FINANCIAL STATEMENTS (Together with Independent Auditors Report) YEARS ENDED SEPTEMBER 30, 2014 AND 2013 AND AUDIT REPORTS AND SCHEDULE RELATED TO OFF

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63 FINANCIAL STATEMENTS (Together with Independent Auditors Report) YEARS ENDED SEPTEMBER 30, 2014 AND 2013 AND AUDIT REPORTS AND SCHEDULE RELATED TO OFFICE OF MANAGEMENT AND BUDGET CIRCULAR A-133 FOR THE YEAR ENDED SEPTEMBER 30, 2014

64 WOMEN S PRISON ASSOCIATION AND HOME FINANCIAL STATEMENTS (Together with Independent Auditors Report) FOR THE YEARS ENDED SEPTEMBER 30, 2014 AND 2013 AND AUDIT REPORTS AND SCHEDULE RELATED TO OFFICE OF MANAGEMENT AND BUDGET CIRCULAR A-133 FOR THE YEAR ENDED SEPTEMBER 30, 2014 CONTENTS Page Independent Auditors' Report Financial Statements: Statements of Financial Position... 3 Statements of Activities... 4 Statements of Functional Expenses Statements of Cash Flows... 7 Notes to Financial Statements OMB A-133: Schedule of Expenditures of Federal Awards Independent Auditors 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 Independent Auditors Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance in Accordance with OMB Circular A Schedule of Findings and Questioned Costs Summary Schedule of Prior Audit Findings Supplementary Information: Administration for Children s Services - Family Rehabilitation Program/Intensive Preventive Services (Fiscal year ended 09/30/2014): Statement of Revenues and Expenditures Schedule of Salaries Schedule of Fringe Benefits Schedule of Fixed Assets Inventory Schedule of Questioned Costs Schedule of Quantitative Program Results... 28

65 Marks Paneth LLP New York City 685 Third Avenue Washington, DC New York, NY New Jersey P Long Island F Westchester Cayman Islands INDEPENDENT AUDITORS' REPORT The Board of Directors Women s Prison Association and Home Report on the Financial Statements We have audited the accompanying financial statements of Women s Prison Association and Home ( WPA ) which comprises the statements of financial position as of September 30, 2014 and 2013, and the related statements of activities, functional expenses and cash flows for the years then ended, and the notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes 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. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to WPA s preparation and fair presentation of the financial statements 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 WPA s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of WPA as of September 30, 2014 and 2013, 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.

66 Other Matters 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 for the year ended September 30, 2014 (shown on page 17), is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations and other supplemental schedules (shown on pages 23-28), are presented for purposes of additional analysis as required by New York City Administration for Children s Services for the fiscal year ended September 30, 2014 and are 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 audits 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 information 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 June 25, 2015, on our consideration of WPA s 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 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 WPA s internal control over financial reporting and compliance. New York, NY June 25, 2015

67 WOMEN'S PRISON ASSOCIATION AND HOME STATEMENTS OF FINANCIAL POSITION AS OF SEPTEMBER 30, 2014 AND ASSETS Cash and cash equivalents (Notes 2C and 12) $ 24,888 $ 101,242 Investments (Notes 2E, 2M, 3, 4 and 12) 209, ,906 Contract and grant receivables (Note 2D) 514, ,447 Pledge receivable (Note 2D) 53,380 66,150 Prepaid expenses and other assets 103, ,192 Property and equipment, net (Notes 2F, 5 and 8) 506, ,558 TOTAL ASSETS $ 1,412,106 $ 1,597,495 LIABILITIES Accounts payable and accrued expenses $ 464,619 $ 548,552 Note payable (Note 7) - 4,659 Contract advances (Notes 2G and 6) 417, ,913 Mortgage payable (Note 8) 3,774,667 3,774,667 TOTAL LIABILITIES 4,656,703 4,739,791 COMMITMENTS AND CONTINGENCIES (Note 13) NET ASSETS / (DEFICIT) (Note 2H): Unrestricted (Notes 12 and 14): Invested in property and equipment 506, ,899 Operating (4,438,823) (4,246,008) Total unrestricted (3,932,797) (3,806,109) Temporarily restricted (Notes 11 and 12) 218, ,737 Permanently restricted (Note 12) 470, ,076 TOTAL NET DEFICIT (3,244,597) (3,142,296) TOTAL LIABILITIES AND NET DEFICIT $ 1,412,106 $ 1,597,495 The accompanying notes are an integral part of these financial statements

