than one program or supporting function. Therefore, expenses require allocation on a reasonable basis that is consistently applied. The expenses that are allocated include professional services, information technology, occupancy, insurance, property taxes, and depreciation, which are allocated based on clients and employee numbers, as well as salaries and wages, benefits, and payroll taxes, which are allocated on the basis of estimates of time and effort. Income Taxes Shelter House is a not-for-profit corporation as described in Section 501(c)(3) of the Internal Revenue Code (the Code)and is exempt from federal income taxes pursuant to Section 501(a) of the Code. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 16 NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Recently Issued Accounting Pronouncement In September 2020, the FASB issued Accounting Standards Update (ASU) No. 2020-07, Not- for-Profit Entities (Topic 958): Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets, which is intended to improve transparency in the reporting of contributed nonfinancial assets,also known as gifts-in-kind, for not-for-profit organizations. In addition to enhanced disclosures for contributed nonfinancial assets, this ASU requires not-for- profit organizations to present contributed nonfinancial assets as a separate line item in the statement of activities, apart from contributions of cash or other financial assets. The amendments in this ASU should be applied on a retrospective basis and are effective for annual reporting periods beginning after June 15, 2021, with early adoption permitted. Shelter House is currently evaluating the impact this standard will have on its financial statements. Subsequent Events Management has evaluated subsequent events through August 16, 2022, the date which the financial statements were available for issue. NOTE 2 –LIQUIDITY AND AVAILABILITY Financial assets available for general expenditure, that is,without donor or other restrictions limiting their use, within one year of the statement of financial position date, comprise the following as of December 31,2021 and 2020: 2021 2020 Cash 568,610$ 847,828$ Contract and grant receivables 1,441,703 480,539 Insurance proceeds receivable -117,000 Total financial assets available 2,010,313 1,445,367 Less donor-imposed restrictions on financial assets 732,306 134,440 Less board restricted endowment 13,683 54,818 Financial assets available within one year 1,264,324$ 1,256,109$ Shelter House has funds available at the Community Foundation of Johnson County which are not included in the table above. These funds are invested for long-term appreciation but are available at the discretion of the Foundation. To help manage unanticipated liquidity needs, Shelter House has a committed line of credit in the amount of $125,000 which it could draw upon. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 17 NOTE 3 –CONTRACT AND GRANT RECEIVABLES Contract and grant receivables as of December 31,2021 and 2020,follows: 2021 2020 Federal 137,231$ 3,893$ State 1,091,947 245,672 Local government 156,335 152,448 United W ay 40,500 40,250 Other 15,690 38,276 Total contract and grant receivables 1,441,703$ 480,539$ NOTE 4 –FUNDS HELD AT COMMUNITY FOUNDATON Beneficial Interest in Assets Held by Community Foundation Shelter House has agency funds available at the Foundation. Shelter House has a beneficial interest in these assets held by the Foundation in the amount of $1,853,141 and $1,633,722 as of December 31, 2021 and 2020, respectively, which represents funds previously transferred to the Foundation by the Shelter House and the earnings thereon. These funds are invested for long-term appreciation but are available at the discretion of the Shelter House's Board of Directors. The Shelter House has granted variance power to the Foundation in the event the Shelter House terminates or ceases to exist as a legal entity. Amounts Held on Behalf of the Organization The Foundation holds third-party contributions to the Foundation on behalf of the Shelter House in designated funds.Income from these funds is available to support the Shelter House's operations at the discretion of the Foundation, with a current distribution rate of 4.5%, calculated using a 12-quarter trailing average.The Foundation is considered the owner of these funds and therefore not recorded on the statement of financial position of Shelter House. The Shelter House had a total of $677,556 and $584,482 in designated Funds held by the Foundation as of December 31, 2021 and 2020, respectively. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 18 NOTE 5 –PROPERTY AND EQUIPMENT Property and equipment consists of the following as of December 31, 2021 and 2020: 2021 2020 Buildings 7,463,839$ 7,361,234$ Furniture 692,963 551,301 Construction in progress 3,709,148 - Land 913,668 508,828 12,779,618 8,421,363 Less accumulated depreciation 1,836,442 1,584,487 Property and equipment, net 10,943,176$ 6,836,876$ NOTE 6 –LINE OF CREDIT Shelter House has available a $125,000 variable rate (5% as of December 31, 2021) revolving bank line of credit which expires December 3, 2022.Outstanding balances are secured by substantially all assets of Shelter House.As of December 31, 2021 and 2020, there were no amounts outstanding under this line of credit. NOTE 7 –LONG-TERM DEBT 2021 2020 0% note payable to City of Iowa City, Iowa, dated September 17, 2010, due July 1, 2041, secured by property located at 1323 and 1325 Ashley Drive, Iowa City, Iowa, payable $278 per month beginning July 1, 2016.81,652$ 84,716$ 0% note payable to Housing Trust Fund of Johnson County, dated December 16, 2010, due December 1, 2040, secured by real property at 1323 and 1325 Ashley Drive, Iowa City, Iowa, payable $198 per month beginning January 1, 2014.44,992 47,170 0% note payable to Housing Trust Fund of Johnson County, dated August 15, 2011, due September 1, 2041, secured by real property at 135 Amhurst Street, Iowa City, Iowa, payable $509 per month beginning September 1, 2014.120,208 125,807 SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 19 NOTE 7 –LONG-TERM DEBT (CONTINUED) 2021 2020 0% note payable to Housing Trust Fund of Johnson County, dated February 18, 2019, due June 1, 2040, secured by real property at 820 Cross Park Ave., Iowa City, Iowa, payable $1,771 per month beginning July 1, 2020.393,125 412,604 0% note payable to Housing Trust Fund of Johnson County, dated January 25, 2019, due December 31, 2039, secured by real property at 15 Wakefield Ct., Iowa City, Iowa, payable $729 per month beginning January 1, 2020.140,496 146,516 0% note payable to Housing Trust Fund of Johnson County, dated October 25, 2019, due October 31, 2030, unsecured, payable $308 per month beginning October 1, 2020.32,287 35,670 Paycheck Protection Program (PPP) loan forgiven February 2022 (A).285,136 321,300 0% note payable to City of Iowa City, Iowa, dated September 3, 2019, due June 1, 2030, secured by real property at 15 Wakefield Ct., Iowa City, Iowa, payable $200 per month beginning July 1, 2020.20,400 22,600 0% note payable to Housing Trust Fund of Johnson County, dated August 2, 2021, due April 30, 2052, secured by real property at 135 Amhurst Street, Iowa City, Iowa, payable $524 per month beginning April 1, 2022.296,515 - 0% note payable to Housing Trust Fund of Johnson County, dated July 23, 2021, due July 31, 2052, secured by real property at 501 Southgate Avenue, Iowa City, Iowa, payable $1,772 per month beginning August 1, 2022.633,211 - Total debt 2,048,022$ 1,196,383$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 20 NOTE 7 –LONG-TERM DEBT (CONTINUED) 2021 2020 Total debt 2,048,022 1,196,383 Less imputed interest 576,676 259,589 Less current maturities 350,091 296,030 Total long-term debt 1,121,255$ 640,764$ Maturities of long-term debt are as follows: Year Ending December 31 2022 350,091$ 2023 78,059 2024 78,059 2025 78,059 2026 78,059 Thereafter 1,385,695 2,048,022$ (A)Shelter House applied for and obtained a $321,300 Paycheck Protection Program (PPP) loan, administered by the U.S. Small Business Administration, established under the Coronavirus Aid, Relief and Economic Security Act (CARES Act). Under the terms of the loan,which was unsecured,Shelter House could apply for and be granted forgiveness for a portion or all of the loan if funds were used in accordance with program guidance. During the year ended December 31, 2021, Shelter House made principal payments of $36,164, reducing the loan balance to $285,136.The loan was forgiven by the SBA in February 2022, at which time the SBA refunded the $36,164 that had been paid in 2021.Shelter House must maintain all records relating to the loan for six years from the date of forgiveness and must permit authorized representatives of the SBA, including representatives of its Office of Inspector General, to access such files upon request. NOTE 8 –CONTINGENCIES Shelter House is contingently liable under several contingent forgivable loans and grant agreements. These contingent forgivable loans and grant agreements have not been recorded as liabilities on the statement of financial position as repayment is not required as long as Shelter House continues to own the properties which secure the notes and complies with the provisions of the respective loans, grants and regulatory agreements, which Shelter House fully intends to do. The contingent forgivable loans and grant agreements were recognized as revenues when qualifying construction or property purchases were incurred and are reflected as net assets with donor restrictions. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 21 NOTE 8 –CONTINGENCIES (CONTINUED) 429 Southgate Avenue During the year ended December 31,2004, the City of Iowa City provided Shelter House with $230,000 of Community Development Block Grant (CDBG) funds to purchase property for a new shelter and improvements to the site. As of December 31, 2008,all of the CDBG funds had been used to purchase the property and pay for closing costs and for site improvements. Under the terms of the CDBG grant, Shelter House is prohibited from selling, assigning, or transferring its interest in the property prior to June 30, 2103, without written concurrence of the City.If Shelter House fully complies with the obligations of the grant through and including June 30, 2103, then the lien against the property will be released by the City. During the year ended December 31, 2009,the City of Iowa City provided Shelter House with $116,785 of Community Development Block Grant ARRA (CDBG-R) funds and $194,443 of CDBG funds to pay for a portion of the construction costs of the new shelter. As of December 31, 2013, all CDBG-R funds and CDBG funds had been used for construction costs.Under the terms of the grants, Shelter House is prohibited from selling, assigning, or transferring its interest in the property prior to June 30, 2073, without written concurrence of the City.If Shelter House fully complies with the obligations of the grant through and including June 30, 2073, then the lien against the property will be released by the City. 1323 and 1325 Ashley Drive During the year ended December 31,2010, the City of Iowa City provided Shelter House with $200,000 of HOME Investment Partnership funds for the purchase and rehabilitation of two homes in Iowa City for the affordable permanent supportive rental housing for low income households.As of December 31,2010, all HOME funds had been received and used for purchase of 1323 and 1325 Ashley Drive, Iowa City, Iowa. Under the terms of the HOME grant, Shelter House's period of affordability is 20 years from the date all units are leased. Shelter House received a $100,000 grant and a $100,000 loan with a 25-year amortization with monthly payments of $278 beginning July 1, 2016 and ending July 1,2041.Under the terms of the agreement, Shelter House is prohibited from selling, assigning, or transferring its interest in the property prior to July 1, 2041, without written concurrence of the City.If Shelter House fully complies with the obligations of the grant and the loan through and including July 1, 2041, then the lien against the property will be released by the City. During the year ended December 31, 2011,the City of Iowa City provided Shelter House with $75,000 of CDBG HOME funds to rehabilitate the property purchased at 1323 Ashley Drive, Iowa City Iowa.As of December 31, 2011, all CDBG funds had been used for the rehabilitation. Under the terms of the agreement, Shelter House must provide affordable housing through October 1,2031.If Shelter House fully complies with the agreement, there shall be no loan payments and the City will release the agreement and mortgage. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 22 NOTE 8 –CONTINGENCIES (CONTINUED) 820 Cross Park Avenue During the year ended December 31, 2016,the City of Iowa City provided Shelter House with $25,000 of CDBG funds to pay for a portion of the purchase price to acquire land for a new shelter. As of December 31, 2016, all CDBG funds had been used for the land purchase. Under the terms of the grant,Shelter House is prohibited from selling, assigning, or transferring its interest in the property through December 28, 2023 (the compliance period), without written concurrence of the City.If Shelter House fully complies with the agreement, there shall be no loan payments and the City will release the agreement and mortgage. During the year ended December 31,2017,the Iowa Finance Authority (IFA) and Shelter House entered into an agreement whereas IFA awarded $2,700,000 of National Housing Trust Fund (NHTF) monies for Shelter House to construct,develop, own,operate, lease and otherwise deal with a nonluxury residential housing project with suitable amenities to be located in Iowa City, IA, known as FUSE –Housing First.As of December 31, 2019,all funds had been used for construction costs.Under the terms of the grant,Shelter House must provide affordable housing for a period of thirty-two years from the date the Certificate of Occupancy (December 28, 2018)is issued for all units in the property (the compliance period). If Shelter House fully complies with the obligations of the grant through and including December 28, 2050, then the lien against the property will be released by the IFA. During the year ended December 31,2018, the Housing Trust Fund of Johnson County (HTFJC)and Shelter House entered into an agreement whereas HTFJC awarded $463,204 to assist Shelter House with the nonluxury residential housing project known as FUSE –Housing First.As of December 31, 2018, all funds had been used for construction costs.Under the terms of the grant, Shelter House must provide affordable housing through January 31, 2049 (the compliance period).If Shelter House fully complies with the agreement, there shall be no loan payments and the City will release the agreement and mortgage.If Shelter House fully complies with the obligations of the grant through and including December 28, 2048,then the lien against the property will be released by the HTFJC. 