No new accounting policies were adopted and the application of existing policies was not changed during the year ended September 30, 2015.

Transcription

1 CliftnLarsnAllen LLP Bard f Directrs Lancaster City Husing Authrity Lancaster, Pennsylvania We have audited the financial statements f the Lancaster City Husing Authrity (the Authrity) as f and fr the year ended September 30, 2015, and have issued ur reprt theren dated April 14, We have previusly cmmunicated t yu infrmatin abut ur respnsibilities under auditing standards generally accepted in the United States f America, Gvernment Auditing Standards, and OMB Circular A 133, as well as certain infrmatin related t the planned scpe and timing f ur audit. Prfessinal standards als require that we cmmunicate t yu the fllwing infrmatin related t ur audit. Significant audit findings Qualitative aspects f accunting practices Accunting plicies Management is respnsible fr the selectin and use f apprpriate accunting plicies. The significant accunting plicies used by the Authrity are described in Nte 1 t the financial statements. N new accunting plicies were adpted and the applicatin f existing plicies was nt changed during the year ended September 30, We nted n transactins entered int by the Authrity during the year fr which there is a lack f authritative guidance r cnsensus. All significant transactins have been recgnized in the financial statements in the prper perid. Accunting estimates Accunting estimates are an integral part f the financial statements prepared by management and are based n management s knwledge and experience abut past and current events and assumptins abut future events. Certain accunting estimates are particularly sensitive because f their significance t the financial statements and because f the pssibility that future events affecting them may differ significantly frm thse expected. The mst sensitive estimate affecting the financial statements was: Management s estimate f the Allwance fr Dubtful Accunts is based n management s knwledge and experience abut past and current events, assumptins abut future events, and analysis f the cllectability. We evaluated the key factrs and assumptins used t develp the allwance fr dubtful accunts in determining that it is reasnable in relatin t the financial statements taken as a whle. Financial statement disclsures Certain financial statement disclsures are particularly sensitive because f their significance t financial statement users. There were n particularly sensitive financial statement disclsures The financial statement disclsures are neutral, cnsistent, and clear. An independent member f Nexia Internatinal

2 Lancaster City Husing Authrity Page 2 Difficulties encuntered in perfrming the audit We encuntered n significant difficulties in dealing with management in perfrming and cmpleting ur audit. Uncrrected misstatements Prfessinal standards require us t accumulate all misstatements identified during the audit, ther than thse that are clearly trivial, and cmmunicate them t the apprpriate level f management. Management did nt identify and we did nt ntify them f any uncrrected financial statement misstatements. Crrected misstatements Management did nt identify and we did nt ntify them f any financial statement misstatements detected as a result f audit prcedures. Disagreements with management Fr purpses f this letter, a disagreement with management is a financial accunting, reprting, r auditing matter, whether r nt reslved t ur satisfactin, that culd be significant t the financial statements r the auditrs reprt. N such disagreements arse during ur audit. Management representatins We have requested certain representatins frm management that are included in the attached management representatin letter dated April 14, Management cnsultatins with ther independent accuntants In sme cases, management may decide t cnsult with ther accuntants abut auditing and accunting matters, similar t btaining a secnd pinin n certain situatins. If a cnsultatin invlves applicatin f an accunting principle t the entity s financial statements r a determinatin f the type f auditrs pinin that may be expressed n thse statements, ur prfessinal standards require the cnsulting accuntant t check with us t determine that the cnsultant has all the relevant facts. T ur knwledge, there were n such cnsultatins with ther accuntants. Significant issues discussed with management prir t engagement We generally discuss a variety f matters, including the applicatin f accunting principles and auditing standards, with management each year prir t engagement as the Authrity s auditrs. Hwever, these discussins ccurred in the nrmal curse f ur prfessinal relatinship and ur respnses were nt a cnditin t ur engagement. Other infrmatin in dcuments cntaining audited financial statements With respect t the required supplementary infrmatin (RSI) accmpanying the financial statements, we made certain inquiries f management abut the methds f preparing the RSI, including whether the RSI has been measured and presented in accrdance with prescribed guidelines, whether the methds f measurement and preparatin have been changed frm the prir perid and the reasns fr any such changes, and whether there were any significant assumptins r interpretatins underlying the measurement r presentatin f the RSI. We cmpared the RSI fr cnsistency with management s respnses t the freging inquiries, the basic financial statements, and ther knwledge btained during the audit f the basic financial statements. Because these limited prcedures d nt prvide sufficient evidence, we did nt express an pinin r prvide any assurance n the RSI.

3 Lancaster City Husing Authrity Page 3 With respect t the schedule f expenditures f federal awards (SEFA) accmpanying the financial statements, n which we were engaged t reprt in relatin t the financial statements as a whle, we made certain inquiries f management and evaluated the frm, cntent, and methds f preparing the SEFA t determine that the SEFA cmplies with the requirements f U.S. Office f Management and Budget Circular A 133, Audits f States, Lcal Gvernments, and Nn Prfit Organizatins, the methd f preparing it has nt changed frm the prir perid r the reasns fr such changes, and the SEFA is apprpriate and cmplete in relatin t ur audit f the financial statements. We cmpared and recnciled the SEFA t the underlying accunting recrds used t prepare the financial statements r t the financial statements themselves. We have issued ur reprt theren dated April 14, With respect t the Financial Data Schedules (cllectively, the supplementary infrmatin) accmpanying the financial statements, n which we were engaged t reprt in relatin t the financial statements as a whle, we made certain inquiries f management and evaluated the frm, cntent, and methds f preparing the infrmatin t determine that the infrmatin cmplies with accunting principles generally accepted in the United States f America, the methd f preparing it has nt changed frm the prir perid r the reasns fr such changes, and the infrmatin is apprpriate and cmplete in relatin t ur audit f the financial statements. We cmpared and recnciled the supplementary infrmatin t the underlying accunting recrds used t prepare the financial statements r t the financial statements themselves. We have issued ur reprt theren dated April 14, Our auditrs pinin, the audited financial statements, and the ntes t financial statements shuld nly be used in their entirety. Inclusin f the audited financial statements in a dcument yu prepare, such as an annual reprt, shuld be dne nly with ur prir apprval and review f the dcument. * * * This cmmunicatin is intended slely fr the infrmatin and use f the Bard f Directrs and management f Lancaster City Husing Authrity and is nt intended t be, and shuld nt be, used by anyne ther than these specified parties. a CliftnLarsnAllen LLP Baltimre, Maryland April 14, 2016

