Loading...
HomeMy WebLinkAboutSH FinancialFINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 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 11 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 Independent Auditor’s Report 1 To the Board of Directors Shelter House Community Shelter and Transition Services Iowa City, Iowa 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, 2023 and 2022, 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, 2023 and 2022, 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 were available to be 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: x Exercise professional judgment and maintain professional skepticism throughout the audit. x 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. x 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. x 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. x 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 July 19, 2024 on our consideration 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 July 19, 2024 2023 2022 Assets Current assets Cash 1,709,650$ 739,403$ Cash equivalents, restricted 341,008 114,168 Contract and grant receivables 543,711 570,542 Other current assets 1,500 48,183 Total current assets 2,595,869 1,472,296 Beneficial interest in assets held by Community Foundation 1,620,213 1,408,703 Property and equipment, net 14,130,869 14,085,551 Donated property held for sale 393,374 - Right-of-use assets - finance leases, net 56,620 71,329 Total assets 18,796,945$ 17,037,879$ Liabilities and Net Assets Current liabilities Current portion of finance lease liabilities 15,876$ 15,876$ Construction line of credit 622,571 1,816,648 Current maturities of long-term debt 105,559 105,559 Accounts payable 72,267 52,784 Accrued expenses 160,894 175,017 Total current liabilities 977,167 2,165,884 Finance lease liabilities 41,949 55,453 Long-term debt 1,520,201 1,567,713 Total liabilities 2,539,317 3,789,050 Net assets Without donor restrictions Designated by Board for operating reserve 77,203 70,343 Invested in property and equipment, net 3,349,734 2,375,774 Undesignated 1,776,081 900,313 Total without donor restrictions 5,203,018 3,346,430 With donor restrictions 11,054,610 9,902,399 Total net assets 16,257,628 13,248,829 Total liabilities and net assets 18,796,945$ 17,037,879$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2023 AND 2022 See notes to financial statements. 4 Without With Donor Donor Restrictions Restrictions Total Revenue, gains and public support Business and individual contributions 936,537$ -$ 936,537$ United Way 41,534 41,532 83,066 Johnson County 201,423 37,100 238,523 City of Iowa City 718,349 48,475 766,824 City of Coralville 20,000 - 20,000 City of North Liberty 10,000 - 10,000 Federal, state and other grants 4,100,744 1,210,333 5,311,077 In-kind donations 240,198 393,374 633,572 Program service revenue 816,326 - 816,326 Gross special events revenue, less cost of direct benefit to donors 112,086 - 112,086 Change in value of beneficial interest - 211,510 211,510 Miscellaneous income 45,688 - 45,688 Net assets released from restrictions 790,113 (790,113) - Total revenue, gains and public support 8,032,998 1,152,211 9,185,209 Expenses Program 5,508,838 - 5,508,838 Management and general 453,879 - 453,879 Fundraising 213,693 - 213,693 Total expenses 6,176,410 - 6,176,410 Change in net assets 1,856,588 1,152,211 3,008,799 Net assets, beginning of year 3,346,430 9,902,399 13,248,829 Net assets, end of year 5,203,018$ 11,054,610$ 16,257,628$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2023 See notes to financial statements. 5 Without With Donor Donor Restrictions Restrictions Total Revenue, gains and public support Business and individual contributions 233,996$ 612,500$ 846,496$ United Way 42,248 42,250 84,498 Johnson County 165,121 36,008 201,129 City of Iowa City 496,444 81,413 577,857 City of Coralville 10,371 - 10,371 City of North Liberty 10,000 - 10,000 Federal, state and other grants 2,650,976 1,106,335 3,757,311 In-kind donations 284,511 - 284,511 Program service revenue 609,207 - 609,207 Gross special events revenue, less cost of direct benefit to donors 125,118 - 125,118 Change in value of beneficial interest - (323,181)(323,181) Gain on loan extinguishment 321,438 - 321,438 Miscellaneous income 53,334 - 53,334 Net assets released from restrictions 830,373 (830,373) - Total revenue, gains and public support 5,833,137 724,952 6,558,089 Expenses Program 4,791,097 - 4,791,097 Management and general 456,653 - 456,653 Fundraising 230,397 - 230,397 Total expenses 5,478,147 - 5,478,147 Change in net assets 354,990 724,952 1,079,942 Net assets, beginning of year 2,991,440 9,177,447 12,168,887 Net assets, end of year 3,346,430$ 9,902,399$ 13,248,829$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2022 See notes to financial statements. 