1447 Valley View Drive During the year ended December 31, 2014, U.S.Department of Housing and Urban Development (HUD) provided Shelter House with $212,000 of Continuum of Care funds to purchase property in Coralville for affordable permanent housing. As of December 31, 2014,all Continuum of Care funds had been received and used for the purchase of 1447 Valley View Drive, Coralville, Iowa.Under the terms of the agreement,Shelter House is prohibited from selling,assigning, or transferring its interest in the property prior to July 15,2030,without written concurrence of HUD. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 23 NOTE 8 –CONTINGENCIES (CONTINUED) 15 Wakefield Court During the year ended December 31, 2019,the City of Iowa City provided Shelter House with $94,000 of HOME Investment Partnership funds for the purchase of a home in Iowa City for the affordable permanent supportive rental housing for low income households. As of December 31,2019, all HOME funds had been received and used for purchase of 15 Wakefield Court, Iowa City, Iowa. Under the terms of the HOME grant,Shelter House's period of affordability is 10 years from the date all units are leased. Shelter House received a $70,000 grant and a $24,000 loan with a 10-year amortization with monthly payments of $200 beginning July 1, 2020 and ending June 1,2030.Under the terms of the agreement, Shelter House is prohibited from selling, assigning, or transferring its interest in the property prior to July 1, 2030,without written concurrence of the City.If Shelter House fully complies with the obligations of the grant and the loan through and including July 1, 2030, then the lien against the property will be released by the City. 501 Southgate Ave During the year ended December 31,2021,the IFA and Shelter House entered into an agreement whereas IFA awarded $2,700,000 of National Housing Trust Fund (NHTF) monies for Shelter House to construct,develop,own,operate, lease and otherwise deal with a nonluxury residential housing project with suitable amenities to be located in Iowa City, IA, known as FUSE –Housing First 2.0.As of December 31, 2021, $1,780,227 have been used for construction costs. Under the terms of the grant, Shelter House must provide affordable housing for a period of thirty-five years from the date the Certificate of Occupancy (May 11, 2021) is issued for all units in the property (the compliance period).If Shelter House fully complies with the obligations of the grant,then the lien against the property will be released by the IFA. NOTE 9 –NET ASSETS WITH DONOR RESTRICTIONS Net assets with donor restrictions as of December 31, 2021 and 2020,are available for the following purposes or periods: 2021 2020 Beneficial interest in assets held by Foundation Operations 245,719$ 245,719$ Employment assistance 1,147,502 1,011,745 Imputed interest on long-term debt 576,676 260,089 Subsequent year's operations 151,315 134,440 Reserve funds 113,596 103,888 501 Southgate Ave. construction 2,296,287 - Property and equipment subject to continuing compliance contingencies 4,186,432 4,186,432 8,717,527$ 5,942,313$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 24 NOTE 10 –DISSAGREGATION OF PROGRAM SERVICE REVENUE The following table disaggregates Shelter House's program service revenue based on the timing of satisfaction of performance obligations: 2021 2020 Performance obligations recognized: At a point in time 26,719$ 75,045$ Over time 597,982 398,174 624,701$ 473,219$ NOTE 11 –RETIREMENT PLAN Shelter House maintains a SIMPLE IRA plan which covers employees who meet certain eligibility requirements.Shelter House makes matching contributions to the plan for those eligible employees who defer a portion of their compensation. The maximum matching amount per eligible employee is 3%.For the years ended December 31, 2021 and 2020, Shelter House contributed $20,579 and $15,006, respectively, in matching funds. NOTE 12 –FAIR VALUE MEASUREMENTS The fair value measurement accounting literature establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value.This hierarchy prioritizes the inputs into three broad levels as follows: Level 1:Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2:Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable,either directly or indirectly through market corroboration,for substantially the full term of the financial instrument. Level 3:Inputs are unobservable inputs based on Shelter House's own assumptions used to measure assets and liabilities at fair value. A financial asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The beneficial interest in assets held by the Community Foundation is valued at the estimated pro rata share of the Foundation's investment pool. The assets held by the Foundation include money market funds, bonds and fixed income funds, and mutual funds. The Foundation is organized and operated as a permanent collection of endowed funds for the benefit of many organizations. Shelter House holds only a portion of the assets held by the Foundation, therefore,Shelter House reports its beneficial interest as a Level 3 asset. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 25 NOTE 12 –FAIR VALUE MEASUREMENTS (CONTINUED) The following is a summary of changes in the fair value of Shelter House's Level 3 asset for the years ended December 31, 2021 and 2020: 2021 2020 Balance - beginning of year 1,633,722$ 1,470,654$ Distribution -(27,101) Net earnings 219,419 190,169 Balance - end of year 1,853,141$ 1,633,722$ NOTE 13 – PURCHASE COMMITMENTS As of December 31, 2021, Shelter House had two purchase commitments outstanding.Under the construction contract for the 501 Southgate Ave.(Southgate) project, Shelter House had incurred costs of approximately $4,324,000 as of December 31,2021. The Southgate project is expected to cost approximately $7,850,000 and be completed June 10, 2022.Shelter House has secured grant funding of approximately $3,565,000 towards the construction costs. Shelter House has continued a construction contract to rebuild the Amhurst Fairweather Lodge that is expected to cost $610,400 and be completed by July 31, 2022.Under the construction contract for the Amhurst Fairweather Lodge project, Shelter House had incurred costs of approximately $565,000 as of December 31,2021. Shelter House was required to apply certain insurance proceeds towards the construction costs. NOTE 14 –RECLASSIFICATIONS Certain reclassifications have been made to the prior year’s financial statements, as previously reported, in order to conform them to the current year's presentation. 26 SUPPLEMENTARY INFORMATION See notes to schedule of expenditures of federal awards. 27 Assistance Pass-Through Listing Entity Identifying Federal Grantor/Pass-Through Grantor/Program Title Number Number U.S. Department of Housing and Urban Development Passed through City of Iowa City, Iowa HOME Investment Partnerships Program 14.239 N/A 170,000$ Direct Continuum of Care (CoC) Program 14.267 1,189,619 Passed through Iowa Finance Authority Emergency Solutions Grants Program 14.231 52003-21 77,454 COVID-19 - Emergency Solutions Grants Program 14.231 CV-52003-20 330,636 COVID-19 - Emergency Solutions Grants Program 14.231 CV2-52003-20 568,698 National Housing Trust Fund Program 14.275 17-NHTF-1285 2,700,000 National Housing Trust Fund Program 14.275 20-NHTF-1071 1,780,227 Passed through City of Iowa City, Iowa Community Development Block Grant ARRA (CDBG-R)14.253 N/A 116,785 CDBG-Entitlement Grants Cluster Passed through City of Iowa City, Iowa CDBG-Entitlement Cluster 14.218 N/A 552,105 COVID-19 - CDBG-Entitlement Cluster 14.218 N/A 377,358 Total CDBG-Entitlement Grants Cluster 929,463 Total U.S Department of Housing and Urban Development 7,862,882 U.S Department of Homeland Security Direct Emergency Food and Shelter National Board Program 97.024 16,994 U.S. Department of Health and Human Services Direct COVID-19 - CDC COVID-19 Vaccination Implementation and Planning 93.268 1,643 U.S. Department of Veterans Affairs Direct VA Homeless Providers Grant and Per Diem Program 64.024 72,270 Total Expenditures of Federal Awards 7,953,789$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED DECEMBER 31, 2021 Federal Expenditures 28 NOTE 1 - BASIS OF PRESENTATION NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE 3 - INDIRECT COST RATE NOTE 4 - LOANS WITH CONTINUING COMPLIANCE REQUIREMENTS Maturity Outstanding Program / Property CFDA #Date Balance CDBG - 429 Southgate Avenue 14.218 6/30/2103 230,000$ CDBG - 429 Southgate Avenue 14.218 6/30/2073 194,443 CDBG - 1323 Ashley Drive 14.218 10/1/2031 75,000 CDBG - 820 Cross Park Avenue 14.218 12/28/2023 25,000 HOME Investment Partnership - 1323 Ashley Drive 14.239 7/1/2041 100,000 CDBG - 429 Southgate Avenue 14.253 6/30/2073 116,785 Continuum of Care - 1447 Valley View Drive 14.267 7/15/2030 212,000 National Housing Trust Fund - 820 Cross Park Avenue 12.275 12/28/2053 2,700,000 HOME Investment Partnership - 15 Wakefield Ct.14.239 12/31/2050 70,000 National Housing Trust Fund - 501 Southgate Avenue 14.275 Undetermined 1,780,227 Total loans with federal continuing compliance requirements 5,503,455$ Shelter House Community Shelter and Transition Services received the following funding from the U.S. Department of Housing and Urban Development. Loan documents require compliance with program regulations until the maturity date of the loan or the period of affordability expires. Loans outstanding as of the beginning of the year and loans received during the year are included in the federal expenditures presented in the Schedule, with balances outstanding as of December 31, 2021, as follows: Shelter House Community Shelter and Transition Services has elected to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED DECEMBER 31, 2021 The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Shelter House Community Shelter and Transition Services under programs of the federal government for the year ended December 31, 2021. 