68 WOMEN'S PRISON ASSOCIATION AND HOME STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED SEPTEMBER 30, 2014 AND 2013 Temporarily Permanently Total Temporarily Permanently Total Unrestricted Restricted Restricted 2014 Unrestricted Restricted Restricted 2013 PUBLIC SUPPORT AND REVENUE: Public Support: Contributions and grants (Notes 2H, 2I, 2J and 2K) $ 665,114 $ 125,000 $ - $ 790,114 $ 543,513 $ 75,000 $ - $ 618,513 Government grants 4,291, ,291,663 4,122, ,122,987 Special events, net of direct expenses $35,967 in 2014 and $34,998 in 2013 (Note 2N) 136, , , ,602 Interest and dividend income 555 5,598-6,153 1,229 14,101-15,330 Unrealized loss on investments (8,194) (23,602) - (31,796) (18,058) (15,554) - (33,612) Realized gain on sale of investments 18,416 23,282-41,698 6,195 59,791-65,986 Rental income , ,000 Miscellaneous 37, ,990 3, ,171 Net assets released from restrictions satisfaction of program restrictions (Note 11) 105,891 (105,891) ,773 (257,773) - - TOTAL PUBLIC SUPPORT AND REVENUE 5,247,803 24,387-5,272,190 5,030,412 (124,435) - 4,905,977 EXPENSES: (Note 2L) Program Services: Direct client services 3,922, ,922,040 4,095, ,095,004 Public outreach and education 280, , , ,423 Total program services 4,202, ,202,863 4,439, ,439,427 Supporting Services: Management and general 931, , , ,777 Fundraising 240, , , ,609 Total supporting services 1,171, ,171,628 1,200, ,200,386 TOTAL EXPENSES 5,374, ,374,491 5,639, ,639,813 CHANGE IN NET ASSETS (Note 14) (126,688) 24,387 - (102,301) (609,401) (124,435) - (733,836) Net (deficit) / assets - beginning of year (3,806,109) 193, ,076 (3,142,296) (3,196,708) 318, ,076 (2,408,460) NET (DEFICIT) / ASSETS - END OF YEAR $ (3,932,797) $ 218,124 $ 470,076 $ (3,244,597) $ (3,806,109) $ 193,737 $ 470,076 $ (3,142,296) The accompanying notes are an integral part of these financial statements

69 WOMEN'S PRISON ASSOCIATION AND HOME STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED SEPTEMBER 30, 2014 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2013) Program Services Supporting Services Public Direct Outreach Total Management Total Client and Program and Fund Supporting Total Total Services Education Services General Raising Services Salaries $ 2,128,518 $ 177,193 $ 2,305,711 $ 572,462 $ 169,215 $ 741,677 $ 3,047,388 $ 3,101,250 Payroll taxes and employee benefits 786,910 45, ,547 86,706 24, , , ,457 Total Salaries and Related Costs 2,915, ,830 3,138, , , ,485 3,990,743 3,971,707 Rent (Note 13) 94,202 1,968 96,170 14,857 2,249 17, , ,397 Program supplies 61, , ,367 35,589 Program service consultants 9,383 2,160 11, ,543 11,598 Information and technology 185,804 18, ,093 17,411 14,844 32, , ,210 Utilities 120,836 9, ,310 9,432 2,220 11, , ,220 Repairs and maintenance 156,535 9, ,582 16,631 1,548 18, , ,151 Equipment lease / rental 14, ,987 2, ,647 17,634 29,447 Office supplies 26, ,717 3,149 2,165 5,314 32,031 18,882 Postage and delivery 2, , ,829 2,230 4,489 7,419 Printing and copying 3,251 2,797 6,048 2,347 4,317 6,664 12,712 10,390 Insurance 134,434 6, ,083 5,042 1,533 6, , ,881 Professional fees 54,640 2,120 56,760 44, , , ,499 Client activities and assistance 73,693 1,912 75, ,605 66,456 Staff travel 24, ,025 1, ,729 26,754 24,653 Training, conferences and meetings 5, ,748 1,431 2,457 3,888 9,636 37,747 Recruitment and advertising 3,429-3, ,812 7,368 Interest expense , , ,691 35,525 Amortization of financing fee ,195 Bank charges ,249 5,318 15,567 15,567 10,558 Payroll processing fees 13, ,247 1, ,215 15,462 13,230 Annual dinner expense ,071 4,071 4,071 17,891 Bad debts ,000-25,000 25,000 - Depreciation and amortization 21, ,632 11,217 2,620 13,837 36,469 55,830 Miscellaneous ,970 TOTAL EXPENSES $ 3,922,040 $ 280,823 $ 4,202,863 $ 931,221 $ 240,407 $ 1,171,628 $ 5,374,491 $ 5,639,813 The accompanying notes are an integral part of these financial statements

