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To the Department of Housing and Urban Development Attached is the financial report of Community Housing of Little Rock, Inc. HUD Community No. 082-HD037 as of and for the year ended June 30, 2016.

Beall Barclay & Company, PLC

BEALL BARCLAY & COMPANY, PLC Certified Public Accountants Russellville, Arkansas January 10, 2017 Audit Firm TIN: 71-0355269 Audit Firm ID (UII): 41370 Engagement Partner: Josh Masters 2410 E. Parkway, Suite 3 Russellville, Arkansas 72802 Phone: (479) 498-9655

COMMUNITY HOUSING OF LITTLE ROCK, INC.

FINANCIAL STATEMENTS

JUNE 30, 2016

COMMUNITY HOUSING OF LITTLE ROCK, INC. HUD COMMUNITY NO. 082-HD037

JUNE 30, 2016 TABLE OF CONTENTS

Page INDEPENDENT AUDITORS' REPORT ............................................................................................ 1 FINANCIAL STATEMENTS Statement of Financial Position .................................................................................................... 4

Statement of Activities .................................................................................................................. 6

Statement of Cash Flows ............................................................................................................. 8

Notes to Financial Statements .................................................................................................. 10

SUPPLEMENTARY INFORMATION Supplementary Data Required by HUD .................................................................................... 16

Schedule of Expenditures of Federal Awards ........................................................................... 19

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 .......................................... 20 INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE ................................................................................................................ 22 SCHEDULE OF FINDINGS AND QUESTIONED COSTS ........................................................... 25 SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS ................................................... 27 CERTIFICATION OF COMMUNITY OWNER ............................................................................... 28 MANAGEMENT AGENT’S CERTIFICATION ............................................................................... 29 INDEPENDENT ACCOUNTANTS’ REPORT ON APPLYING AGREED-UPON PROCEDURE .................................................................................................. 30

INDEPENDENT AUDITORS' REPORT Board of Directors Community Housing of Little Rock, Inc. Pine Bluff, Arkansas Report on the Financial Statements

We have audited the accompanying statement of financial position of Community Housing of Little Rock, Inc. (a nonprofit organization), HUD Community No. 082-HD037, as of June 30, 2016, and were engaged to audit the related statements of activities and cash flows for the year then ended, and the related 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 conducting the audit in accordance with auditing standards generally accepted in the United States of America. Because of the matter described in the Basis for Disclaimer of Opinion paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the changes in net assets and cash flows or the consistency of application of accounting principles with the preceding year.

We conducted our audit of the statement of financial position 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 statement of financial position is 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 auditors’ 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 auditors consider internal control relevant to the entity’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 the entity’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 on the statement of financial position.

Basis for Disclaimer of Opinion on Changes in Net Assets, Cash Flows, and Consistency

The accounting records and related evidence provided by management and made available to us were not sufficient to permit the application of auditing procedures necessary to obtain sufficient appropriate audit evidence about the classifications and amounts comprising the statement of financial position at June 30, 2015. The significant aspects of the balance sheet at that date, including classifications and amounts, materially affect the determination of the results of operations and cash flows for the year ended June 30, 2016, and the consistency of application of accounting principles between 2016 and 2015.

Disclaimer of Opinion on Changes in Net Assets, Cash Flows, and Consistency

Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the changes in net assets and cash flows for the year ended June 30, 2016, or on the consistency of application of accounting principles with the preceding year. Accordingly, we do not express an opinion on the changes in net assets and cash flows for the year ended June 30, 2016, or on the consistency of application of accounting principles with the preceding year.

Opinion on Statement of Financial Position

In our opinion, the statement of financial position presents fairly, in all material respects, the financial position of Community Housing of Little Rock, Inc. as of June 30, 2016, in accordance with accounting principles generally accepted in the United States of America.

Correction of Error As discussed in Note 6, the Organization has made a correction to its prior year financial statements that impacted the beginning balances of net assets for the year ended June 30, 2016. Our opinion is not modified with respect to this matter.