6 SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2023 Emergency Housing Supported Total Management Total Services Services Employment Program and General Fundraising Expenses Salaries and wages 655,679$ 1,561,932$ 153,734$ 2,371,345$ 358,707$ 147,198$ 2,877,250$ Employee benefits 76,957 183,324 18,044 278,325 44,904 18,426 341,655 Payroll taxes 53,928 128,465 12,644 195,037 29,270 12,011 236,318 Total salaries and related expenses 786,564 1,873,721 184,422 2,844,707 432,881 177,635 3,455,223 Professional services and fees 13,089 31,179 3,069 47,337 2,084 1,191 50,612 Advertising 173 414 41 628 - - 628 Office 45,482 46,765 2,937 95,184 - 12,258 107,442 Printing 4,761 - - 4,761 - 10,244 15,005 Information technology 30,826 73,432 7,228 111,486 4,908 2,805 119,199 Occupancy 54,218 90,425 7 144,650 2,088 1,193 147,931 Repairs and maintenance 40,541 71,096 - 111,637 - - 111,637 Staff development 20,770 5,588 - 26,358 - 1,557 27,915 Interest 8,497 84,324 - 92,821 - - 92,821 Insurance 48,566 52,609 1,188 102,363 4,507 2,575 109,445 Property taxes - 16,820 - 16,820 243 139 17,202 Miscellaneous 27,120 817 - 27,937 - - 27,937 Special events - - - -- 7,501 7,501 Food for residents and catering 2,214 553 14 2,781 - - 2,781 Participant assistance - rental and utilities 9,636 1,117,245 - 1,126,881 - - 1,126,881 Participant assistance - clothing and furniture 91,830 - - 91,830 - - 91,830 Participant assistance - medical services 123,299 2,687 - 125,986 - - 125,986 Participant assistance - COVID hoteling 2,038 190 - 2,228 - - 2,228 Participant assistance - transportation 1,272 32,560 - 33,832 - - 33,832 Total expenses before depreciation 1,310,896 3,500,425 198,906 5,010,227 446,711 217,098 5,674,036 Depreciation 137,866 328,420 32,325 498,611 7,168 4,096 509,875 Total expenses by function 1,448,762 3,828,845 231,231 5,508,838 453,879 221,194 6,183,911 Less expenses included with revenues on the statement of activities Cost of direct benefits to donors - - - - - (7,501) (7,501) Total expenses included in the expense section on the statement of activities 1,448,762$ 3,828,845$ 231,231$ 5,508,838$ 453,879$ 213,693$ 6,176,410$ Program Expenses See notes to financial statements. 7 SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2022 Emergency Housing Supported Total Management Total Services Services Employment Program and General Fundraising Expenses Salaries and wages 711,876$ 1,092,430$ 153,631$ 1,957,937$ 361,311$ 160,104$ 2,479,352$ Employee benefits 69,610 106,821 15,022 191,453 35,169 15,560 242,182 Payroll taxes 60,122 92,261 12,975 165,358 30,375 13,439 209,172 Total salaries and related expenses 841,608 1,291,512 181,628 2,314,748 426,855 189,103 2,930,706 Professional services and fees 24,158 37,072 5,214 66,444 4,213 2,317 72,974 Advertising 3,316 5,089 716 9,121 - - 9,121 Office 62,109 39,469 4,733 106,311 - 18,302 124,613 Printing 11,718 - - 11,718 - 5,492 17,210 Information technology 60,326 92,575 13,019 165,920 11,061 6,084 183,065 Occupancy 55,668 69,424 7 125,099 2,101 1,156 128,356 Repairs and maintenance 52,721 73,092 170 125,983 - - 125,983 Staff development 18,631 2,277 - 20,908 - 938 21,846 Interest 27,600 52,175 - 79,775 - - 79,775 Insurance 34,385 40,949 1,210 76,544 5,590 3,074 85,208 Property taxes - 4,018 - 4,018 84 46 4,148 Miscellaneous 9,564 4,841 250 14,655 - 173 14,828 Special events - - 49 49 - 9,827 9,876 Food for residents and catering 13,105 140 - 13,245 - - 13,245 Participant assistance - rental and utilities 1,052 981,774 - 982,826 - - 982,826 Participant assistance - clothing and furniture 124,530 - - 124,530 - - 124,530 Participant assistance - medical services 134,973 2,934 - 137,907 - - 137,907 Participant assistance - COVID hoteling 45,804 210 - 46,014 - - 46,014 Participant assistance - transportation 3,370 27,348 7,712 38,430 - - 38,430 Total expenses before depreciation 1,524,638 2,724,899 214,708 4,464,245 449,904 236,512 5,150,661 Depreciation 118,838 182,367 25,647 326,852 6,749 3,712 337,313 Total expenses by function 1,643,476 2,907,266 240,355 4,791,097 456,653 240,224 5,487,974 Less expenses included with revenues on the statement of activities Cost of direct benefits to donors - - - - - (9,827) (9,827) Total expenses included in the expense section on the statement of activities 1,643,476$ 2,907,266$ 240,355$ 4,791,097$ 456,653$ 230,397$ 5,478,147$ Program Expenses See notes to financial statements. 