70 WOMEN'S PRISON ASSOCIATION AND HOME STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED SEPTEMBER 30, 2013 Program Services Supporting Services Public Direct Outreach Total Management Total Client and Program and Fund Supporting Total Services Education Services General Raising Services 2013 Salaries $ 2,126,449 $ 250,246 $ 2,376,695 $ 594,036 $ 130,519 $ 724,555 $ 3,101,250 Payroll taxes and employee benefits 690,165 24, , ,736 7, , ,457 Total Salaries and Related Costs 2,816, ,890 3,091, , , ,203 3,971,707 Rent (Note 13) 146,396 15, ,272 52,447 19,678 72, ,397 Program supplies 35, , ,589 Program service consultants 10,398 1,200 11, ,598 Information and technology 248,351 13, ,519 11,701 6,990 18, ,210 Utilities 134,363 4, ,728 3,696 3,796 7, ,220 Repairs and maintenance 251,646 12, ,914 5,138 4,099 9, ,151 Equipment lease / rental 25, ,235 2,151 1,061 3,212 29,447 Office supplies 14, ,453 2, ,429 18,882 Postage and delivery 3, , ,381 3,811 7,419 Printing and copying 7, ,565 1,370 1,455 2,825 10,390 Insurance 136,028 5, ,821 5,281 1,779 7, ,881 Professional fees 91, ,255 75, , ,499 Client activities and assistance 65, , ,456 Staff travel 23, , ,653 Training, conferences and meetings 24,771 10,953 35,724 1, ,023 37,747 Recruitment and advertising 7,368-7, ,368 Interest expense ,525-35,525 35,525 Amortization of financing fee ,195-21,195 21,195 Bank charges ,277 1,281 10,558 10,558 Payroll processing fees 11, , ,230 Annual dinner expense ,891 17,891 17,891 Depreciation and amortization 33, ,653 18,830 3,347 22,177 55,830 Miscellaneous 7, ,394 3, ,576 12,970 TOTAL EXPENSES $ 4,095,004 $ 344,423 $ 4,439,427 $ 993,777 $ 206,609 $ 1,200,386 $ 5,639,813 The accompanying notes are an integral part of these financial statements

71 WOMEN'S PRISON ASSOCIATION AND HOME STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30, 2014 AND CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ (102,301) $ (733,836) Adjustments to reconcile change in net assets to net cash used in operating activities: Depreciation and amortization 36,469 55,830 Bad debts 25,000 - Amortization of financing fee - 21,195 Realized gain on sale of investments (41,698) (65,986) Unrealized loss on investments 31,796 33,612 Subtotal (50,734) (689,185) Changes in operating assets and liabilities: (Increase) decrease in assets: Contract and grant receivables (72,546) 287,909 Pledge receivable 12,770 (55,450) Prepaid expenses and other assets 2,480 16,144 Increase (decrease) in liabilities: Accounts payable and accrued expenses (83,933) 159,771 Contract advances 5, ,446 Deferred rent - (50,244) Net Cash Used in Operating Activities (186,459) (119,609) CASH FLOWS FROM INVESTING ACTIVITIES: Property and equipment acquisitions (97,937) - Proceeds from sale of investments 797, ,598 Purchase of marketable investments (584,478) (299,352) Net Cash Provided by Investing Activities 114,764 70,246 CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of note payable (4,659) (4,549) Proceeds from mortgage payable - 3,774,667 Repayments from mortgage payable - (3,750,000) Net Cash (Used in) Provided by Financing Activities (4,659) 20,118 NET DECREASE IN CASH AND CASH EQUIVALENTS (76,354) (29,245) Cash and cash equivalents-beginning of year 101, ,487 CASH AND CASH EQUIVALENTS END OF YEAR $ 24,888 $ 101,242 Supplemental Cash Flow Information: Cash paid during the year for interest $ 105,691 $ 35,525 The accompanying notes are an integral part of these financial statements