4 325 Church St. Lancaster, PA Phne (717) x3025 April 14, 2016 CliftnLarsnAllen LLP 1966 Greenspring Drive, Suite 300 Timnium, Maryland This representatin letter is prvided in cnnectin with yur audit f the financial statements f Lancaster City Husing Authrity as f September 30, 2015, and the changes in financial psitin and cash flws fr the year then ended, and the related ntes t the financial statements, fr the purpse f expressing pinins n whether the financial statements are presented fairly, in all material respects, in accrdance with accunting principles generally accepted in the United States f America (U.S. GAAP). Certain representatins in this letter are described as being limited t matters that are material. Items are cnsidered material, regardless f size, if they invlve an missin r misstatement f accunting infrmatin that, in light f surrunding circumstances, makes it prbable that the judgment f a reasnable persn relying n the infrmatin wuld be changed r influenced by the missin r misstatement. We cnfirm, t the best f ur knwledge and belief, as f April 14, 2016, the fllwing representatins made t yu during yur audit f the financial statements as f and fr the year ended September 30, Financial Statements We have fulfilled ur respnsibilities, as set ut in the terms f the audit engagement letter dated August 3, 2015, fr the preparatin and fair presentatin f the financial statements in accrdance with U.S. GAAP. The financial statements include all prperly classified funds and ther financial infrmatin f the primary gvernment and all cmpnent units required by generally accepted accunting principles t be included in the financial reprting entity. We acknwledge and have fulfilled ur respnsibility fr the design, implementatin, and maintenance f internal cntrl relevant t the preparatin and fair presentatin f financial statements that are free frm material misstatement, whether due t fraud r errr. We acknwledge ur respnsibility fr the design, implementatin, and maintenance f internal cntrl t prevent and detect fraud. Significant assumptins used by us in making accunting estimates are reasnable. Page 1

5 Significant estimates have been apprpriately accunted fr and disclsed in accrdance with the requirements f U.S. GAAP. Significant estimates are estimates at the financial statement date that culd change materially within the next year. Related party relatinships and transactins, including, but nt limited t, revenues, expenditures/expenses, lans, transfers, leasing arrangements, and guarantees, and amunts receivable frm r payable t related parties have been apprpriately accunted fr and disclsed in accrdance with the requirements f U.S. GAAP. N events, including instances f nncmpliance, have ccurred subsequent t the financial statement date and thrugh the date f this letter that wuld require adjustment t, r disclsure in, the financial statements r in the schedule f findings and questined csts. We have nt identified r been ntified f any uncrrected financial statement misstatements. The effects f all knwn actual r pssible litigatin, claims, and assessments have been accunted fr and disclsed in accrdance with U.S. GAAP. Receivables recrded in the financial statements represent valid claims against debtrs fr transactins arising n r befre the financial statement date and have been reduced t their estimated net realizable value. Lans t executive fficers have been prperly accunted fr and disclsed. Agreements t repurchase assets previusly sld have been prperly disclsed. We have n plans r intentins that may materially affect the carrying value r classificatin f assets, liabilities, r equity. We believe that the actuarial assumptins and methds used t measure pensin and ther pstemplyment benefits (OPEB) liabilities and csts fr financial accunting purpses are apprpriate in the circumstances. We d nt plan t make frequent amendments t ur pensin r ther pstretirement benefit plans. Infrmatin Prvided We have prvided yu with: Access t all infrmatin, f which we are aware, that is relevant t the preparatin and fair presentatin f the financial statements such as recrds, dcumentatin, and ther matters. Additinal infrmatin that yu have requested frm us fr the purpse f the audit. Unrestricted access t persns within the entity frm whm yu determined it necessary t btain audit evidence. Cmplete minutes f the meetings f the gverning bard and related cmmittees, r summaries f actins f recent meetings fr which minutes have nt yet been prepared. Page 2

6 All cmmunicatins frm regulatry agencies, grantrs, lenders, and ther funding surces cncerning nncmpliance with, r deficiencies in, financial reprting practices. All cmmunicatins frm regulatry agencies, grantrs, lenders, and ther funding surces cncerning nncmpliance with the prvisins f laws, regulatins, cntracts, and grant agreements. Access t all audit r relevant mnitring reprts, if any, received frm funding surces. All material transactins have been recrded in the accunting recrds and are reflected in the financial statements and the schedule f expenditures f federal awards. We have disclsed t yu the results f ur assessment f the risk that the financial statements may be materially misstated as a result f fraud. We have n knwledge f any fraud r suspected fraud that affects the entity and invlves: Management; Emplyees wh have significant rles in internal cntrl; r Others when the fraud culd have a material effect n the financial statements. We have n knwledge f any allegatins f fraud, r suspected fraud, affecting the entity's financial statements cmmunicated by emplyees, frmer emplyees, grantrs, regulatrs, r thers. We have n knwledge f any instances f nncmpliance r suspected nncmpliance with prvisins f laws, regulatins, cntracts, and grant agreements, r abuse whse effects shuld be cnsidered when preparing financial statements. We have disclsed t yu all knwn actual r pssible litigatin, claims, and assessments whse effects shuld be cnsidered when preparing the financial statements. There are n ther material liabilities r gain r lss cntingencies that are required t be accrued r disclsed in accrdance with U.S. GAAP. We have disclsed t yu the identity f the entity's related parties and all the related party relatinships and transactins f which we are aware. The entity has satisfactry title t all wned assets, and there are n liens r encumbrances n such assets, nr has any asset been pledged as cllateral, except as made knwn t yu and disclsed in the financial statements. We have a prcess t track the status f audit findings and recmmendatins. We have identified t yu any previus audits, attestatin engagements, and ther studies related t the audit bjectives and whether related recmmendatins have been implemented. We are respnsible fr cmpliance with the laws, regulatins, and prvisins f cntracts and grant agreements applicable t Lancaster City Husing Authrity, including tax r debt limits and debt cntracts; and we have identified and disclsed t yu all laws, regulatins, and prvisins Page 3