8 2023 2022 Cash Flows - Operating Activities Change in net assets 3,008,799$ 1,079,942$ Adjustments to reconcile change in net assets to net cash flows - operating activities Depreciation 509,875 337,313 Loan discounts - (317,671) Noncash interest expense 58,046 53,649 Change in value of beneficial interest (211,510) 323,181 Donated property(393,374) - Amortization of ROU assets - finance leases 14,709 1,086 Grants and contributions restricted for long-term purposes - (800,000) Gain on loan extinguishment - (321,438) Loss on sale of property and equipment 3,487 - Changes in operating assets and liabilities Contract and grant receivables 26,831 871,161 Other current assets 46,683 48,536 Accounts payable 19,483 (1,187,648) Accrued expenses (14,123) 38,737 Net cash flows - operating activities 3,068,906 126,848 Cash Flows - Investing Activities Proceeds from sale of property and equipment 19,237 - Purchases of property and equipment (577,917) (838,040) Distributions received from beneficial interest - 121,257 Net cash flows - investing activities (558,680) (716,783) Cash Flows - Financing Activities Grants and contributions restricted for long-term purposes - 800,000 Refund of PPP repayments - 36,302 Payments on line of credit (1,194,077) - Payments on finance lease liabilities (13,504) (1,086) Payments on long-term debt (105,558) (73,916) Net cash flows - financing activities (1,313,139) 761,300 Net change in cash and cash equivalents, unrestricted and restricted 1,197,087 171,365 Cash and Cash Equivalents, Unrestricted and Restricted Beginning of year 853,571 682,206 End of year 2,050,658$ 853,571$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2023 AND 2022 See notes to financial statements. 9 2023 2022 Cash and Cash Equivalents, Unrestricted and Restricted Cash 1,709,650$ 739,403$ Cash equivalents, restricted 341,008 114,168 Total cash and cash equivalents, unrestricted and restricted 2,050,658$ 853,571$ Supplemental Schedule of Noncash Investing and Financing Activities Financing of property and equipment -$ 2,641,648$ ROU assets obtained in exchange for finance lease liabilities -$ 72,415$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2023 AND 2022 See notes to financial statements. 10 SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 11 NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Nature of Organization and Description of Services Shelter House Community Shelter and Transition Services (Shelter House) was incorporated on July 23, 1983, in the state of Iowa as a nonprofit corporation. Through shelter and housing, advocacy, and supportive services, the mission of Shelter House is to prevent and end homelessness in our community. Shelter House envisions being a catalyst and voice for systemic change in the pursuit of homelessness. Shelter House will enact its vision through excellence in service, financial stewardship, and development of strong community partnerships. Shelter House offers the following services: Emergency Services: Emergency Shelter, Coordinated Entry, Veterans' Bridge Housing, Street Outreach, and Eviction Prevention and Diversion: Shelter House provides emergency shelter stays for single adults and families experiencing homelessness in Johnson County and is the designated Coordinated Entry lead for Johnson and Washington Counties in Iowa. The shelter has 70 beds; men and women's dormitories for single adults, and a family wing of six family bedrooms. Bridge Housing services are offered to qualifying Veterans experiencing homelessness. These services are embedded in the shelter facility with 10 of the 70 beds prioritized for veterans. Shelter House provides an additional emergency shelter during the winter months at a satellite location and in its overflow lobby, providing shelter for up to an additional 70 people. Emergency Shelter services have a low barrier for eligibility. The approach is person-centered, and trauma informed. The focus is on harm reduction—minimizing the risks and consequences of certain behaviors rather than prohibiting the behavior itself—and on keeping people alive and safe. Breakfast and dinner are offered daily for current guests of Shelter House's emergency shelter. Health services are offered onsite to guests by volunteers from the University of Iowa College of Nursing and the University of Iowa Hospitals and Clinics Department of Adult Psychiatry on a weekly and bi-weekly basis. Drop-in Services are available daily and include access to showers, laundry, phone, and professional staff. These services are available to anyone from the public in need. Shelter House provides Street Outreach services for the service region. Through Street Outreach, people living in unsheltered locations 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. Eviction Prevention and Diversion services were initiated in response to the pandemic. Shelter House offers direct financial assistance for rent and utility arrears and supports individuals facing a housing crisis by negotiating with landlords to avoid eviction, providing landlord-tenant education and conflict management support; an Eviction Diversion Help Desk is held weekly at the Johnson County Courthouse. Through these efforts combined, households avoid the cost, crisis, and trauma of homelessness. 