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). Because the Schedule presents only a selected portion of the operations of Shelter House Community Shelter and Transition Services, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Shelter House Community Shelter and Transition Services. 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 to reimbursement. 29 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 Board of Directors Shelter House Community Shelter and Transition Services We have audited, 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, the financial statements of Shelter House Community Shelter and Transition Services (Shelter House), which comprise the statement of financial position as of December 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 August 16, 2022. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered Shelter House'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 Shelter House's internal control.Accordingly, we do not express an opinion on the effectiveness of Shelter House'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. 30 Compliance and Other Matters As part of obtaining reasonable assurance about whether Shelter House'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. Waterloo, Iowa August 16, 2022 31 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Board of Directors Shelter House Community Shelter and Transition Services Report on Compliance for Each Major Federal Program Opinion on Each Major Federal Program We have audited Shelter House Community Shelter and Transition Services' (Shelter House) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on Shelter House's major federal programs for the year ended December 31, 2021.Shelter House's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. In our opinion,Shelter House complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2021. Basis for Opinion on Each Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit 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). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report. We are required to be independent of Shelter House and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of Shelter House's compliance with the compliance requirements referred to above. 32 Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes,regulations, rules and provisions of contracts or grant agreements applicable to Shelter House's federal programs. Auditor's Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on Shelter House's compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about Shelter House's compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis,evidence regarding Shelter House's compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. Obtain an understanding of Shelter House's internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances 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 Shelter House's internal control over compliance.Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. 33 Report on 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 a 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 Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses,as defined above. However,material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. 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. Waterloo, Iowa August 16, 2022 34 SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31, 2021 SECTION I – SUMMARY OF AUDITOR'S RESULTS Financial Statements Type of auditor's report issued Unmodified Internal control over financial reporting Material weakness(es)identified?No Significant deficiency(ies) identified?None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs Material weakness(es) identified?No Significant deficiency(ies) identified?None reported Type of auditor's report issued on compliance for major programs Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)?No Identification of Major Program(s) Assistance Listing Numbers(s)14.231 14.218 Name of Federal Program(s) or Cluster(s)Emergency Solutions Grants Program Community Development Block Grants Dollar threshold used to distinguish between type A and type B programs $750,000 Auditee qualified as a low-risk auditee? Yes SECTION II – FINDINGS RELATED TO THE FINANCIAL STATEMENTS None for current year. SECTION III –FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None for current year.