Rubino & Company, Chartered Housing Authority of the City of Spartanburg FY 2016 Independent Audit Board Presentation April 25, 2017 Rubino & Company, Chartered 6903 Rockledge Drive Suite 1200 Bethesda, MD 20817 301.564.3636 www.Rubino.com

Your Engagement Team J. Michael Stephens, Shareholder Ben Karlin, Sr. Associate Vidur Bhalla, Associate

Engagement Scope Audit of the Housing Authority of the City of Spartanburg (SHA) Single Audit in Accordance with Uniform Guidance (new single audit rules effective this year) Audit of Discretely Presented Component Units (Mary Wright & Wright Center LLC’s) Additional procedures on closed grants as required by HUD Additional procedures for implementation of GASB 68 related to State Pension Plan

Audit Status Presentation of draft financial statements today which include Authority and component units Presentation of management letter All audit work is completed Submission to HUD through REAC and Federal Audit Clearing House due by June 30, 2017

Review of Financial Statements and Related Reports An Unmodified opinion on the financial statements. Net Position decreased $793.1 Million for the year after consideration of the $408.8 Thousand prior period adjustment. Assets decreased $1.8 Million primarily due to increases in cash, decreases in capital assets as a result of RAD, and new deferred outflows as result of State Pension Plan. Liabilities decreased $620.1 Thousand primarily due to decreases in debt. Net position decrease of $1.2 Million overall with decrease in invested in capital assets of $9.1 Million; increase in restricted of $8.7 Million to $24.5 Million primarily for change in notes receivable; and decrease in unrestricted of $395.8 thousand to $6.2 Million due to joining state pension plan.

Review of Financial Statements and Related Reports (continued) Total revenues increased $5.3 Million primarily due to increase in CFP grant funding and transfers of property through RAD offsetting declines in rent. Total expenses decreased $972.3 Thousand primarily due to increases in administration, maintenance, and HAP payments offsetting decreases in utilities and depreciation. Retirement Plan disclosure changed significantly this year and resulted in required prior period adjustment. Litigation Disclosure. Subsequent Events disclosure for RAD activity and foreclosure.

Review of Financial Statements and Related Reports (continued) Audit Opinion Unmodified opinion on financial statements and on compliance Report On Internal Control No findings reported in current year Report on Compliance No findings in current year

Review of Financial Statements and Related Reports (continued) Single Audit Report Programs tested included Housing Choice Voucher and HOME Investment Partnerships Programs. No findings identified in either program.

Required Communications to The Board Communication required under Auditing Standards (SAS 114) Auditor’s responsibilities under generally accepted auditing standards Scope and Timing of the Audit Significant Findings from the Audit Qualitative aspects of significant accounting policies – New GASB in current year No significant difficulties encountered during the audit Corrected and uncorrected misstatements Revised trial balances and Financial Data Schedule Prior period adjustment based on debt confirmation Passed adjustments related to miscellaneous immaterial variances in reconciliations

Required Communications to the Board (continued) There were no disagreements with Management There were no management consultations with other accountants Significant issues discussed with Management Implementation of GASB 68 related to State Pension Status of RAD Mary Wright and SHAPCO Foreclosure and Transactions Independence Management Representation

Open Items and Closing Comments Issue financial statements and submit to HUD through REAC Submit reports to Federal Audit Clearinghouse Closing Comments Impact of GASB 68 and joining state pension plan Impact of Uniform Guidance and new pronouncements going forward

Rubino & Company contacts Questions? Rubino & Company contacts J. Michael Stephens, CPA mstephens@Rubino.com