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: Rapid Rehousing and Permanent Supportive Housing: Rapid Rehousing is a housing-first approach that minimizes the amount of time an individual or family experiences homelessness and helps them find and stabilize in their own housing. Rapid Rehousing solves the immediate crisis of homelessness while connecting families and individuals with community resources to address other needs. 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, moving assistance, and rent assistance for three to six months); and 3) Housing stability case management (connecting participants 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 stability. Shelter House offers Permanent Supportive Housing as an evidence-based intervention serving individuals and families with complex health and behavioral health issues through both scattered site and single site approaches. The Fairweather Lodge is a scattered site model. It is a recovery- focused, peer-driven program for adults experiencing homelessness who have been diagnosed with a serious persistent mental illness, many of whom have a co-occurring disorder. The model is based 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. Cross Park Place and 501 Southgate are single site properties comprised of one-bedroom apartments (24 units and 36 units respectively). These are Housing First interventions—an approach based on the concept that, for an individual experiencing homelessness, the first and primary need is to obtain stable housing (a basic necessity), and that other issues that may affect the individual should be addressed voluntarily and only after housing is obtained. Housing opportunities are exclusively for adults who meet the HUD definition of chronic homelessness who categorically have a disabling condition. Both scattered site and single site Permanent Supportive Housing interventions incorporate comprehensive supportive services including case management, life skills and daily living supports, and support to apply for and maintain mainstream resources. The approach is person- centered, and trauma informed with a focus on harm reduction. Clinical primary and behavioral health care services are embedded in all Permanent Supporting Housing programs. These services are available weekly through longstanding partnerships with community stakeholders. Scattered site Permanent Supportive Housing opportunities were increased by Shelter House in partnership with the Iowa City Housing Authority and area landlords with specialized Vouchers (78 Mainstream Vouchers and 69 Emergency Housing Vouchers) assigned through Coordinated Entry to households indicating need for Permanent Supportive Housing but where no permanent supportive housing unit was otherwise available. Access to case management and supportive services is available, including access to clinical primary and behavioral health care providers. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 13 NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Nature of Organization and Description of Services (Continued) Supported Employment Shelter House provides Supported Employment for tenants in its Permanent Supportive Housing programs through Fresh Starts Janitorial Services, an in-house janitorial company that employs Permanent Supportive Housing tenants and has cleaning contracts throughout the community. Through Supported Employment, people with mental illnesses discover paths of self-sufficiency and recovery, rather than disability and dependence. Supported employment 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 support for as long as required. 