72 WOMEN'S PRISON ASSOCIATION AND HOME NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2014 AND 2013 NOTE 1 ORGANIZATION AND NATURE OF ACTIVITIES Women's Prison Association and Home ("WPA") is organized under the Not-For-Profit Corporation Law of the State of New York. WPA has been granted exemption from federal income tax pursuant to Section 501(c)(3) of the Internal Revenue Code. The purpose of WPA is to create opportunities for women prisoners, ex-prisoners and their families to change their lives by providing programs through which women acquire life skills needed to end involvement in the criminal justice system and to make positive, healthy choices for themselves and their families. WPA has been in existence for over 150 years and maintains a tradition of public information and advocacy designed to ameliorate jail and prison conditions for women. WPA also works to increase public awareness of and support for effective, community-based responses to crime. On October 9, 2012, Hopper Home LLC ( Hopper LLC ) was incorporated as a wholly owned affiliate of WPA. WPA will transfer its ownership of the premises located at 110 Second Avenue, New York to Hopper LLC once the mortgage on the property is paid. WPA will simultaneously enter into a master lease agreement with Hopper LLC that provides for the legal use of the premises by WPA, subject to the required regulatory approvals. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Basis of presentation Women s Prison Association and Home s financial statements have been prepared on the accrual basis of accounting. WPA adheres to accounting principles generally accepted in the United States of America ( U.S. GAAP ). B. Use of estimates - The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. C. Cash and cash equivalents - Cash and cash equivalents include all cash balances and highly liquid investments with a maturity of three months or less when acquired. WPA places its temporary cash investments with high credit financial institutions. D. Pledge, contract and grant receivables - Principal support for the programs operated by WPA is derived directly from various New York State governmental sources and indirectly from Federal governmental sources. WPA recognizes revenue from these sources when the contractual obligations are met. Revenues from government agencies are subject to audit by the agencies. No provision for any disallowance is reflected in the accompanying financial statements, since management does not anticipate any material adjustments. Grants receivable are recognized to the extent of support earned in excess of advances and payments received. Contributions and pledges are recognized when the donor makes an unconditional promise to give. WPA determines whether an allowance for uncollectible accounts receivable should be provided. Such estimates are based on management s assessment of the aged basis of WPA s funding sources, current economic conditions, and historical information. As of September 30, 2014 and 2013, WPA determined that an allowance of $25,000 and $0, respectively, was necessary for contract and grant receivables. As of September 30, 2014 and 2013, WPA determined that an allowance was not necessary for pledges receivables. E. Investments - Investments are stated at fair value. Investment income and gains and losses are recorded as unrestricted revenue unless specifically restricted by the donor. F. Property and equipment - Property and equipment are recorded at cost. Depreciation is computed by the straight-line method based on the estimated useful lives of the related assets. WPA capitalizes all individual items with a cost of $500 or more and a useful life of greater than one year. Leasehold improvements amortization expense is calculated by using the lesser of the useful life of the asset or the life of the lease. G. Contract advances - Support from governmental contracts and grants received prior to providing services are deferred and recognized over the periods to which the services relate

73 WOMEN'S PRISON ASSOCIATION AND HOME NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2014 AND 2013 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) H. Net assets - WPA maintains its net assets under the following three classes: Unrestricted represents resources available for support of WPA s operations over which the Board of Directors (the Board ) has discretionary control. Temporarily restricted represents assets that are subject to donor-imposed stipulations. In addition, earnings on endowment assets are classified as temporarily restricted until appropriated for operations by the Board. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Permanently restricted represents net assets that are subject to donor-imposed stipulations, restricted to investment in perpetuity and the income from which is expendable for general or donor intended purposes, subject to annual appropriation by the Board. I. Contributions - Contributions, including cash and in-kind contributions, are recorded as revenue in the period in which they are received. WPA classifies cash receipts from the sale of donated stocks or other financial assets as operating cash flows consistent with cash donations received if upon receipt were directed without any imposed limitations for sale and were converted nearly immediately into cash. If, however, the donor restricted the use of the donated stocks or other financial assets to a long-term purpose, then those cash receipts shall be classified as financing activities. J. Contributed services - WPA pays for most services which require specific expertise. However, many individuals volunteer their time to assist WPA with various board committee assignments, fundraising efforts and direct and indirect services that benefit clients. No amounts have been recognized for these services in the accompanying statements of activities because the criteria for recognition of such volunteer efforts have not been satisfied. K. Donated assets - Donated investments and other noncash donations are recorded as contributions at their fair values at the date of donation. L. Functional allocation of expenses - The cost of providing the various programs and other activities has been summarized on a functional basis in the accompanying statements of functional expenses. Accordingly, certain costs have been allocated among the program services and supporting services benefited. M. Fair value measurement - Fair value measurements are based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, a fair value hierarchy prioritizes observable and unobservable inputs used to measure fair value into three levels, as described in Note 4. N. Direct costs - The direct costs of special events include expenses for the benefit of the donor. For example, meals and facilities rental are considered direct costs of special events. O. Deferred rent - WPA leases real property under an operating lease. For the years ended September 30, 2014 and 2013, WPA recorded an adjustment to rent expense to reflect its straight-lining policy that amounted to $0 and $50,244, respectively. Straight-lining of rent gives rise to timing differences that are reflected as deferred rent in the accompanying statements of financial position. P. Reclassification Certain line items in the 2013 financial statements have been reclassified to conform to the 2014 financial statements presentation