7 f cntracts and grant agreements that we believe have a direct and material effect n the determinatin f financial statement amunts r ther financial data significant t the audit bjectives, including legal and cntractual prvisins fr reprting specific activities in separate funds. There are n vilatins r pssible vilatins f budget rdinances, laws and regulatins (including thse pertaining t adpting, apprving, and amending budgets), prvisins f cntracts and grant agreements, tax r debt limits, and any related debt cvenants whse effects shuld be cnsidered fr disclsure in the financial statements, r as a basis fr recrding a lss cntingency, r fr reprting n nncmpliance. The entity has cmplied with all aspects f cntractual r grant agreements that wuld have a material effect n the financial statements in the event f nncmpliance. We have fllwed all applicable laws and regulatins in adpting, apprving, and amending budgets. The financial statements include all cmpnent units as well as jint ventures with an equity interest, and prperly disclse all ther jint ventures, jintly gverned rganizatins, and ther related rganizatins. The financial statements prperly classify all funds and activities. Cmpnents f net psitin (net investment in capital assets; restricted; and unrestricted) and equity amunts are prperly classified and, if applicable, apprved. Investments, derivative instruments, and land and ther real estate held by endwments are prperly valued. Prvisins fr uncllectible receivables have been prperly identified and recrded. Expenses have been apprpriately classified in r allcated t functins and prgrams in the statement f activities, and allcatins have been made n a reasnable basis. Revenues are apprpriately classified in the statement f activities within prgram revenues, general revenues, cntributins t term r permanent endwments, r cntributins t permanent fund principal. Interfund, internal, and intra-entity activity and balances have been apprpriately classified and reprted. Special and extrardinary items are apprpriately classified and reprted. Depsits and investment securities and derivative instruments are prperly classified as t risk and are prperly valued and disclsed. Capital assets, including infrastructure and intangible assets, are prperly capitalized, reprted, and, if applicable, depreciated. We have apprpriately disclsed the entity s plicy regarding whether t first apply restricted r unrestricted resurces when an expense is incurred fr purpses fr which bth restricted and Page 4

8 unrestricted net psitin is available and have determined that net psitin is prperly recgnized under the plicy. We acknwledge ur respnsibility fr the required supplementary infrmatin (RSI). The RSI is measured and presented within prescribed guidelines and the methds f measurement and presentatin have nt changed frm thse used in the prir perid. We have disclsed t yu any significant assumptins and interpretatins underlying the measurement and presentatin f the RSI. We acknwledge ur respnsibility fr presenting the Financial Data Schedules (the supplementary infrmatin) in accrdance with U.S. GAAP, and we believe the supplementary infrmatin, including its frm and cntent, is fairly presented in accrdance with U.S. GAAP. The methds f measurement and presentatin f the supplementary infrmatin have nt changed frm thse used in the prir perid, and we have disclsed t yu any significant assumptins r interpretatins underlying the measurement and presentatin f the supplementary infrmatin. If the supplementary infrmatin is nt presented with the audited financial statements, we will make the audited financial statements readily available t the intended users f the supplementary infrmatin n later than the date we issue the supplementary infrmatin and the auditrs reprt theren. As part f yur audit, yu prepared the draft financial statements and related ntes and schedule f expenditures f federal awards. We have designated an individual wh pssesses suitable skill, knwledge, and/r experience t understand and versee yur services; have made all management judgments and decisins; and have assumed all management respnsibilities. We have evaluated the adequacy and results f the service. We have reviewed, apprved, and accepted respnsibility fr thse financial statements and related ntes and schedule f expenditures f federal awards. With respect t federal award prgrams: We are respnsible fr understanding and cmplying with, and have cmplied with the requirements f OMB Circular A-133, Audits f States, Lcal Gvernments, and Nn- Prfit Organizatins, including requirements relating t preparatin f the schedule f expenditures f federal awards. We acknwledge ur respnsibility fr presenting the schedule f expenditures f federal awards (SEFA) in accrdance with the requirements f OMB Circular A b, and we believe the SEFA, including its frm and cntent, is fairly presented in accrdance with OMB Circular A b. The methds f measurement and presentatin f the SEFA have nt changed frm thse used in the prir perid and we have disclsed t yu any significant assumptins and interpretatins underlying the measurement and presentatin f the SEFA. If the SEFA is nt presented with the audited financial statements, we will make the audited financial statements readily available t the intended users f the SEFA n later than the date we issued the SEFA and the auditrs reprt theren. We have identified and disclsed t yu all f ur gvernment prgrams and related activities subject t OMB Circular A-133, and included in the SEFA expenditures made during the audit perid fr all awards prvided by federal agencies in the frm f grants, federal cst-reimbursement cntracts, lans, lan guarantees, prperty (including Page 5

