Hearthstone Housing Foundation

“1. Hearthstone Housing Foundations Audit and Finance Committee will receive a copy of the draft tax return prior to the filing due date (Nov 15).2. Upon review, changes and comments will be communicated by the Committee to the Executive Director and the Tax Preparer.”

“the organization regularly & consistently monitors and enforces compliance with the conflicts of interest policy through periodic reviews as addressed in Articles VIII and IX.Article VIII PERIODIC REVIEWS:To ensure that the Corporation operates in a manner consistent with its charitable purposes and that it does not engage in activities that could jeopardize its status as an organization exempt from federal income tax, periodic reviews shall be conducted. The periodic reviews shall, at a minimum include the following subjects:a) Whether compensation arrangements and benefits are reasonable and are the result of arm's-length bargaining.b) Whether financial transactions result in inurement or impermissible private benefit.c) Whether partnership and joint venture arrangements conform to written policies, are properly recorded, reflect reasonable payments for goods and services, further the Corporation's charitable purposes and do not result in inurement or impermissible private benefit.Article IX USE OF OUTSIDE EXPERTS:In conducting the periodic reviews provided for in Article VIII, the Corporation may, but need not, use outside advisors. If outside experts are used their use shall not relieve the Board of its responsibility for ensuring that periodic reviews are conducted.”

“The Board or committee shall gather and rely upon appropriate data as to comparability prior to making any determination as to whether a particular transaction will generate an excess benefit. Appropriate comparability data shall include:i. In the case of compensation or service agreements or transactions: examination of compensation levels paid by similarly situated organizations, whether or not tax-exempt, the functionality of comparable positions, the availability of similar services in the Corporation's geographic area, current compensation surveys compiled by independent firms and any written offers from similar institutions competing for the individual.ALSO, SEE DETAIL IN THE ANSWER TO LINE 12C REGARDING PERIODIC REVIEWS.”

“The organization makes copies of its governing documents, conflict of interest policy, and financial statements and provides them to the public upon written request.”

“Gaap/tax difference-bad debt adjustment = $210583”

“Gaap/tax differences in amounts from k-1 = -$38922”

“The organization has general partnership interests in 155 limited partnerships. The k-1s use tax basis for income/(loss) and expense items, but the ending capital accounts are on gaap basis. These tax/gaap differences cause an adjustment to fund balance as follows:fund balance at 1/1/15 1,804,423.2015 net income 262,924.gaap/tax difference-from k-1 (38,922).gaap/tax difference-bad debt recovery adj 210,583.fund balance at 12/31/15 2,239,008.”