Mini Audit in Lieu of Full Audit

In an effort to help ease this obstacle, NEF implemented a ONE-TIME mini-audit in lieu of a full financial audit option. A mini-audit is less in scope than a full financial audit as it is the performance of substantive procedures on material account balances of the Partnership in order to substantiate our investment recorded on the balance sheet at the fund-level. This great opportunity is only available to Partnerships that begin and completely place in service during the fourth quarter.

NEF will contact each mini-audit eligible Partnership directly via email. The Partnership will be asked to declare its election to participate in the mini audit program OR engage a NEF approved CPA to prepare a full financial audit by the submission deadline to avoid late reporting fees as provided for in the respective Limited Partnership Agreement/Operating Agreement. The late reporting fee will not be assessed for Partnerships electing the mini-audit option provided there is complete cooperation in submitting the mini-audit work papers and other documentation requested by the NEF Fund Auditor as well as the submission of the final cost certification and final tax return by the deadline.

PLEASE NOTE THE FOLLOWING KEY POINTS

• NEF will determine eligibility for this option and contact all eligible Partnerships directly via e-mail
• The mini-audit will be completed by NEF’s Fund Auditor at the Partnership’s expense (estimated cost will range between $2,500 and $5,000 give or take depending on the complexity, time involved and content of information received). An audit opinion will NOT be issued by the NEF fund auditor(s) at the completion of the mini-audit.
• The Partnership will still need to engage a CPA to prepare the Cost Certification as soon as possible and the Tax Return by the submission deadline.
• An audit will not be required for the fiscal year since NEF’s Fund Auditor(s) will perform a mini-audit of the Partnership’s financials unless required by the Partnership’s lender or regulatory agency. The goal is to have the Partnership devote its time to the completion of the cost certification and tax return as soon as possible.
• Completing the cost certification as soon as possible may reduce the amount of support NEF’s Fund Auditor(s) will need to perform the mini-audit. In addition, it will prevent delays in the preparation of the tax return for the Partnership.
• The tax return deadline will not change and should be followed in accordance with the Limited Partnership Agreement/Operating Agreement. Please notify the Financial Analysis Department as soon as possible if there are unavoidable delays that will prevent submission by the deadline. Also, the Partnership must provide detailed estimates of tax losses and low income housing tax credits to NEF.

MINI-AUDIT WORKPAPERS

The following mini-audit work papers, as they apply, should be uploaded via the CPA Portal as “Mini Audit Work Papers” by the submission deadline to allow sufficient time for the Partnership’s CPA to prepare and submit the Tax Return by the deadline.

1. Partnership Trial Balance as of fiscal year end date (10/31/xx or 12/31/xx)
2. Partnership General Ledger from Inception through the fiscal year end date (10/31/xx or 12/31/xx)
3. Partnership Bank Statements & Reconciliations for all cash accounts as of the fiscal year end date (10/31/xx or 12/31/xx)
4. Partnership Loan Statements (or Loan Agreements, if soft debt) for all loans as of the fiscal year end date (10/31/xx or 12/31/xx)
5. Partnership Material Fixed Asset Additions
6. Partnership Security Deposit listing as of the fiscal year end date (10/31/xx or 12/31/xx)
7. Partnership Accounts Receivable and Other Receivable schedules as of the fiscal year end date (10/31/xx or 12/31/xx)
8. Partnership Accounts Payable and Other Payable schedules as of the fiscal year end date (10/31/xx or 12/31/xx)
9. Partnership Rent Roll as of the twelfth period (October or December)
10. Partnership Insurance and Tax Invoices
11. Partnership Legal Invoices
12. Partnership Material Expenses
13. Partnership GAAP Depreciation and Amortization Schedules as of the fiscal year end date (10/31/xx or 12/31/xx)
14. Partnership Loan Closing Statement
15. Partnership Final AIA document completed for the fiscal year ended
16. Partnership First AIA document completed in the next fiscal year
17. Additional documentation as deemed necessary

Tracey LeGrand will be the liaison between NEF’s Fund Auditor(s) and the Partnership to facilitate the mini-audit process. If you have questions or concerns regarding this process please contact Tracey rather than contacting the NEF Asset Manager. We are also available to discuss this option, questions and/or concerns you may have regarding this great opportunity, if needed.