9 dnated surplus prperty), cperative agreements, interest subsidies, insurance, fd cmmdities, direct apprpriatins, and ther direct assistance. We are respnsible fr understanding and cmplying with, and have cmplied with, the requirements f laws, regulatins, and the prvisins f cntracts and grant agreements related t each f ur federal prgrams and have identified and disclsed t yu the requirements f laws, regulatins, and the prvisins f cntracts and grant agreements that are cnsidered t have a direct and material effect n each majr prgram. We are respnsible fr establishing and maintaining, and have established and maintained, effective internal cntrl ver cmpliance requirements applicable t federal prgrams that prvides reasnable assurance that we are managing ur federal awards in cmpliance with laws, regulatins, and the prvisins f cntracts and grant agreements that culd have a material effect n ur federal prgrams. We believe the internal cntrl system is adequate and is functining as intended. We have made available t yu all cntracts and grant agreements (including amendments, if any) and any ther crrespndence with federal agencies r passthrugh entities relevant t federal prgrams and related activities. We have received n requests frm a federal agency t audit ne r mre specific prgrams as a majr prgram. We have cmplied with the direct and material cmpliance requirements, including when applicable, thse set frth in the OMB Circular A-133 Cmpliance Supplement, relating t federal awards and have identified and disclsed t yu all amunts questined and all knwn nncmpliance with the direct and material cmpliance requirements f federal awards. We have disclsed t yu any cmmunicatins frm grantrs and pass-thrugh entities cncerning pssible nncmpliance with the direct and material cmpliance requirements, including cmmunicatins received frm the end f the perid cvered by the cmpliance audit t the date f the auditrs reprt. We have disclsed t yu the findings received and related crrective actins taken fr previus audits, attestatin engagements, and internal r external mnitring that directly relate t the bjectives f the cmpliance audit, including findings received and crrective actins taken frm the end f the perid cvered by the cmpliance audit t the date f the auditrs reprt. Amunts claimed r used fr matching were determined in accrdance with relevant guidelines in OMB Circular A-87, Cst Principles State, Lcal, and Tribal Gvernments, and OMB s Unifrm Administrative Requirements fr Grants and Cperative Agreements t State and Lcal Gvernments. We have disclsed t yu ur interpretatin f cmpliance requirements that may have varying interpretatins. We have made available t yu all dcumentatin related t cmpliance with the direct and material cmpliance requirements, including infrmatin related t federal prgram financial reprts and claims fr advances and reimbursements. Page 6

10 We have disclsed t yu the nature f any subsequent events that prvide additinal evidence abut cnditins that existed at the end f the reprting perid affecting nncmpliance during the reprting perid. There are n knwn instances f nncmpliance with direct and material cmpliance requirements that ccurred subsequent t the perid cvered by the auditrs reprt. We have disclsed t yu whether any changes in internal cntrl ver cmpliance r ther factrs that might significantly affect internal cntrl, including any crrective actin we have taken regarding significant deficiencies and/r material weaknesses in internal cntrl ver cmpliance, have ccurred subsequent t the date as f which cmpliance was audited. Federal prgram financial reprts and claims fr advances and reimbursements are supprted by the bks and recrds frm which the basic financial statements have been prepared. The cpies f federal prgram financial reprts prvided t yu are true cpies f the reprts submitted, r electrnically transmitted, t the respective federal agency r pass-thrugh entity, as applicable. We have charged csts t federal awards in accrdance with applicable cst principles. We are respnsible fr and have accurately prepared the summary schedule f prir audit findings t include all findings required t be included by OMB Circular A-133, and we have prvided yu with all infrmatin n the status f the fllw-up n prir audit findings by federal awarding agencies and pass-thrugh entities, including all management decisins. We are respnsible fr and have accurately prepared the auditee sectin f the Data Cllectin Frm as required by OMB Circular A-133. Signature: Rbert C. Schellhamer, Executive Directr Signature: Title: Page 7

11 FINANCIAL STATEMENTS SEPTEMBER 30, 2015

12 TABLE OF CONTENTS YEAR ENDED SEPTEMBER 30, 2015 INDEPENDENT AUDITORS REPORT 1 REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) 4 FINANCIAL STATEMENTS STATEMENT OF NET POSITION 10 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION 11 STATEMENT OF CASH FLOWS 12 NOTES TO FINANCIAL STATEMENTS 13 SUPPLEMENTARY INFORMATION 21 FINANCIAL DATA SCHEDULES: ENTITY-WIDE BALANCE SHEET SUMMARY 22 ENTITY-WIDE REVENUE AND EXPENSE SUMMARY 24 PROJECT-WIDE BALANCE SHEET SUMMARY 27 PROJECT-WIDE REVENUE AND EXPENSE SUMMARY 29 SINGLE AUDIT REPORTS 31 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 32 INDEPENDENT AUDITORS REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 36 NOTE TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 37 SCHEDULE OF FINDINGS AND QUESTIONED COSTS 38 SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS 40

13 CliftnLarsnAllen LLP INDEPENDENT AUDITORS REPORT Bard f Directrs Lancaster City Husing Authrity Lancaster, Pennsylvania Reprt n the Financial Statements We have audited the accmpanying financial statements f the Lancaster City Husing Authrity (the Authrity) which cmprise the statement f net psitin as f September 30, 2015, and the related statements f revenues, expenses and changes in net psitin, and cash flws fr the year then ended and the related ntes t the financial statements. Management s Respnsibility fr the Financial Statements Management is respnsible fr the preparatin and fair presentatin f these financial statements in accrdance with accunting principles generally accepted in the United States f America; this includes the design, implementatin, and maintenance f internal cntrl relevant t the preparatin and fair presentatin f financial statements that are free frm material misstatement, whether due t fraud r errr. Auditrs Respnsibility Our respnsibility is t express an pinin n these financial statements based n ur audit. We cnducted ur audit in accrdance with auditing standards generally accepted in the United States f America and the standards applicable t financial audits cntained in Gvernment Auditing Standards, issued by the Cmptrller General f the United States. Thse standards require that we plan and perfrm the audit t btain reasnable assurance abut whether the financial statements are free frm material misstatement. An audit invlves perfrming prcedures t btain audit evidence abut the amunts and disclsures in the financial statements. The prcedures selected depend n the auditrs judgment, including the assessment f the risks f material misstatement f the financial statements, whether due t fraud r errr. In making thse risk assessments, the auditr cnsiders internal cntrl relevant t the entity s preparatin and fair presentatin f the financial statements in rder t design audit prcedures that are apprpriate in the circumstances, but nt fr the purpse f expressing an pinin n the effectiveness f the entity s internal cntrl. Accrdingly, we express n such pinin. An audit als includes evaluating the apprpriateness f accunting plicies used and the reasnableness f significant accunting estimates made by management, as well as evaluating the verall presentatin f the financial statements. An independent member f Nexia Internatinal (1)