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 and Cash Equivalents Restricted cash and cash equivalents include highly liquid investments, with original maturities of three months or less, that are recorded at cost plus accrued interest, which approximates fair value. Shelter House is required to maintain established amounts for capital expenditures and operations of the Cross Park and 501 Southgate facilities. Concentrations Financial instruments which potentially subject Shelter House to concentrations of credit risk consist principally of cash, restricted cash and cash equivalents and receivables. Shelter House places its cash and restricted cash and cash equivalents with a limited number of financial institutions, which at times, 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 50% of its total revenue, gains and other support from the federal government for the years ended December 31, 2023 and 2022. As of December 31, 2023 and 2022, three payors accounted for approximately 76% and 82%, respectively, 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. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 14 NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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, and with an estimated useful life greater than one year, is capitalized. Certain properties are subject to contingencies which restricts Shelter House's ability to sell, assign or transfer its interest in the property. 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, 2023 and 2022. Leases Shelter House recognizes a right-of-use (ROU) asset and lease liability for each operating and finance lease with a term greater than 12 months at the time of lease inception. Shelter House does not record a ROU asset or lease liability for leases with an initial term of 12 months or less but continues to record rent expense on a straight-line basis over the lease term. Options to extend or terminate at the sole discretion of Shelter House are included in the determination of the lease term when they are reasonably certain to be exercised. The lease liability represents the present value of future lease payments over the lease term. Shelter House has elected the practical expedients (1) to discount the lease liability using the risk-free rate for all classes of assets, (2) to use hindsight for assessing the lease term and impairment of the ROU asset, and (3) to not separate lease and non-lease components for all classes of assets. 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. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 15 NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Revenue Recognition Contribution and Grant Revenue Shelter House recognizes contributions when cash, securities or other assets, an unconditional promise to give, or notification of an irrevocable 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, 2023, Shelter House had conditional promises to give of $621,228 for construction rehabilitation and $3,325,125 for 2024 programs. No amounts were recognized in 2023 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, including those with contingent forgivable loans and grant agreements (see Note 8). This revenue is 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. 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. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 16 NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. Subsequent Events Management has evaluated subsequent events through July 19, 2024, the date which the financial statements were available for to be issued. In February 2024, the donated property was sold for $430,000 of which the Shelter House received approximately $393,000 after closing costs. NOTE 2 – LIQUIDITY AND AVAILABILITY Financial assets available for general expenditure, that is, without donor or other restrictions limiting their use, within one year of the statement of financial position date, comprise the following as of December 31, 2023 and 2022: 2023 2022 Cash 1,709,650$ 739,403$ Contract and grant receivables 543,711 570,542 Total financial assets available 2,253,361 1,309,945 Less donor-imposed restrictions on financial assets 560,585 772,171 Less board designated operating reserve 77,203 70,343 Financial assets available within one year 1,615,573$ 467,431$ Shelter House has funds available at the Community Foundation of Johnson County (the Foundation) 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 $275,000 which it could draw upon. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 17 NOTE 3 – CONTRACT AND GRANT RECEIVABLES Contract and grant receivables as of December 31, 2023 and 2022, are as follows: 2023 2022 Federal 98,641$ 75,197$ State 150,271 242,104 Local government 229,929 192,983 United Way 41,532 42,250 Other 23,338 18,008 Total contract and grant receivables 543,711$ 570,542$ NOTE 4 – FUNDS HELD AT COMMUNITY FOUNDATION 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 $1,620,213 and $1,408,703 as of December 31, 2023 and 2022, 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 $602,426 and $520,367 in designated Funds held by the Foundation as of December 31, 2023 and 2022, respectively. NOTE 5 – PROPERTY AND EQUIPMENT Property and equipment consists of the following as of December 31, 2023 and 2022: 2023 2022 Buildings 14,850,985$ 14,294,145$ Furniture and equipment 1,041,710 1,051,493 Land 913,668 913,668 16,806,363 16,259,306 Less accumulated depreciation 2,675,494 2,173,755 Property and equipment, net 14,130,869$ 14,085,551$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 18 NOTE 6 – LINES OF CREDIT Shelter House has a $275,000 variable rate (10.5% as of December 31, 2023) revolving bank line of credit which expires March 2025. Outstanding balances are secured by substantially all assets of Shelter House. As of December 31, 2023 and 2022, there were no amounts outstanding under this line of credit. Shelter House has available a $4,216,942 construction line of credit (7.5% as of December 31, 2023) used to assist in building the 501 Southgate location which expires July 2024. Outstanding balances are secured by substantially all assets of Shelter House. As of December 31, 2023 and 2022, there was $622,571 and $1,816,648 outstanding under this line of credit. NOTE 7 – LONG-TERM DEBT 2023 2022 0% note payable to City of Iowa City, Iowa, dated September 17, 2010, due July 1, 2041, secured by real property located at 1323 and 1325 Ashley Drive, Iowa City, Iowa, payable $278 per month beginning July 1, 2016.74,982$ 78,316$ 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, 2014.40,240 42,616 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, 2014.107,992 114,100 0% note payable to Housing Trust Fund of Johnson County, dated March 25, 2022, due July 31, 2052, secured by real property at 501 Southgate Avenue, Iowa City, Iowa, payable $2,292 per month beginning August 1, 2022.783,750 811,250 SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 19 NOTE 7 – LONG-TERM DEBT (CONTINUED) 2023 2022 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, 2020.350,625 371,875 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 $646 per month beginning January 1, 2020.124,996 132,746 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, 2020.24,908 28,598 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, 2020.15,600 18,000 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 $824 per month beginning April 1, 2022.279,219 289,102 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 $1,772 per month beginning August 1, 2022.606,100 627,367 Total debt 2,408,412$ 2,513,970$ Less imputed interest 782,652 840,698 Less current maturities 105,559 105,559 Total long-term debt 1,520,201$ 1,567,713$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 20 NOTE 7 – LONG-TERM DEBT (CONTINUED) Maturities of long-term debt are as follows: Year Ending December 31 2024 105,559$ 2025 105,559 2026 105,559 2027 105,559 2028 105,559 Thereafter 1,880,617 2,408,412$ 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. 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. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 21 NOTE 8 – CONTINGENCIES (CONTINUED) 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. 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. 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. 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, 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 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, 2053, then the lien against the property will be released by the IFA. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 22 NOTE 8 – CONTINGENCIES (CONTINUED) 820 Cross Park Avenue (Continued) 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. 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. 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. 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 December 31, 2030, without written concurrence of the City. If Shelter House fully complies with the obligations of the grant and the loan through and including December 31, 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 $2,763,720 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, known as FUSE – Housing First 2.0. Under the terms of the grant, Shelter House must provide affordable housing for a period of thirty years from the date of completion (the compliance period). If Shelter House fully complies with the obligations of the grant through December 31, 2052, then the lien against the property will be released by the IFA. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 23 NOTE 8 – CONTINGENCIES (CONTINUED) 501 Southgate Ave (Continued) During the year ended December 31, 2022, the City of Iowa City provided Shelter House with $300,000 of HOME 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, 2022, all HOME funds had been received and used for the construction of 501 Southgate Ave, Iowa City. Under the terms of the HOME grant, Shelter House's period of affordability is 20 years from the date all units are leased. Under the terms of the agreement, Shelter House is prohibited from selling, assigning, or transferring its interest without written concurrence of the City. If Shelter House fully complies with the obligations of the grant through and including December 31, 2042, then the lien against the property will be released by the City. During the year ended December 31, 2022, the IFA provided Shelter House with $500,000 of HOME funds for the construction of affordable permanent supportive rental housing for low income households. As of December 31, 2022, all HOME funds had been received and used for the construction of 501 Southgate Ave, Iowa City. Under the terms of the grant, Shelter House must provide affordable housing for a period of twenty years from the date the Certificate of Occupancy (October 18, 2022) is issued for all units in the property (the compliance period). If Shelter House fully complies with the obligations of the grant through and including October 18, 2042, then the lien against the property will be released by the IFA. NOTE 9 – NET ASSETS WITH DONOR RESTRICTIONS Net assets with donor restrictions as of December 31, 2023 and 2022, are available for the following purposes or periods: 2023 2022 Beneficial interest in assets held by Foundation Operations - original principal 245,719$ 245,719$ Operations - net earnings 370,945 290,489 Employment assistance 1,003,549 872,495 Imputed interest on long-term debt 782,652 840,698 Subsequent year's operations 167,211 159,671 Reserve funds 341,008 114,168 501 Southgate Ave. 393,374 612,500 Property and equipment subject to continuing compliance contingencies 7,750,152 6,766,659 Net assets with donor restrictions 11,054,610$ 9,902,399$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 24 NOTE 10 – DONATED MATERIALS AND CONTRIBUTED SERVICES Donated materials, rental activities, and contributed services are valued at the estimated fair value that Shelter House might incur under normal operating activities. These donated materials, rental activities, and contributed services, which are received without donor restriction, are used to support the programs of Shelter House. During the year ended December 31, 2023, Shelter House received a donation of real estate. The real estate was received without donor restriction as to use and was subsequently sold in February 2024 for approximately $393,000, after closing costs, which is the value assigned to the contribution. The value of donated materials, rental activities, property, and services included as contributions and corresponding assets and expenses, in the accompanying statements for the years ended December 31, 2023 and 2022, is as follows: 2023 2022 Materials 91,830$ 124,530$ Rental activities 25,088 25,088 Property 393,374 - Client counseling services 123,280 134,893 Total in-kind donations 633,572$ 284,511$ NOTE 11 – RETIREMENT PLAN Shelter House maintains a defined contribution 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 4%. For the years ended December 31, 2023 and 2022, Shelter House contributed $41,354 and $19,088, respectively, in matching funds. NOTE 12 – FAIR VALUE MEASUREMENTS The fair value measurement accounting literature establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3: Inputs are unobservable inputs based on Shelter House's own assumptions used to measure assets and liabilities at fair value. SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES NOTES TO FINANCIAL STATEMENTS 25 NOTE 12 – FAIR VALUE MEASUREMENTS (CONTINUED) A financial asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The beneficial interest in assets held by the Community Foundation is valued at the estimated pro rata share of the Foundation's investment pool. The assets held by the Foundation include money market funds, bonds and fixed income funds, and mutual funds. The Foundation is organized and operated as a permanent collection of endowed funds for the benefit of many organizations. Shelter House holds only a portion of the assets held by the Foundation, therefore, Shelter House reports its beneficial interest as a Level 3 asset. The following is a summary of changes in the fair value of Shelter House's Level 3 asset for the years ended December 31, 2023 and 2022: 2023 2022 Balance - beginning