Other Matters

Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information shown on pages 16 to 18 is presented for purposes of additional analysis as required by the Consolidated Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General, and is not a required part of the financial statements. The accompanying Schedule of Expenditures of Federal Awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), is presented for the purposes of additional analysis and is 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 audit 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 January 10, 2017, on our consideration of Community Housing of Little Rock, Inc.’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 the 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 Community Housing of Little Rock, Inc.’s internal control over financial reporting and compliance.


BEALL BARCLAY & COMPANY, PLC Certified Public Accountants Russellville, Arkansas January 10, 2017

COMMUNITY HOUSING OF LITTLE ROCK, INC. HUD COMMUNITY NO. 082-HD037 STATEMENT OF FINANCIAL POSITION

JUNE 30, 2016

See Independent Auditors’ Report and Notes to Financial Statements. - 4 -

CURRENT ASSETS1120 Cash - operations 4,081$ 1130 Tenant accounts receivable 1021140 Accounts receivable - operations 5951200 Prepaid expenses 2,100

1100T Total Current Assets 6,878$

DEPOSITS HELD IN TRUST - FUNDED1191 Tenant deposits held in trust 4,509

RESTRICTED DEPOSITS AND FUNDED RESERVES1320 Replacement reserve 9,782 1340 Residual receipts reserve 632

1300T 10,414

PROPERTY AND EQUIPMENT1410 Land 53,1051420 Buildings 1,035,2691440 Building equipment - portable 3,5661490 Miscellaneous fixed asset 20,670

1400T 1,112,610 1495 Less accumulated depreciation 752,958

1400N 359,652

1000T Total Assets 381,453$

ASSETS


CURRENT LIABILITIES 2110 Accounts payable - operations 4,429$ 2120 Accrued wages payable 181 2123 Accrued management fee payable 5,704 2174 Other loans and notes (short term) 38,3362210 Prepaid revenue 891

2122T Total Current Liabilities 49,541$

DEPOSIT LIABILITIES2191 Tenant security deposits payable 4,232

2000T Total Liabilities 53,773

NET ASSETS 3131 Unrestricted net assets (785,720) 3132 Temporarily restricted net assets 1,113,400

327,680

2033T Total Liabilities and Net Assets 381,453$

LIABILITIES AND NET ASSETS


STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2016


RENT REVENUE5120 Rent revenue - gross potential 52,128$ 5121 Tenant assistance payments 90,081

5100T Total rent revenue 142,209$ 5122 Less utility allowances 5625220 Less vacancies - apartments 11,8925250 Less rental concessions 125

5152N Net rental revenue 129,630

OTHER REVENUE5410 Financial revenue - project operations 25440 Revenue from investments - replacement reserve 2

5400T Total financial revenue 4

5910 Laundry and vending revenue 2035920 Tenant charges 985

5900T Total other revenue 1,188

5000T Total revenue 130,822

ADMINISTRATIVE EXPENSES6203 Conventions and meetings 396250 Other renting expense 1266310 Office salaries 2,0676311 Office expenses 8,6496320 Management fee 13,0716330 Manager or superintendent salaries 4,9796350 Audit expense 10,3546351 Bookkeeping fees/accounting services 13,0286390 Miscellaneous administrative expenses 3,713

6263T Total Administrative Expenses 56,026

UTILITIES EXPENSES6450 Electricity 6,0496451 Water 5,8986453 Sewer 5,979

6400T Total utilities expense 17,926


OPERATING AND MAINTENANCE EXPENSES6510 Payroll 2,7216515 Supplies 7,4716520 Contracts 30,8086525 Garbage and trash removal 7,7006546 Heating/cooling repairs and maintenance 3,399

6500T Total operating and maintenance expenses 52,099

TAXES AND INSURANCE EXPENSES6711 Payroll taxes 8266720 Property and liability insurance (hazard) 10,9896721 Fidelity bond insurance 2006722 Workmen's compensation 2026723 Health insurance and other employee benefits 989