14 Bard f Directrs Lancaster City Husing Authrity We believe that the audit evidence we have btained is sufficient and apprpriate t prvide a basis fr ur audit pinin. Opinin In ur pinin, the financial statements referred t abve present fairly, in all material respects, the financial psitin f the Authrity as f September 30, 2015, and the changes in financial psitin and cash flws fr the year then ended in accrdance with accunting principles generally accepted in the United States f America. Other Matters Required Supplementary Infrmatin Accunting principles generally accepted in the United States f America require that the management s discussin and analysis n pages 4 thrugh 8 be presented t supplement the basic financial statements. Such infrmatin, althugh nt a part f the basic financial statements, is required by the Gvernmental Accunting Standards Bard wh cnsiders it t be an essential part f financial reprting fr placing the basic financial statements in an apprpriate peratinal, ecnmic, r histrical cntext. We have applied certain limited prcedures t the required supplementary infrmatin in accrdance with auditing standards generally accepted in the United States f America, which cnsisted f inquiries f management abut the methds f preparing the infrmatin and cmparing the infrmatin fr cnsistency with management s respnses t ur inquiries, the basic financial statements, and ther knwledge we btained during ur audit f the basic financial statements. We d nt express an pinin r prvide any assurance n the infrmatin because the limited prcedures d nt prvide us with sufficient evidence t express an pinin r prvide any assurance. Other Infrmatin Our audit was cnducted fr the purpse f frming pinins n the financial statements that cllectively cmprise the Authrity s basic financial statements. The financial data schedules listed as supplementary infrmatin in the table f cntents are presented fr purpses f additinal analysis and are nt a required part f the basic financial statements. The schedule f expenditures f federal awards as required by the U.S. Office f Management and Budget Circular A-133, Audits f States, Lcal Gvernments, and Nn-Prfit Organizatins is als presented fr the purpse f additinal analysis, and is nt a required part f the basic financial statements. The financial data schedules and the schedule f expenditures f federal awards are the respnsibility f management and were derived frm and relate directly t the underlying accunting and ther recrds used t prepare the basic financial statements. Such infrmatin has been subjected t the auditing prcedures applied in the audit f the basic financial statements and certain additinal prcedures, including cmparing and recnciling such infrmatin directly t the underlying accunting and ther recrds used t prepare the basic financial statements r t the basic financial statements themselves, and ther additinal prcedures in accrdance with auditing standards generally accepted in the United States f America. In ur pinin, the financial data schedules and schedule f expenditures f federal awards are fairly stated, in all material respects, in relatin t the basic financial statements as a whle. (2)

15 Bard f Directrs Lancaster City Husing Authrity Other Reprting Required by Gvernment Auditing Standards In accrdance with Gvernment Auditing Standards, we have als issued ur reprt dated April 14, 2016 n ur cnsideratin f the Authrity s internal cntrl ver financial reprting and n ur tests f its cmpliance with certain prvisins f laws, regulatins, cntracts, and grant agreements and ther matters. The purpse f that reprt is t describe the scpe f ur testing f internal cntrl ver financial reprting and cmpliance and the result f that testing, and nt t prvide an pinin n internal cntrl ver financial reprting r n cmpliance. That reprt is an integral part f an audit perfrmed in accrdance with Gvernment Auditing Standards in cnsidering the Authrity s internal cntrl ver financial reprting and cmpliance. a Baltimre, Maryland April 14, 2016 (3)

16 MANAGEMENT S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 The missin f the Lancaster City Husing Authrity (the Authrity) is t imprve the quality f life cnsistent with lcal, cmmnwealth, and federal statutes by prviding decent, safe, and sanitary husing fr lw and mderate incme individuals and families, retired persns, and the handicapped; recgnizing the residents as ur ultimate custmer; fstering an increased supply f quality husing affrdable t lw and mderate incme residents thrughut Lancaster Cunty; fstering develpment, wnership, and successful management f husing; taking a cmprehensive apprach that ges beynd bricks and mrtar, t build links t scial service and ecnmic develpment rganizatins, and t assist neighbrhd residents and cmmunity rganizatins in creating successful neighbrhds; administering rental assistance and related prgrams which allw peple t affrd and access the widest range f husing pprtunities; prviding supprt and referral services which enable families and individuals t cmprehensively address their husing and scial service needs and t becme increasingly self-sufficient. As management f the Lancaster City Husing Authrity, we ffer the readers f the Authrity's financial statements this narrative verview and analysis f the financial activities f the Authrity fr the year ended September 30, We encurage readers t cnsider the infrmatin presented here in cnjunctin with the Authrity's financial statements. Financial Highlights The assets f the Authrity exceeded its liabilities as f September 30, 2015 by $9,761,382 (net psitin). The Authrity's unrestricted cash balance as f September 30, 2015 was $3,076,328, representing an increase f $28,076 frm the prir year. The Authrity had $1,699,776 in tenant revenue, $7,953,034 in HUD PHA Operating Grants, and $685,468 f HUD Capital Grants fr the year ended September 30, Overview f the Financial Statements The financial statements included in this annual reprt are thse f a special-purpse gvernment engaged in a business-type activity. The fllwing statements are included: Statement f Net Psitin - reprts the Authrity's current financial resurces (shrt-term spendable resurces) with capital assets and lng-term debt bligatins, Statement f Revenues, Expenses, and Change in Net Psitin - reprts the Authrity's perating and nn-perating revenues by majr surce alng with perating and nn-perating expenses and capital cntributins. Statement f Cash Flws - reprts cash flws frm perating, financing, and investing activities. The mst imprtant questin asked abut the Authrity's finances is, "Is the Authrity as a whle better r wrse ff as a result f the year's activities?" (4)

