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Virginia Enterprise ZoneAgreed Upon ProceduresFor CPA AttestationGrant Year 2021600 E. Main Street, Suite 300Richmond, Virginia 23219(804) ov

TABLE OF CONTENTSTABLE OF CONTENTS . 1ABOUT THIS MANUAL . 2ENTERPRISE ZONE GRANT FUNDING PRIORITIES . 2GRANT YEAR 2021: JCG Timeline . 3GRANT YEAR 2021: RPIG Timeline . 3 ACCESSING THE APPLICATION AND ADDITIONAL INFORMATION . 4AGREED-UPON PROCEDURES ENGAGEMENT. 4CPA ATTESTATION REPORT: FORM REQUIREMENTS. 5SUBMITTAL REQUIREMENTS . 6Submittal of Multiple Applications . .Error!Bookmark not defined. Application Confirmations . 6JOB CREATION GRANTS. 8HIGH UNEMPLOYMENT AREAS . 9 REQUIRED JCG APPLICATION MATERIALS. 10 RECORD KEEPING REQUIREMENTS . 10CPA ATTESTATION RESPONSIBILITIES . 11JCG APPLICANT RESPONSIBILITIES . 11JCG AGREED-UPON PROCEDURES . 12JCG GLOSSARY: DEFINITIONS FOR JOB CREATION GRANTS . 16REAL PROPERTY INVESTMENT GRANTS . 20 REQUIRED AND SUPPLEMENTAL RPIG DOCUMENTATION . 21 RECORD KEEPING REQUIREMENTS . 21CPA ATTESTATION RESPONSIBILITIES . 22RPIG APPLICANT RESPONSIBILITIES . 22RPIG AGREED-UPON PROCEDURES . 23RPIG GLOSSARY: DEFINITIONS FOR REAL PROPERTY INVESTMENT GRANTS . 30Agreed Upon Procedures Manual 2021Page 1

ABOUT THIS MANUALThis document provides instructions for CPAs performing the Agreed-Upon Procedures outlined by the Department ofHousing and Community Development. These procedures test and report on the assertion of a business or qualifiedzone investor as to their qualification to receive Job Creation Grants (JCGs) or Real Property Investment Grants (RPIGs).The findings from these procedures are reported in the CPA Attestation Report. This report is a required applicationcomponent for both the Job Creation Grant and Real Property Investment Grant.Agreed-Upon Procedures for the Job Creation Grant are provided in the first half of this document and in the second halffor the Real Property Investment Grant. In an effort to provide more user-friendly instructions, specific icons have beenused throughout the manual. Frequently asked questions have been included within each grant section and are denoted by a question marksymbol within a text box. Details pertaining to required application materials (including the JCG Online Worksheet) have been indicated by . Details pertaining to the timeline for submission are indicated by . Lastly, for your convenience, the definitions of key terms are included in the glossary on Pages 16-18 (JCG) and30-32 (RPIG). These terms are defined by statute and program regulations, and must be followed.Each respective grant section contains information regarding: An overview of the grant amount and eligibility criteria; Required grant documentation; The CPA’s attestation responsibilities; The applicant firm’s responsibilities; And purpose and procedures for each attestation requirement.As provided in §59.1-547 of the Code of Virginia, business firms with Base Year employment of 100 or fewerpermanent full-time positions that create 25 or fewer grant eligible positions are exempt from the attestationrequirement for that qualification year. However, the firm is not exempt from completing the required Job CreationGrant Worksheet. The JCG Worksheet must be completed each year the firm seeks qualification for the JCG.ENTERPRISE ZONE GRANT FUNDING PRIORITIESEnterprise Zone grants are subject to an annual appropriation by the General Assembly. By statute, Job Creation Grantsreceive funding priority. After fully funding the JCGs, the remaining funds will be allocated to the Real PropertyInvestment Grants. The amount paid to each RPIG applicant will be prorated proportionally should grant requestsexceed the remaining funds. In Grant Year 2019, RPIGs were funded at a prorated amount of approximately 84 cents perqualified dollar requested. In Grant Year 2020, RPIGs were funded at a prorated amount of approximately 88 cents perqualified dollar requested.Agreed Upon Procedures Manual 2021Page 2