of year 1,408,703$ 1,853,141$ Contributions 400 500 Distributions - (88,864) Net earnings 211,110 (356,074) Balance - end of year 1,620,213$ 1,408,703$ 26 SUPPLEMENTARY INFORMATION 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 470,000$ Direct Continuum of Care (CoC) Program 14.267 1,558,037 Passed through Iowa Finance Authority Emergency Solutions Grants Program 14.231 52003-23 201,429 COVID-19 - Emergency Solutions Grants Program 14.231 CV2-52003-20-2 242,865 Housing Trust Fund 14.275 17-NHTF-1285 2,700,000 Housing Trust Fund 14.275 20-NHTF-1071 2,763,720 HOME Investment Partnerships Program 14.239 20PI-HM-101 500,000 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 754,946 COVID-19 - CDBG-Entitlement Cluster 14.218 N/A 66,232 Total CDBG-Entitlement Grants Cluster 821,178 Total U.S Department of Housing and Urban Development 9,374,014 U.S Department of Homeland Security Passed through Johnson County Board of Supervisors COVID-19 - Sheltering alternatives 97.036 N/A 3,577 Direct Emergency Food and Shelter National Board Program 97.024 14,000 U.S. Department of the Treasury Passed through Iowa Finance Authority COVID-19 Emergency Rental Assistance Program 21.023 RRH-ERA2-12 682,954 Passed through City of Iowa City, Iowa State and Local Fiscal Recovery Fund 21.027 N/A 223,150 Passed through Johnson County COVID-19 Coronavirus State and Local Fiscal Recovery Funds 21.027 N/A 66,566 U.S. Department of Veterans Affairs Direct VA Homeless Providers Grant and Per Diem Program 64.024 135,162 Total Expenditures of Federal Awards 10,499,423$ SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED DECEMBER 31, 2023 Federal Expenditures 27 NOTE 1 - BASIS OF PRESENTATION NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE 3 - INDIRECT COST RATE NOTE 4 - LOANS WITH CONTINUING COMPLIANCE REQUIREMENTS Assistance Listing Maturity Outstanding Program / Property Number 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 14.275 12/28/2053 2,700,000 HOME Investment Partnership - 15 Wakefield Ct. 14.239 12/31/2030 70,000 National Housing Trust Fund - 501 Southgate Avenue 14.275 12/31/2052 2,763,720 HOME Investment Partnership - 501 Southgate Avenue 14.239 10/18/2042 500,000 HOME Investment Partnership - 501 Southgate Avenue 14.239 12/31/2042 300,000 Total loans with federal continuing compliance requirements 7,286,948$ 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, 2023, 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, 2023 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, 2023. 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. 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 Board of Directors Shelter House Community Shelter and Transition Services Iowa City, Iowa 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, 2023, 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 July 19, 2024. Report on 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 Report on 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 July 19, 2024 Independent Auditor's Report on Compliance for Each Major Federal Program and Report on Internal Control over Compliance Requited by the Uniform Guidance 31 To the Board of Directors Shelter House Community Shelter and Transition Services Iowa City, Iowa 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, 2023. 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, 2023. 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: x Exercise professional judgment and maintain professional skepticism throughout the audit. x 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. x 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 July 19, 2024 SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31, 2023 34 SECTION I – SUMMARY OF AUDITOR'S RESULTS Financial Statements Type of auditor's report issued Unmodified Internal control over financial reporting x Material weakness(es) identified? No x Significant deficiency(ies) identified? None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs x Material weakness(es) identified? No x 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) 21.023 14.275 14.267 Name of Federal Program(s) or Cluster(s) COVID-19 Emergency Rental Assistance Program Housing Trust Fund Continuum of Care (CoC) Dollar threshold used to distinguish between type A and type B programs $750,000 Auditee qualified as a low-risk auditee? No SHELTER HOUSE COMMUNITY SHELTER AND TRANSITION SERVICES SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31, 2023 35 SECTION II – FINDINGS RELATED TO THE FINANCIAL STATEMENTS None for current year. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None for current year.