17 MANAGEMENT S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 The attached analysis f net psitin, revenues, and expenses is prvided t assist with answering the abve questin. This analysis includes all assets and liabilities using the accrual basis f accunting, which is similar t the accunting used by mst private sectr cmpanies. Accrual accunting recgnizes revenues and expenses when earned and incurred regardless f when cash is received r paid. Our analysis als presents the Authrity's net psitin and changes therein. Yu can think f the Authrity's net psitin as the difference between what the Authrity wns (assets) t what the Authrity wes (liabilities). The change in net psitin analysis will assist the reader with measuring the health r financial psitin f the Authrity. Over time, significant changes in the Authrity's net psitin are an indicatr f whether its financial health is imprving r deterirating. T fully assess the financial health f any Authrity the reader must als cnsider ther nn-financial factrs such as changes in family cmpsitin, fluctuatins in the lcal ecnmy, HUD-mandated prgram administrative changes, and the physical cnditin f the Authrity's capital assets. Analysis f Net Psitin (Statement f Net Psitin) Ttal Assets fr the years ended September 30, 2015 and 2014, were $10,946,747 and $11,036,777, respectively. This represents a net decrease f $90,030 ver the prir year. The majrity f the decrease was the effect f depreciatin in lwering the net Capital Asset balance. Current Assets increased by $50,041 frm the prir year. This increase is primarily due t an increase in amunts due t the Authrity by HUD at year end. Lng-term receivables decreased by $35,304 due t an allwance taken fr fraud recvery receivables that are deemed uncllectible. Current liabilities increased frm $519,972 fr the year ended September 30, 2014 as cmpared t $696,337 fr the year ended September 30, This was an increase f $176,365. This increase is the result f an increase in year-end payables and accruals; alng with, a delay in the payment f the prir FY s PILOT. Nncurrent Liabilities increased by $31,822. The additinal nncurrent liabilities are related t FSS prgram escrws and an increase in cmpensated absences. (5)

18 MANAGEMENT S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 Statements f Net Psitin Ttal Change % Change Assets Cash and Cash Equivalents $ 3,473,303 $ 3,469,915 $ 3, % Other Current Assets 327, ,882 46, % Lng-Term Receivable 31,473 66,777 (35,304) (52.87)% Capital Assets 7,114,436 7,219,203 (104,767) (1.45)% Ttal Assets $ 10,946,747 $ 11,036,777 $ (90,030) (0.82)% Liabilities Current Liabilities $ 696,337 $ 519,972 $ 176, % Nn-Current Liabilities 489, ,206 31, % Ttal Liabilities 1,185, , , % Net Psitin Net Investment in Capital Assets 6,962,476 7,219,203 (256,727) (3.56)% Restricted Net Psitin 64, ,630 (46,092) (41.66)% Unrestricted Net Psitin 2,734,368 2,729,766 4, % Ttal Net Psitin 9,761,382 10,059,599 (298,217) (2.96)% Ttal Liabilities and Net Psitin $ 10,946,747 $ 11,036,777 $ (90,030) (0.82)% Net Capital Assets decreased by $104,767 frm the prir year Ttal Change % Change Land $ 350,012 $ 350,012 $ % Infrastructure 580, ,034 9, % Buildings and Imprvements 39,309,927 38,627, , % Furniture, Equipment, and Machinery 754, ,307 9, % 40,994,798 40,293, , % Less: Accumulated Depreciatin (33,880,362) (33,074,388) (805,974) 2.44% Net Capital Assets $ 7,114,436 $ 7,219,203 $ (104,767) -1.45% Land did nt change frm the prir year. Infrastructure, Buildings and Imprvements increased with the capital imprvement csts incurred in the current fiscal year. Furniture, Equipment, and Machinery increased fr vehicle purchases, net f dispsitins. Wrk in Prcess was nt incurred during the fiscal year. Accumulated depreciatin increased due t fiscal year depreciatin expense. (6)