74 WOMEN'S PRISON ASSOCIATION AND HOME NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2014 AND 2013 NOTE 3 INVESTMENTS Investments consist of the following as of September 30, 2014 and 2013: U.S. Equity securities Common stock: Basic materials $ 24,393 $ 26,165 Consumer goods 32, ,985 Financial - 24,615 Healthcare 25, ,096 Industrial goods 50,414 - Services 1,377 53,265 Technology 72,359 99,780 Mutual Funds Small-cap U.S. equities index fund 2,734 - Total $ 209,107 $ 411,906 Investments are subject to market volatility that could change their carrying value in the near term. Investment fees for the years ended September 30, 2014 and 2013 amounted to $4,820 and $6,195, respectively. During 2014 and 2013, WPA received contributions of marketable equity securities that had a fair value of $30,890 and $28,872, respectively. NOTE 4 FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value hierarchy defines three levels as follows: Level 1: Valuations based on quoted price (unadjusted) in an active market that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Valuations based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in inactive markets; or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data. Level 3: Valuations based on unobservable inputs are used when little or no market data is available. The fair value hierarchy gives lowest priority to Level 3 inputs. WPA s policy is to recognize transfers in and transfers out of fair value levels as of the beginning of the period in which the transfer takes place. For the years ended September 30, 2014 and 2013, there were no transfers between fair value levels. In determining fair value, WPA utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible in its assessment of fair value. Equity securities and mutual funds are valued at the closing price reported on the active market on which the individual securities are traded. Fair values of assets measured at September 30, 2014 and 2013 are listed in Note 3 and are classified as Level

75 WOMEN'S PRISON ASSOCIATION AND HOME NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2014 AND 2013 NOTE 5 PROPERTY AND EQUIPMENT Property and equipment as of September 30, 2014 and 2013 consisted of the following: Estimated Useful Lives Land $ 9,000 $ 9,000 Building and improvements 1,288,000 1,213, years Equipment, furniture and fixtures 74,854 50,927 5 years 1,371,854 1,273,917 Less: accumulated depreciation and amortization 865, ,359 Total $ 506,026 $ 444,558 Depreciation and amortization expense for September 30, 2014 and 2013 amounted to $36,469 and $55,830, respectively. During the fiscal years ending September 30, 2014 and 2013, WPA wrote off fixed assets amounting to $0 and $211,157, respectively, that were fully depreciated and no longer in use. Included in 2013 fixed assets write off were leasehold improvements related to an office space lease located at 175 Remsen Street, Brooklyn, NY that was terminated in January (See Note 13) NOTE 6 CONTRACT ADVANCES This amount consists of advances from government agencies under grant agreements for which WPA has not yet met the grant conditions or provided the services. The contract advances will be recognized as they are earned through expenditures or provision of services in accordance with the agreements. As of September 30, 2014 and 2013, the balance of the contract advances amounted to $417,417 and $411,913, respectively. NOTE 7 NOTE PAYABLE As of September 30, 2014 and 2013, the balance in notes payable amounted to $0 and $4,659, respectively, which consisted of an amount payable to the previous landlord of 175 Remsen Street pursuant to the agreement governing the early termination of the lease in January The original amount of the note was $30,129 payable in nine monthly installments of $3,184 and the last principal payment of $1,475 was due on November 1, The note bore no interest and was paid in full in NOTE 8 MORTGAGE PAYABLE On September 26, 2008, WPA closed on a mortgage (the First Mortgage ) in the amount of $3,750,000 with the owner of a Neighboring Property (the Mortgagee ). The mortgage payable was collateralized by WPA's property located at 110 Second Avenue, New York, New York. Interest was payable monthly at the lower of the three-month LIBOR rate plus.75% (floating) or base rate (prime) plus 1% (1.15% at September 30, 2012) and the entire outstanding principal amount was payable to the Mortgagee on September 30, On September 9, 2013, the First Mortgage was assigned by the Mortgagee to an unrelated party pursuant to the Assignment of Mortgage agreement dated September 9, The unrelated party is the buyer of the Huntington Property as explained further in Note 14. On September 26, 2013, WPA and the unrelated party entered into a Mortgage and Security agreement ( Second Mortgage ) for the purpose of securing and consolidating the principal indebtedness of WPA under the First Mortgage in the amount of $3,750,000 that was assigned to the unrelated party and to secure the additional GAP Mortgage in the amount of $24,667. The full principal balance of $3,774,667, as of September 30, 2014, under the Second Mortgage is due upon the closing of the sale of the Huntington House Property. The Second Mortgage bears interest at 3% annually