6700T Total taxes and insurance 13,206

OPERATING RESULTS6000T Total cost of operations before depreciation 139,257

5060T Profit (loss) before depreciation (8,435)

6600 Less depreciation expense 42,242

5060N Operating profit or (loss) (50,677)$

CHANGE IN NET ASSETS3250 Change in total net assets from operations (50,677)$

S1100-060 Unrestricted net assets, beginning of year 367,233

S1100-065 Other Changes in unrestricted net assets - prior period adjustment (1,102,276)

3131 Unrestricted net assets, end of year (785,720)$

S1100-070 Temporarily restricted net assets, beginning of year -$

S1100-075 Other Changes in unrestricted net assets - prior period adjustment 1,113,400

3132 Temporarily restricted net assets, end of year 1,113,400$

ADDITIONAL INFORMATIONS1000-010 Total first mortgage principal payments required during

the audit year -$

S1000-020 Total of 12 monthly deposits in the audit year into the replacement reserve account, as required by the regulatory agreement evenif payments may be temporarily suspended or reduced 14,688$


STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2016


CASH FLOWS FROM OPERATING ACTIVITIESS1200-010 Rental receipts 130,127$ S1200-020 Interest receipts 4S1200-030 Other operating receipts 1,188S1200-040 Total receipts 131,319$

S1200-050 Administrative (42,955)S1200-070 Management fee (7,367)S1200-090 Utilities (17,926)S1200-100 Salaries and wages (2,540)S1200-110 Operating and maintenance (43,919)S1200-140 Property insurance (13,089)S1200-150 Miscellaneous taxes and insurance (2,217)S1200-160 Tenant security deposits 430S1200-230 Total disbursements (129,583)

S1200-240 Net Cash From Operating Activities 1,736

CASH FLOWS FROM INVESTING ACTIVITIESS1200-250 Net change in the replacement reserve 800S1200-260 Net change in the residual receipts account 96

S1200-350 Net Cash From Investing Activities 896

S1200-470 Net increase in cash and cash equivalents 2,632

S1200-480 Cash at beginning of year 1,449

S1200T Cash at end of year 4,081$


RECONCILIATION OF CHANGE IN NET ASSETS TONET CASH FROM OPERATING ACTIVITIES

3250 Change in net assets (50,677)$ Adjustments to reconcile change in net assets to cash

from operating activities:6600 Depreciation expense 42,242$ S1200-490 Change in tenants accounts receivable (102)S1200-520 Change in prepaid expenses 9,024S1200-540 Change in accounts payable (3,291)S1200-560 Change in accrued liabilities 5,885S1200-580 Change in tenant security deposits held in trust 430S1200-590 Change in prepaid revenue 891S1200-600 Other adjustments: change in bank overdraft (2,666)

Total adjustments 52,413

Net Cash From Operating Activities 1,736$


NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Activities Community Housing of Little Rock, Inc. ("the Community") is a nonprofit organization incorporated in the State of Arkansas. The Community is operated under Section 811 of the National Housing Act and regulated by the U.S. Department of Housing and Urban Development (HUD) with respect to rental charges and operating methods. The Community owns a 23-unit apartment complex for persons with disabilities located in Little Rock, Arkansas. The Community’s major program is its Section 811 Capital Advance Program. The Community has a Project Rental Assistance Contract (PRAC). Under the terms of the contract, the Community may request a rent increase by a budget based rent increase subject to approval by HUD. The contract expires August 1, 2017. A significant portion of the Community’s rental income is received from HUD. The Community extends unsecured credit to its residents for rent and ancillary charges.

Basis of Accounting The Community’s policy is to prepare its financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Revenues are recognized in the period in which they are earned. Expenses are recognized in the period in which they are incurred.

Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities 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.

Property and Equipment Property and equipment are recorded at cost, if purchased, and at fair market value on the date donated, if contributed. The cost of property and equipment purchased or donated, in excess of $5,000 is capitalized. Depreciation of property and equipment is computed on the straight-line method over the estimated useful lives of the assets, which range from three to twenty five years.