19 MANAGEMENT S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 Analysis f Revenues (Statement f Revenues, Expenses, and Change in Net Psitin) The Authrity administers the fllwing prgrams and the revenues generated frm these prgrams fr the year ended September 30, 2015 were as fllws: Central Office Cst Center $ 5,444 Lw Rent Public Husing (AMPs) 4,160,499 Sectin 8 Rental Vucher 6,443,956 Sectin 8 Mderate Rehabilitatin SRO 48,313 Business Activities 23 Family Self-Sufficiency 29,325 Shelter Plus Care 46,489 Ttal Revenues $ 10,734,049 Ttal Revenues fr the years ended September 30, 2015 and 2014 were $10,734,049 and $10,180,000, respectively. The change frm 2014 t 2015 is due t an increase in Capital Fund Grant activity; alng with, additinal Sectin 8 funding fr HAP and Administrative Fees. Ttal Tenant Revenue increased by $3,755 frm the previus fiscal year. Analysis f Expenses (Statement f Revenues, Expenses, and Change in Net Psitin) Ttal Expenses decreased by $89,273 fr the year ended September 30, 2015 as cmpared t the year ended September 30, Ttal Change % Change Revenues Tenant Revenue $ 1,699,776 $ 1,696,021 $ 3, % HUD PHA Grants 7,953,034 7,942,210 10, % Capital Grants 685, , , % Investment Incme (3) (4.23)% Gain n Sale f Fixed Assets 1, , % Other Incme 393, ,248 (25,505) (6.08)% Ttal Revenues 10,734,049 10,180, , % Expenses Administrative 1,620,728 1,645,807 (25,079) (1.52)% Tenant Services 88,045 79,415 8, % Utilities 635, ,016 1, % Maintenance, Including Extrardinary & Casualty 1,534,414 1,382, , % General Expenses, Including Insurance 388, ,976 (5,910) (1.50)% Husing Assistance Payments 5,937,953 6,156,667 (218,714) (3.55)% Depreciatin Expense 827, ,771 (1,670) (0.20)% Ttal Expenses 11,032,266 11,121,539 (89,273) (0.80)% Change in Net Psitin (298,217) (944,182) 645,965 (68.42)% Beginning Net Psitin 10,059,599 11,003,781 (944,182) (8.58)% Ending Net Psitin $ 9,761,382 $ 10,059,599 $ (298,217) (2.96)% (7)

20 MANAGEMENT S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 Maintenance expenditures increased by $151,527, due primarily t an increase in labr csts fr vertime during the winter mnths and additinal maintenance cntracts were incurred fr nn-cyclical wrk items. Husing Assistance Payments (HAP) decreased by $218,714 because f a decrease in the number f families leased due t a higher than anticipated turnver rate Ecnmic Factrs and Next Year's Budgets The fllwing factrs were cnsidered in preparing the Authrity's budget fr the fiscal year ending September 30, 2015: 1. The uncertainty f a reductin f HUD funded subsidies. 2. The funding f the Husing Chice Vucher prgram fr 2015 was essentially based n 2014 HAP Expense reprted in the Vucher Management System. The Husing Authrity anticipates being able t huse an average f apprximately 905 families based n apprpriated Husing Assistance Payment funding plus HAP Reserves. 3. The Husing Authrity cntinues t take steps and measures t keep csts under cntrl and will utilize the Capital Fund grants t supplement peratins. In the event f extrardinary and ther unanticipated csts, the Authrity's Unrestricted Net Psitin is currently sufficient t cver any shrtfall. Cntacting the Authrity's Financial Management This financial reprt is designed t prvide investrs and creditrs with a general verview f the Authrity's finances and t shw the Authrity's accuntability fr the mney it receives. If yu have questins abut this reprt r t request additinal infrmatin, please cntact Rbert C. Schellhamer, Executive Directr, at Lancaster City Husing Authrity, 325 Church St., Lancaster, PA r (717) (8)

21 STATEMENT OF NET POSITION SEPTEMBER 30, 2015 ASSETS CURRENT ASSETS Cash and Cash Equivalents - Unrestricted $ 3,076,328 Cash and Cash Equivalents - Restricted 396,975 Accunts Receivable, Net 136,664 Prepaid Expenses 111,508 Inventries 79,363 Ttal Current Assets 3,800,838 NONCURRENT ASSETS Capital Assets, Net 7,114,436 Other Assets 31,473 Ttal Nncurrent Assets 7,145,909 Ttal Assets $ 10,946,747 LIABILITIES AND NET POSITION CURRENT LIABILITIES Accunts Payable $ 123,371 Accrued Wages / Payrll Taxes 138,195 Accunts Payable - HUD 1,590 Accunts Payable - Other Gvernment 194,068 Accrued Cmpensated Absences - Current Prtin 5,412 Accrued Liabilities 48,370 Tenant Security Depsits 180,477 Unearned Revenues 1,351 Other Current Liabilites 3,503 Ttal Current Liabilities 696,337 NONCURRENT LIABILITIES Accrued Cmpensated Absences 337,068 Other Nncurrent Liabilities 151,960 Ttal Nncurrent Liabilities 489,028 Ttal Liabilities 1,185,365 NET POSITION Net Investment in Capital Assets 6,962,476 Restricted 64,538 Unrestricted 2,734,368 Ttal Net Psitin 9,761,382 Ttal Liabilities and Net Psitin $ 10,946,747 See accmpanying Ntes t Financial Statement (9)

22 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEAR ENDED SEPTEMBER 30, 2015 OPERATING REVENUES Tenant Dwelling Rental $ 1,588,403 Other Tenant Rental 111,373 Ttal Tenant Incme 1,699,776 HUD Grants - Nncapital 7,953,034 Other Incme 393,743 Ttal Operating Revenues 10,046,553 OPERATING EXPENSES Administrative 1,620,728 Tenant Services 88,045 Utilities 635,959 Maintenance and Operatins 1,534,414 General Expense 388,066 Husing Assistance and Prtability Payments 5,937,953 Depreciatin Expense 827,101 Ttal Operating Expenses 11,032,266 Net Lss Frm Operatins (985,713) NONOPERATING REVENUES Gain n Sale f Fixed Assets 1,960 Investment Incme 68 Ttal Nnperating Revenues 2,028 Net Lss Befre Capital Cntributins (983,685) HUD Grants - Capital 685,468 DECREASE IN NET POSITION (298,217) Net Psitin - Beginning f Year 10,059,599 NET POSITION - END OF YEAR $ 9,761,382 See accmpanying Ntes t Financial Statement (10)