GRANT YEAR 2021: JCG TIMELINEGRANT YEAR 2021: RPIG TIMELINEAgreed Upon Procedures Manual 2021Page 3

ACCESSING THE APPLICATION AND ADDITIONAL INFORMATIONThe Qualified Zone Investor is expected to complete and submit all required application components. In the past, bothhard copy and electronic submission were required. Hard copies are no longer accepted. The application form,supplemental materials, and all required attachments, including the JCG Online Worksheet, the CPA Attestation Report,Final Placed-in-Service document, and supplemental documents must be submitted electronically through theSubmission System. The EZ Application Submission System site can be found .As part of the application process, an independent Certified Public Accountant (CPA), licensed in Virginia, must attest tothese application materials. The CPA Attestation Report is required and must be submitted with RPIG applications andmost JCG applications, unless otherwise noted in this manual. The Agreed upon Procedures for CPA Attestations andAttestation Report Templates are available on the EZ Application Submission System.AGREED-UPON PROCEDURES ENGAGEMENTAs required by statute, a CPA must perform the Agreed-Upon Procedures outlined by DHCD in this document. The CPAselected to perform these procedures must be independent of the company and currently licensed in the State ofVirginia. The CPA will review information, apply tests, and will report on these procedures and their findings in theattestation report signed and submitted by the CPA on behalf of their client.The Attestation Report Form for both grant programs is available on the EZ Online Submission site.The Agreed-Upon Procedures Engagement outlinesspecific procedures to be performed on a subject matter whereby a CPA is engaged by a client to issue areport of findings. Distribution of the report based onHow is an attestation different from an audit?such an engagement is limited to specific, identifiedusers (in this case, the applicant and DHCD). GuidanceThe American Institute of Certified Public Accountants (AICPA) hasfor the performance of such engagements can bepromulgated standards for attestation engagements, other thanfound in AT Section 201 of the American Institute ofthose involving audits of financial statements, in the “AT” sectionCertified Public Accountants (AICPA) Professionalof professional standards.Standards. Under the Enterprise Zone Statute,Enterprise Zone grant applicants must hire anindependent CPA currently licensed in Virginia to perform the Agreed-Upon Procedures established by DHCD. The CPA’sattestation report must be submitted online to DHCD with the grant application materials by the April 1st deadline inorder for the application to be considered on time.Agreed Upon Procedures Manual 2021Page 4

CPA ATTESTATION REPORT: FORM REQUIREMENTS Findings from the Agreed-Upon Procedures are to be reported on the required CPA Attestation Report forms. Theforms have been created to ensure that all CPAs are reporting on the procedure as indicated. The forms and use of theforms have the support of the VA Society of CPAs. CPAs must use the Attestation Report templates provided by DHCD todocument findings. Attestation report forms for both the Real Property Investment Grant and the Job Creation Grant areavailable for download on the EZ Online Submission System site under the CPA Attestation Report header.The link to the EZ Online Submission System to access the appropriate forms is included /.The attestation report that accompanies the application must be submitted on the appropriate DHCD AttestationReport form or the application will be deemed incomplete. Do not retype the procedures or submit findings using anydocument other than what has been provided by DHCD. Applications will have to be resubmitted using the correct formin order to be processed.Additionally, any reports submitted that do not state the findings for each procedure are also considered incomplete.The AICPA professional standards set forth in Section AT 201.25, states that the “practitioner should report all findingsfrom the application of the Agreed-Upon Procedures.” Furthermore, Section AT 201.26 specifies that “a practitionershould avoid vague or ambiguous language in reporting findings.” Please see the examples of appropriate andinappropriate descriptions of findings within Section AT 201.26.Based on the professional standards set forth, providing one’s initials and/or “no findings” by each procedure does notconstitute an adequate description of findings. In instances where no findings are reported or only the CPA’s initials arelisted as the findings, the report will be deemed incomplete and the application will not be processed until the report isre-submitted.Agreed Upon Procedures Manual 2021Page 5