Cash Equivalents For purposes of the Statement of Cash Flows, the Community considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. At June 30, 2016, the Community had no cash equivalents.

Advertising The Community follows the policy of charging advertising to expense as incurred.



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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Distributions The Community’s regulatory agreement with HUD stipulates, among other things, that the Community will not make distributions of assets or income to any of its officers or directors. Income Rental income is recognized as rentals become due. Rental payments received in advance are deferred until earned. All leases between the Community and tenants of the property are operating leases. Income Taxes and Uncertain Tax Positions The Community qualifies as an organization exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and a similar state statute and is not subject to tax at the entity level for Federal and state income tax purposes. Consequently, no provision or liability for income taxes is reflected in the accompanying financial statements. In addition, the Community has been classified as an organization that is not a private foundation. The Community accounts for uncertain tax positions in accordance with the provisions of Financial Accounting Standards Board (FASB) Codification Topic Income Taxes. FASB Codification Topic Income Taxes clarifies the accounting for uncertainty in income taxes and requires the Community to recognize in their financial statements the impact of a tax position taken or expected to be taken in a tax return, if that position is more likely than not to be sustained under audit, based on the technical merits of the position. Management has assessed the tax positions of the Community and determined that no positions exist that require adjustment or disclosure under the provisions of FASB Codification Topic Income Taxes. The Community files informational “Return of Organization Exempt from Income Tax” (Form 990) in the U.S. Federal jurisdiction. Long-Lived Assets FASB Codification Topic Property, Plant and Equipment, Section Subsequent Measurement requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The application of this Codification Topic has not materially affected the Community’s reported change in net assets, financial position or cash flows. Subsequent Events Subsequent events are evaluated through the date the financial statements were available to be issued, which is the date of the Independent Auditors’ Report.



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NOTE 2: RENT INCREASES Under the regulatory agreement, the Community may not increase rent charged to tenants without HUD approval. NOTE 3: FINANCIAL INSTRUMENTS WITH RISK OF ACCOUNTING LOSS

The Community uses financial institutions in which it maintains cash balances, which at times may exceed federally insured limits. The Community has not experienced any losses in such accounts, and management believes it is not exposed to any significant credit risk related to cash. NOTE 4: FUNCTIONAL ALLOCATION OF EXPENSES Expenditures incurred in connection with the Community’s operations and expenditures made for corporate purposes have been summarized on a functional basis in the Statement of Activities. NOTE 5: CONCENTRATIONS OF RISK AND CONTINGENT LIABILITIES Federal Awards Program The Community is the recipient of various Federal awards. These award programs are subject to audit by Federal or state governments or their representatives. Accordingly, the amount, if any, of expenditures which may be disallowed by the program representatives cannot be determined at this time, although the Community expects such amounts, if any, to be immaterial. Concentration A significant portion of the Community’s income is derived from governmental funding through HUD. During the year ended June 30, 2016, $90,081 or 69% of total revenues was derived from this source. Regulatory Environment The Community operates a 23-unit apartment complex. The Community’s operations are concentrated in the multifamily real estate market. In addition, the Community operates in a heavily regulated environment. The operations of the Community are subject to the administrative directives, rules, and regulations of Federal, state and local regulatory agencies, including, but not limited to, HUD. Such administrative directives, rules and regulations are subject to change by an act of Congress or an administrative change mandated by HUD. Such changes may occur with little notice or inadequate funding to pay for the related cost, including the additional administrative burden, to comply with a change and could impact the Community materially in the near term.



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NOTE 6: PRIOR PERIOD ADJUSTMENTS

Restrictions on Net Assets The Community restated its beginning net assets as of July 1, 2015 due to corrections necessary to properly reflect temporary restrictions on net assets from the HUD Capital Advance Program (see Note 7). The effect on the financial statements was as follows:

Decrease in unrestricted net assets $ 1,113,400 (Increase) in temporarily restricted net assets (1,113,400)

These corrections have no effect on the changes in net assets for the year ended June 30, 2015.