23 STATEMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 2015 CASH FLOWS FROM OPERATING ACTIVITIES Receipts Frm Custmers and Users $ 1,717,352 Gvernmental Grants and Subsidiary - Operatins 7,953,034 Cash Received Frm Other Surces 393,743 Payments t Suppliers fr Operatins (602,027) Payments fr Husing Operatins and Tenant Services (1,141,953) Husing Assistance Payments (5,937,953) Payments t Emplyees (2,343,970) Net Cash Flws Prvided By Operating Activities 38,226 CASH FLOWS FROM INVESTING ACTIVITIES Interest Received 68 Net Cash Flws Prvided By Investing Activities 68 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Grant Revenue - Capital Grants 685,468 Acquisitin f Capital Assets (722,334) Net Cash Flws Used In Capital and Related Financing Activities (36,866) CASH FLOWS FROM NON CAPITAL AND RELATED ACTIVITIES Prceeds frm Sale f Asset 1,960 Net Cash Flws Prvided By Capital and Related Financing Activities 1,960 NET INCREASE IN CASH AND CASH EQUIVALENTS 3,388 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 3,469,915 CASH AND CASH EQUIVALENTS, END OF YEAR $ 3,473,303 RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net Lss Frm Operatins $ (985,713) Adjustments t Recncile Operating Lss t Net Cash prvided by perating activities: Depreciatin 827,101 Bad Debt Expense (Tenants) 21,774 Effects f Changes in Operating Assets and Liabilities: Accunts Receivable (10,830) Prepaid Expenses (22,993) Other Assets 700 Accunts Payable 104,282 Accrued Wages / Payrll Taxes 30,469 Accrued Liabilities 31,899 Unearned Revenue 202 Cmpensated Absences 16,428 Tenant Security Depsits 6,632 Other Current Liabilities 3,503 Other Nncurrent Liabilities 14,772 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 38,226 See accmpanying Ntes t Financial Statement (11)

24 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Intrductin The Lancaster City Husing Authrity (the Authrity) was established fr the purpse f engaging in the develpment, acquisitin, and administrative activities f lw-incme husing prgrams and ther prgrams with similar bjectives. The United States Department f Husing and Urban Develpment (HUD) has direct respnsibility fr administering the lw-incme husing prgrams under the United States Husing Act f 1937, as amended. HUD is authrized t enter int cntracts with lcal husing authrities t prvide funding t assist the lcal husing authrities in financing the acquisitin, cnstructin and/r leasing f husing units and t make annual cntributins (subsidies) t the lcal husing authrities fr the purpse f maintaining the lw-rent character f the lcal husing prgrams. Reprting Entity Cnsistent with guidance cntained in generally accepted accunting standards prmulgated by the Gvernmental Accunting Standards Bard (GASB), the criteria used by the Authrity t evaluate the pssible inclusin f related entities (authrities, bards, cuncils, and s frth) within its reprting entity, are financial accuntability and the nature and significance f the relatinship. In determining financial accuntability in a given case, the Authrity reviews the applicability f the fllwing criteria: The Authrity is financially accuntable fr: 1. Organizatins that make up its legal entity. 2. Legally separate rganizatins if Authrity fficials appint a vting majrity f the rganizatin's gverning bdy and the Authrity is able t impse its will n the rganizatin r if there is a ptential fr the rganizatin t prvide specific financial benefits t, r impse specific burdens n, the Authrity as defined belw. Impsitin f Will - If the Authrity can significantly influence the prgrams, prjects, r activities f, r the level f services perfrmed r prvided by, the rganizatin. Financial Benefit r Burden - If the Authrity (1) is entitled t the rganizatin's resurces r (2) is legally bligated r has therwise assumed the bligatin t finance the deficits f, r prvide supprt t, the rganizatin r (3) is bligated in sme manner fr the debt f the rganizatin. 3. Organizatins which are fiscally dependent n the Authrity. Fiscal dependency is established if the rganizatin is unable t adpt its wn budget, levy taxes r set rates r charges, r issue bnded debt withut the apprval f the Authrity. Based n the freging criteria, n additinal entities are included in the accmpanying basic financial statements. (12)

25 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Reprting Entity (Cntinued) A summary f each f the prgrams administered by the Authrity included in the financial statements is prvided belw t assist the reader in interpreting the financial statements. These prgrams cnstitute all prgrams subsidized by HUD and perated by the Authrity. Public Husing Agency Owned Husing Prgram The public husing agency wned husing prgram is designed t prvide lw-cst husing within the city f Lancaster. Funding is prvided by subsidies frm HUD as well as frm mnthly rents charged t eligible residents based n family size, family incme, and ther determinants. On the financial data schedule, this prgram is recrded n the asset management prject level. Public Husing Capital Fund Prgram The public husing capital fund prgram utilizes grants frm HUD fr capital and management activities, including mdernizatin and develpment f public husing. On the financial data schedule, this prgram is cmbined with the perating fund at the asset management prject level. Sectin 8 Mderate Rehabilitatin Single Rm Occupancy The sectin 8 mderate rehabilitatin single rm ccupancy prgram prvides rental assistance t hmeless individuals. Under the prgram, HUD enters int annual cntributins cntracts with public husing agencies in cnnectin with the mderate rehabilitatin f residential prperties that, when rehabilitatin is cmpleted, will cntain multiple single rm dwelling units. Shelter Plus Care Prgram The shelter plus care prgram aims t prvide rental assistance t hmeless persns with disabilities and their families. Husing Chice Vucher Prgram The Authrity administers prgrams f rental assistance payments t private wners n behalf f eligible lw-incme families under Sectin 8 f the Husing and Urban Develpment Act f The prgram prvides payments cvering the difference between the maximum rental n a dwelling unit, as apprved by HUD, and the amunt f rent cntributed by a participating family. Funding fr this prgram is prvided by grants frm HUD. Business Activities Prgram This prgram accunts fr amunts allcated frm state grant prgrams and excess perating reserves frm Sectin 8 in prir years. Family Self-Sufficiency Prgram The family self-sufficiency prgram prmtes and prvides resurces t families increase earned incme and financial literacy, reduce r eliminate the need fr welfare assistance, and make prgress tward ecnmic independence and self-sufficiency. (13)