76 WOMEN'S PRISON ASSOCIATION AND HOME NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2014 AND 2013 NOTE 8 MORTGAGE PAYABLE (Continued) Interest expense for the mortgage payable for the years ended September 30, 2014 and 2013 amounted to $105,691 and $33,674, respectively. NOTE 9 RELATED-PARTY TRANSACTIONS WPA and Huntington House Housing Development Fund Corporation ("HDFC"), a separate nonprofit corporation, are related through common board members. The board members of HDFC are appointed by the New York City Homeless Housing Assistance Corporation. WPA utilizes the facilities of HDFC to operate its transitional housing program. Any excess cash available from the operation of the program is required to be used to reduce HDFC's mortgage, which has a balance of approximately $2,160,000 at September 30, 2014 and As of September 30, 2014 and 2013, the program has not generated excess cash. NOTE 10 PENSION PLANS WPA maintains a profit-sharing plan for the benefit of all eligible employees. Contributions are based upon a percentage of each employee's salary as determined by WPA's Board of Directors. The Board of Directors suspended making any contributions to the plan for the years ended September 30, 2014 and WPA also maintains a noncontributory tax sheltered annuity plan that allows employees to defer a portion of their salaries for tax purposes through payroll deductions. NOTE 11 TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets of $105,891 and $257,773 were released from donor restrictions during the years ended September 30, 2014 and 2013, respectively, by incurring expenses satisfying the restricted purpose of providing programs. Temporarily restricted net assets as of September 30, 2014 and 2013, respectively, consisted of the following: Purpose restriction: Client Emergency Services $ 52,980 $ 42,703 Youth Services 34,044 29,666 Financial Literacy 10,000 10,000 Family Preservation Program - 10,000 ATI Justice Home Program 11,651 - Women s Advocacy Program 28,089 - Unappropriated Endowment Earnings 81, ,368 NOTE 12 ENDOWMENT NET ASSETS $ 218,124 $ 193,737 WPA recognizes that New York State adopted as law the New York Prudent Management of Institutional Funds Act ( NYPMIFA ) on September 17, NYPMIFA replaced the prior law which was the Uniform Management of Institutional Funds Act ( UMIFA ). In addition, NYPMIFA created a rebuttable presumption of imprudence if an organization appropriates more than 7% of a donor-restricted permanent endowment fund s fair value (averaged over a period of not less than the preceding five years) in any year. Any unappropriated earnings that would otherwise be considered unrestricted by the donor will be reflected as temporarily restricted until appropriated

77 WOMEN'S PRISON ASSOCIATION AND HOME NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2014 AND 2013 NOTE 12 ENDOWMENT NET ASSETS (Continued) Permanently restricted net assets consist of endowment fund assets to be held indefinitely. WPA s Board has interpreted NYPMIFA as allowing WPA to appropriate for expenditure or accumulate so much of an endowment fund as WPA determines to be prudent for the uses, benefits, purposes and duration for which the endowment was established, subject to the intent of the donor as expressed in the gift instrument. During the year ended September 30, 2014, WPA borrowed $227,713 of permanently restricted endowment funds for operating activities. This amount will be repaid as soon as cash is available. In accordance with U.S. GAAP, organizations are required to disclose any deterioration of the fair value of assets associated with donor-restricted endowment funds that fall below the level the donor requires the organization to retain in perpetuity. These deficiencies resulted from the unfavorable market fluctuations that occurred in the economy as a whole that affected the donor-restricted endowment fund, where the fair market value of the donorrestricted endowment fund was below the amount that is required to be retained permanently by $68,291 and $48,283 as of September 30, 2014 and 2013, respectively. WPA s endowment investment policy is to invest assets into investment instruments approved by the Finance Committee of the Board of Directors with the allocation of funds based upon specified target percentages (or range of target percentages) for each type of investment instrument. The overall investment objective is to maximize the total return from income (dividends and interest) and the appreciation of investments. Any earnings on the endowment funds are spent in the year they are earned, subject to appropriation by the Board. Interest and dividends from donor restricted endowment funds are temporarily restricted for specific purposes, and are presented as temporarily restricted investment activity and released from restrictions in the statement of activities. Changes in endowment net assets for the year ended September 30, 2014 are as follows: Temporarily Permanently Unrestricted Restricted Restricted Total Investment activity: Interest and dividends $ - $ 5,598 $ - $ 5,598 Appropriation for expenditures - (25,286) - (25,286) Transfer out (227,713) - - (227,713) Realized and unrealized gains, net - (320) - (320) Change in endowment net assets (227,713) (20,008) - (247,721) Endowment net assets, beginning of year (149,651) 101, , ,793 Endowment net assets, end of year $ (377,364) $ 81,360 $ 470,076 $ 174,072 Changes in endowment net assets for the year ended September 30, 2013 are as follows: Temporarily Permanently Unrestricted Restricted Restricted Total Investment activity: Interest and dividends $ - $ 14,101 $ - $ 14,101 Appropriation for Expenditures - (25,735) - (25,735) Realized and unrealized losses - 44,237-44,237 Change in endowment net assets - 32,603-32,603 Endowment net assets, beginning of (149,651) 68, , ,190 Endowment net assets, end of year $ (149,651) $ 101,368 $ 470,076 $ 421,