SUBMITTAL REQUIREMENTS All applications and additional attachments must be submitted through the system no later than 11:59PM, April 1,2022 (EDT). Any application submitted without the required CPA Attestation Report or submitted after the deadline will beconsidered late. Such applications are held until DHCD determines that funds remain after fully funding on-timeapplications. At such time, DHCD will review and process late applications on a first-come, first served basis. Please keepin mind that DHCD is unable to pre-qualify any applicants. Once the “Submit” button is clicked, applicants will be automatically prompted to print a PDF of the completedapplication for their own records. If submitting more than one application, each grant application and associated materials must be submittedseparately via electronic submission. Application ConfirmationsEmail confirmations will be sent throughout the submittal process to keep the applicant informed of the status of theapplication and to bring any submittal issues to the applicant’s attention prior to certain deadlines. Applicants willreceive confirmation emails in the following order:1. Successful submission of the online application This email will indicate the date and time of the submittal. DHCD recommends applicants print the application at thistime and retain confirmation emails with their grant records. If the applicant has entered all necessary information intothe system and has submitted all required documents as electronic attachments, this notification is the only one thatwill be received.If you do not receive a confirmation email, your application was not received. If you received an error message, yourapplication was not received. Please contact staff immediately if you encounter technical issues with the onlineapplication system. ([email protected])2. Notification of DeficienciesDHCD will notify applicants by May 15th in cases where any additional information is required due to applicationdeficiencies. The email will be sent from the following address: [email protected] Please reply directly to thisaddress when responding to the email.3. Notification of Resolution of DeficienciesApplicants must resolve any identified deficiencies by June 1st. Once the applicant provides the requested information, afinal email will be sent to the applicant confirming DHCD’s receipt of the requested material.Agreed Upon Procedures Manual 2021Page 6

Job Creation GrantAgreed Upon ProceduresFor CPA AttestationGrant Year 2021Agreed Upon Procedures Manual 2021Page 7

JOB CREATION GRANTSJob Creation Grants are based on net new permanent full-time job creation exceeding a four-job threshold.Positions over the four-job threshold must meet wage and health benefits requirements to be eligible. EligibilityRequirements IneligibleApplicants Grant Term GrantCalculations The business must be located within the boundaries of an Enterprise Zone.The business must create at least four net new permanent full-time positionsover the base calendar year. Base Year employment can be either of the two calendar yearsimmediately preceding the first grant year. Base Year employment isestablished in the first grant application and remains static for the fullfive-year period.These positions must meet wage and health benefit requirements. Positions must earn at least 175% of the Federal Minimum Wage 1,150% in High Unemployment Areas. Firms must offer to cover at least 50% of employee’s health insurancepremium.The following entities are prohibited from applying for the JCG: Units of local, state, or federal government Non-profit, other than those classified as NAICS 813910 and 813920.The following entities and positions are prohibited from applying for the JCG: Personal service, food and beverage, and retail positionsFive-year periods beginning with the first grant year in which a JCG wasawarded. To be eligible for the JCG in years two through five, the firm mustmaintain or increase the number of eligible permanent full-timepositions (above the four-job threshold) over base year employment.Firms may apply for a subsequent five-year period given they meet the granteligibility requirements. See Appendix A for more information on subsequentfive-year periods.Job Creation Grant awards are determined by the wages paid and the numberof months positions were filled during the Grant Year.Grants are available in amounts of: Up to 500 per grant eligible position filled by an employee earning atleast 175% (150% in HUAs) of the FMW who was offered healthbenefits. Up to 800 per grant eligible position filled by an employee earning200% of the FMW who was offered health benefits.Firms can receive grants for up to 350 positions per year.The Federal Minimum Wage (FMW) is currently 7.25 per hour. In order to be eligible for the Job Creation Grant, net new positionsmust be paid at least 12.69/hour ( 10.88 in HUAs) to be eligible for the 500 grant and at least 14.50/hour to be eligible for the 800 grant.1Agreed Upon Procedures Manual 2021Page 8

HIGH UNEMPLOYMENT AREASAny business applying as an HUA applicant must use Form EZ-JCG-HUA and fill out the JCG-HUA Worksheet. Thesedocuments are specifically tailored to accommodate the reduced wage rate threshold.LocalityZone #Brunswick County*Northumberland County*City of Danville*Dickenson County (Clintwood & Haysi)City of Emporia*City of HopewellTazewell CountyNorthampton County*City of PetersburgWise County32B50C1 &57B49A43B94426B1052*The following communities in joint zones are NOT HUAs: Mecklenburg, Lancaster, Richmond, Westmoreland,Pittsylvania, Greensville, and Accomack Counties and the towns of Kilmarnock and Warsaw. Businesses in thesecommunities are not eligible for the reduced wage threshold. Source: DHCD, based on the LAUS Unit and Bureau ofLabor Statistics 2020 annual Virginia Unemployment Report.The following localities are no longer considered HUA zones:City of FranklinCity of GalaxCity of CovingtonCity of MartinsvilleGreensville CountyHalifax CountyHenry CountyLancaster County (Kilmarnock)Mecklenburg CountyPage CountyCity of PortsmouthPrince Edward CountyRichmond CountyBusinesses in these zones that have previously applied for the JCG as HUA applicants may continue to qualifyfor the 500 grant at the reduced wage threshold of 10.88/hour for the remainder of their 5-year grant period.However, any new business applying for the JCG in these zones must pay a wage rate threshold of at least 175%of the FMW ( 12.69/hour) to be eligible for the grant.Agreed Upon Procedures Manual 2021Page 9

REQUIRED JCG APPLICATION MATERIALS Enterprise Zone Grants applications are now accepted via electronic submission through the EZ ApplicationSubmission System. Form EZ-JCG or Form EZ-JCG-HUA must be submitted online, along with all requiredattachments, including the JCG/JCG-HUA Worksheet, the CPA Attestation Report, Final Placed-in-Servicedocument, and supplemental documents. Hard copies are not accepted. All applications and additional attachments must be submitted through the system no later than 11:59PM,April 1, 2022 (EDT).MaterialsJob Creation Grant Submission MaterialsSubmission DeadlineTo be uploaded: Form EZ-JCG or EZ-JCG-HUA Commonwealth of Virginia Form W-9 JCG Worksheet Sheet * CPA Attestation Report*In Year 1, all firms are required to submit Sheets 1 &2 from the JCG Worksheet. In Years 2-5, only firmsthat are exempt from the attestation are required tosubmit the JCG Worksheet Sheets 1 & 2.All application materials are due to DHCD onApril 1, 2022Applicants must submit their application and all requiredsupporting documentation electronically through the EZOnline Submission System. Hard copies will NOT beaccepted.RECORD KEEPING REQUIREMENTSThe Department may at any time review an applicant’s records related to qualification under this section to assurethat information provided in the application process is accurate. Qualified Zone Investors shall maintain alldocumentation regarding JCG qualification for a minimum of three years following the receipt of the grant.All JCG grantees are monitored for their first Grant Year. Job Creation Grants that do not have adequatedocumentation regarding permanent full-time positions, report to work criteria, wage rates, or the provision ofhealth benefits may be subject to repayment. The digital version along with a hard copy print out must be kepton file and accessible with other grant request records.10