78 WOMEN'S PRISON ASSOCIATION AND HOME NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2014 AND 2013 NOTE 12 ENDOWMENT NET ASSETS (Continued) Endowment net assets as of September 30, 2014 and 2013 consisted of the following: Investments $ 172,756 $ 361,846 Cash and cash equivalents 1,316 59,947 NOTE 13 COMMITMENTS AND CONTINGENCIES $ 174,072 $ 421,793 A. WPA is committed under non-cancelable operating agreements through 2021 for occupancy of its premises. Future minimum payments for non-cancelable operating leases for years ended after September 30, 2014, are as follows: 2015 $ 150, , , , ,480 Subsequent to ,352 $ 1,004,124 Rent expense for the years ended September 30, 2014 and 2013, amounted to $113,276 and $234,397, respectively. In January 2013, WPA terminated its lease for an office space located at 175 Remsen Street. In accordance with the lease termination agreement with the landlord, WPA incurred costs of approximately $66,000 in fiscal year 2013 and is included in rent expenses in the accompanying statement of functional expenses. B. Pursuant to WPA s contractual relationships with certain governmental funding sources, these governmental agencies have the right to examine the books and records of WPA involving transactions relating to these contracts. The accompanying financial statements make no provision for possible disallowances. C. WPA has no uncertain tax positions as of September 30, 2014 and 2013 in accordance with Accounting Standards Codification ( ASC ) Topic 740, Income Taxes, which provides standards for establishing and classifying any tax provisions for uncertain tax positions. WPA is no longer subject to federal or state and local income tax examinations by tax authorities for the year ended September 30, 2011 and prior years. NOTE 14 DEFICIT NET ASSETS WPA's change in unrestricted net assets for the years ended September 30, 2014 and 2013 amounted to approximately ($102,000) and ($609,000), respectively. The accumulated deficit from operations amounted to approximately $4,413,000 and $4,246,000 as of September 30, 2014 and 2013, respectively. Measures taken by WPA to improve the net deficit include the following: Resolution of Deficit WPA s annual operating budget for fiscal year 2015 projects an operating surplus. This projection did not take into account any potential new funding and was based on known revenue streams that were in place and would fund operation of existing programs. While in past years, late start-up of new programs delayed flow of revenue and WPA ended those years with operating deficits, WPA s management is confident that fiscal year 2015 will yield better results as all of WPA s contracts will be operational for the full year. In fiscal year 2013, WPA streamlined the management team and functions and, along with continuation of careful budgeting and monitoring of program activities and expenses, WPA is confident that it will operate within its financial means