CPA ATTESTATION RESPONSIBILITIESThe Job Creation Grant attestation procedures outlined in the following pages are structured to ensure that: The company is not a personal service, food or beverage, or retail establishment, as such businesses areprohibited from applying for the grant; The company only includes permanent full-time positions (PFTP) in the Base Year and Grant Year on theJCG/JCG-HUA Worksheet and that the wage rates for the net new equivalent PFTPs in the Grant Year areaccurately indicated; and Employment dates and wage rates for positions listed on the JCG/JCG-HUA Worksheet are accurate andidentical to the information on payroll and personnel documentation. Can the CPA prepare the application and accompanying materials and attest?Professional standards (AICPA) provide that a CPA can offer assistance provided theCPA does not assume management responsibilities, such as making managementdecisions or performing any management functions. The decision to follow any adviceprovided remains with management of the entity.JCG APPLICANT RESPONSIBILITIESThe business firm will provide the CPA with the following: A JCG/JCG-HUA Online Worksheet that includes all employees filling permanent full-time positions in theBase Year (in alphabetical order) followed by all employees filling permanent full-time positions in theGrant Year (in alphabetical order). Failure to provide a complete and accurate list of all employees, thedates they were employed, and their wage rates may result in an under- or overpayment of grant funds.The Commonwealth will require the grantee to return any overpayment to the Treasurer of Virginia. Employees receiving raises (or decreases) in pay during the Grant Year must be listed on aseparate line for each wage fluctuation. Applicants may not use their average wage rate ORending wage rate to represent an employee’s annual wages. I-9s and paystub/payroll records indicating the first work date, last work date, and wage rates in the BaseYear and Grant Year for each employee listed on the JCG Online Worksheet, where applicable. Health benefits documentation (including written benefit waivers). The business firm representative must provide his/her signature verifying the following: No retail, food or beverage, or personal service positions are listed on the worksheet. All employees listed are permanent full-time positions and have not been churned from anotherlocation within the Commonwealth of Virginia. All employees listed on the worksheet (Grant & Base Year) meet the report to work requirement.11

JCG AGREED-UPON PROCEDURESProcedure 1 - Attestation Regarding Prohibited PositionsThe CPA will read the NAICS code listed on the Form EZ-JCG (Part I, Box 5) to determine that the NAICS code listedon the Form EZ-JCG is one other than NAICS 441-454 (retail); 722 (food/beverage) or 812 (personal service), whichare NOT eligible to receive JCG. A business is not a retail business, but has retail positions.Is this firm eligible for the Job Creation Grant?Yes, but only positions that are not retail, food/beverage, or personal service can beincluded in the JCG/JCG-HUA Worksheet for the purposes of qualifying for the JobCreation Grant.Procedure 2 - Attestation of Permanent Full-Time Positions on JCG/JCG-HUA WorksheetThe CPA will follow the sampling procedure explained below to obtain employment documentation and theJCG/JCG-HUA Worksheet for Employees Filling Permanent Full-Time Positions (EF- PFTPs) during the Base Yearand/or Grant Year. The CPA will report the applicable procedure he/she followed in establishing a sample ofpermanent full time positions:Rules for Sampling: The following procedures should be used in establishing a sample of PFTPs: Firms with 100 or fewer Employees Filling Permanent Full-time Positions (EF-PFTPs)The CPA will obtain a random sample of the documentation for 20 EF-PFTPs on the worksheet and readto ensure the start/end work dates for such employees agrees without exception to the informationprovided on payroll records using the random sampling techniques established below. If there are 20 orfewer EF-PFTPs, the documentation and worksheet calculations for all employees will be included in theCPA’s sample. Firms with More than 100 Employees Filling Permanent Full-time Positions (EF-PFTPs)For firms with more than 100 EF-PFTPs on the worksheet, the CPA will obtain a random sampling of payrollrecords and health benefits documentation for 20 percent of all employees shown. The CPA will read toensure the start/end work dates for such employees agrees without exception to the informationprovided on payroll records using the random sampling techniques established below.Random SamplingThe CPA will obtain a random sampling for the greater of 20 employees or 20 percent of employees listed on theworksheet based on the above criteria. The random sampling will be based on the use of a table of randomnumbers. The CPA will first assign each employee listed on the JCG Worksheet a unique identification number.Then, the CPA will select cases for the 20 employees or 20 percent sample when their identification numbercorresponds to the number chosen from the table. The CPA will indicate in Column B of the JCG Worksheet whichemployees have been selected to be sampled. The CPA will stop selecting cases when they have reached thedesired sample size. If an identification number is selected more than once, the CPA will ignore the repeats.12