79 WOMEN'S PRISON ASSOCIATION AND HOME NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2014 AND 2013 NOTE 14 DEFICIT NET ASSETS (Continued) WPA s net deficit, arising primarily from the mortgage interest for Hopper Home and the accumulated annual operating deficits, is expected to be resolved within the foreseeable future. Late in fiscal year 2014, WPA applied to the State Office of Temporary and Disability Assistance for project funding under the Homeless Housing Assistance Program (HHAP). This funding would be used to repay the mortgage on Hopper Home and fund repairs, systems upgrades and a small capital reserve for the building. WPA was notified of an award of $5,373,222 in late February 2015 and WPA anticipates the completion of the contract and receipt of funds within the next several months. Increased Revenue WPA realized full implementation of new and nearly-new contract programs during the past year. The Justice Home Alternative to Incarceration program, a performance-based contract with maximum annual potential earnings of $434,000, completed the implementation phase and is now fully functional. The Hopper Home adult shelter for 38 women has a maximum annual operating budget of $1.39 million. The contract was fully executed and operation began in August The program quickly reached capacity, with a full complement of staff and a client census that is reliably at capacity nearly every night. Opening the Hopper Home adult shelter has had a marked impact on WPA s expenses and revenues, with increased staffing and direct program costs, and regular revenues generated and promptly paid to fund operations. Private Fundraising In fiscal year 2014, WPA surpassed its private fundraising goal and raised 23% more revenue than the previous fiscal year. WPA continues to apply an annual strategic fundraising plan that incorporates several key categories: foundation grants; corporate partnerships; major donors; events; and direct mail appeals. In addition, WPA s development strategy integrates marketing, communications, and social media in order to attract individual donors at many entry points. WPA launched a multi-media marketing and fundraising campaign, the Second Chances Campaign, which raised over $15,000 and generated increased social media traffic throughout the year. WPA continues to build brand awareness and presence and will continue marketing strategy in 2015 with the goal of increasing online donations and converting non-donors. Looking ahead to 2015, WPA will leverage its 170th anniversary year to re-engage lapsed donors, convert in-kind donors, encourage increased giving among current donors and further increase our corporate partnerships with the goal of securing more corporate support for general operating funds. WPA will also introduce a new fundraising event, a golf tournament, to attract more corporate involvement with the agency. Monetize Real Estate Assets On June 28, 2013, the HDFC ( Seller ) entered into an agreement for sale of the Huntington House building at a purchase price of $18,000,000. In accordance with the agreement, the buyer deposited an earnest money in the amount of $4,000,000 in an escrow account. On September 9, 2013, the buyer authorized to use a portion of the earnest money in the escrow account to pay off WPA s First Mortgage and the buyer entered into a Mortgage and Security agreement with WPA (see Note 7). In March 2015, the Seller and the buyer amended the agreement to extend the contract until April 17, 2016 and granting the buyer two additional options to extend the contract for one year, with an outside termination date of April 17, The current contract expires in April 2016 unless it is terminated because of the closing of the sale of the Huntington House Property or the required government approvals are denied, or the buyer elects not to exercise the second extension. At the time that WPA entered into the sale, there was no other plan for repaying the mortgage on Hopper Home (money that had been borrowed to alleviate the cash crisis/long-term deficit discovered in 2007). However, with the HHAP award, WPA has another means for paying the Hopper Home mortgage. Therefore, in the event that WPA is unable to obtain City or other required approval for the sale of the Huntington House building and the sale contract is canceled, WPA can plan for long-term continued operation of the property without fear of financial shortfalls

80 WOMEN'S PRISON ASSOCIATION AND HOME NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2014 AND 2013 NOTE 15 SUBSEQUENT EVENTS Management has evaluated, for potential recognition and disclosure, events subsequent to the statement of financial position date through June 25, 2015, the date the financial statements were available to be issued. With the exception of the items disclosed in Note 14, no events have occurred subsequent to the statement of financial position date through June 25, 2015 that would require adjustment to or disclosure in the financial statements

81 WOMEN'S PRISON ASSOCIATION AND HOME SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2014 Grantor's Identifying Federal Federal Grantor/Pass Through Grantor/Program or Cluster Title CFDA Number Number Expenditures U.S. Department of Health and Human Services: Passed - through from Public Health Solutions: HIV Prevention ETB-522 $ 16,855 Passed - through from Health Research Inc: Positive Pathways ,874 Positive Pathways ,682 91,411 Passed - through from Public Health Solutions: Ryan White Title I (Prison Project) PRS ,842 Passed - through from New York City Department of Homeless Services: Temporary Assistance for Needy Families (TANF) - SPPH - Tier II ,769 Passed - through from New York City Administration for Children's Services: General Prevention Family Rehabilitation Program ,375 Total U.S. Department of Health and Human Services 1,389,397 U.S. Department of Justice: Second Chance Act Adult Mentoring Grant CY-BX ,703 U.S. Department of Homeland Security: Passed - through from United Way of NYC: Emergency Food and Shelter Program E9 7,550 TOTAL EXPENDITURES OF FEDERAL AWARDS $ 1,462,650 Note: This schedule has been prepared on the accrual basis of accounting. See Independent Auditors' Report

82 Marks Paneth LLP New York City 685 Third Avenue Washington, DC New York, NY New Jersey P Long Island F Westchester Cayman Islands INDEPENDENT AUDITORS 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 The Board of Directors Women s Prison Association and Home We have audited, in accordance with the 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 Women s Prison Association and Home ( WPA ) which comprise the statements of financial position as of September 30, 2014 and 2013, and the related statements of activities, functional expenses and cash flows for the years then ended, and the related notes to the financial statements, and have issued our report thereon dated June 25, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered WPA'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 WPA s internal control. Accordingly, we do not express an opinion on the effectiveness of WPA 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. Compliance and Other Matters As part of obtaining reasonable assurance about whether WPA s financial statements are free of 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 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 WPA s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering WPA s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. New York, NY June 25,