Non-reconciled errorsShould the CPA find any non-reconcilable errors (any unexplained difference between information on thedocumentation provided and what is entered on the Worksheet) in the sample population, the CPA shouldrepeatedly select another 20 employees or 20 percent sample from the original population until the subsequentsample produces no non-reconcilable errors. The CPA shall submit by name any non-reconcilable errors foundduring this procedure in the attestation report. If the client chooses to revise the Worksheet and application toremove the non-reconcilable item(s), the CPA shall read to ensure that the revised Worksheet has omitted thenon-reconcilable item(s) and that there are no resulting changes from the original Online Worksheet.Procedure 3 - Attestation of Required DocumentationFor each employee from the sample population, the CPA will compare the JCG/JCG-HUA Online Worksheet forBase and Grant Year employment information listed on the Worksheet to the required documentation (I-9, firstpayroll, last payroll for Base Year and/or Grant Year, and health benefits enrollment information) provided by thecompany. In the case of a business in a qualification year other than its first year, the sample should only includethe Grant Year information. The Base Year employment should only be sampled in the first Grant Year along withGrant Year employment. Employees should only be listed on the JCG Online Worksheet one time UNLESS: They have worked two or more separate times in the Base or Grant Year.The grant-year employee’s wage fluctuated during the Grant Year.To accurately calculate grant awards, separate rows should be included showing thestart date and end date for each separate employment period or wage fluctuation(grant year employees only) based on the employee’s I-9 or payroll recorddocumentation.Since the JCG/JCG-HUA Online Worksheet is equipped with formulas to apportionthe eligible months employees were earning at least 175% of the FMW or 150% inHUAs, please note that employees should only be listed more than once if thebusiness firm increased/decreased the employee’s wage rate (irrespective of theincrease in the federal minimum wage).A. I-9: The CPA will obtain the sample population’s I-9s to determine the Base Year and/or Grant Year employee’sname, social security number, address, and start date of employment. In cases where the I-9 was signed priorto the actual hire date (for example, required as part of the job application), the CPA will read and comparethe I-9 in conjunction with the supporting employee payroll documentation and attest to the hire date of theemployee.B. Payroll records for Base Year and/or Grant Year employees (first and last payroll records for the time theemployee worked in the Base Year and/or Grant Year). The CPA will:A. Compare the employee’s name and employee number (where assigned) with the information included onthe Worksheet.B. Read and compare records to attest that the first and last work date for each employee within Base Yearand/or Grant Year correspond to those dates listed for the employee on the Worksheet.13

C. Compare the wage rates as indicated on the first and last payroll records for those sampled employeeshired in the Grant Year (i.e. net new employees) with the specific wage rates listed in column O of the JCGWorksheet and report any differences.D. If an employee received raises (or a decrease in pay) during the Grant Year, the employee MUST belisted on a separate line for each wage fluctuation. DO NOT use their average wage rate OR endingwage rate. The CPA will read the Worksheet and determine that employees with wage fluctuationsduring the Grant Year have been listed in the spreadsheet as many times as payroll records showwage fluctuations.For sampled employees with information in column(s) P, Q, R and/or S, the CPA will read the employmentdocumentation to determine that the employees reflected on the Worksheet are permanent and fulltime.E. If the sampled employee’s wage rate was converted from salary to hourly, the CPA will determine that itis mathematically correct by dividing the annual salary, inclusive of shift premiums and commissions by1,820 hours.C. Health benefits information:A. The CPA will obtain and read the signed health benefits enrollment agreements and compare insurancecoverage materials indicating employer contribution to payroll documents indicating employeecontribution. The CPA should compare the individual employee information on these documents to theinformation presented in Column N indicating they were offered/received health benefits and for whichwages are listed in Column O (as such employees are net new over the Base Year employment), and reporton these findings. The CPA should report all instances where the firm does not offer to c

Virginia Enterprise Zone Agreed Upon Procedures For CPA Attestation Draft Grant Year 2021 600 E. Main Street, Suite 300 Richmond, Virginia 23219 (804) 371-7171 [email protected] www.dhcd.virginia.gov