Other adjustments During the year ended June 30, 2016, the Community found the payments made for various disbursements and expenses were not properly recorded in previous year:

Increase in prepaid expenses $ 11,124 (Increase) in unrestricted net assets (11,124)

The effect of these corrections would have had a positive increase of $11,124 on the changes in net assets for the year ended June 30, 2015. NOTE 7: CAPITAL ADVANCE PROGRAM AND TEMPORARILY RESTRICTED NET

ASSETS The Community began operations on August 2, 1998. Under the Section 811 Capital Advance Program, HUD advanced $1,113,400 to the Community to construct housing for low-income persons with disabilities. This amount bears no interest and repayment is not required as long as the housing remains available for the designated purpose. At the end of 40 years, the Community retains all rights to the capital advance. Until that time, the $1,113,400 will be classified as temporarily restricted net assets. Failure to keep the housing available for the designated purpose can result in HUD billing the owner for the entire capital advance outstanding plus interest since the date of the first advance. Except for those mentioned above, none of the Community's net assets are subject to donor-imposed restrictions. Accordingly, all net assets other than the amount of the capital advance are accounted for as unrestricted net assets.



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NOTE 8: HUD-RESTRICTED DEPOSITS AND DEPOSITS HELD IN TRUST The restricted deposits include the replacement reserve account. The Community shall utilize these amounts to fund major repairs, capital expenditures and replacement of capital items in the Community. Monthly deposits of $832 were required to be deposited into the replacement reserve account from July 2015 through October 2015. HUD temporarily suspended the required deposits from November 2015 through January 2016. Monthly required deposits of $832 resumed for February and March 2016 and were then increased by HUD to $2,400 per month beginning in April 2016. Deposits held in trust consist of tenant’s security deposits, which are maintained in a separate account to fund future repayment of security deposits.

In addition, the Community is required to deposit any surplus cash, calculated in accordance with HUD requirements, into a separate bank account (the “Residual Receipts Account”) within sixty days after the Community’s fiscal year end. Balances accumulated in the Residual Receipts Account are restricted and disbursement requires prior written approval from HUD. NOTE 9: MANAGEMENT FEE At the beginning of the year, the Community had a HUD-approved management agent certification with M.T. Graham and Associates, Inc. Management fees are based on 7.81% of collections. Management fees earned and paid to M.T. Graham and Associates, Inc. amounted $856 for the year ended June 30, 2016. During the year ended June 30, 2016, Intrepid Management, Inc. (IMI) replaced M.T. Graham and Associates, Inc. as the management agent for the Community. The Community has a HUD-approved management agent certification (Form 9839-B) with Intrepid Management, Inc. Management fees are based on 8.15% of collections and totaled $12,215 for the year ended June 30, 2016. Management fees incurred but not paid of $5,704 are included in accrued management fee payable on the Statement of Financial Position at June 30, 2016. NOTE 10: RELATED PARTY TRANSACTIONS The management company uses the services of the following related parties meeting the HUD definition of identity of interest entities through common control.



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NOTE 10: RELATED PARTY TRANSACTIONS - CONTINUED Little Rock Community Mental Health Center, Inc. (LRCMHC) was a former management agent for the Community and is related to the Community through common board members. The Community has loans payable to LRCMHC of $9,999 and $28,337. These loans are unsecured, non-interest bearing, and are repayable only from surplus cash as defined by HUD. As of June 30, 2016, the Community had no surplus cash. The Community also reimbursed LRCMHC $7,808 for insurance expenses that LRCMHC paid on behalf of the Community. Arkansas Consolidated Payroll Processing, LLC provides onsite employees and payroll processing for the Community. During the year ended June 30, 2016, this vendor was paid $12,334 for the labor and processing services. The cost for the employee labor has been recorded on the Statement of Activities in the various payroll and benefit categories, based on the cost of the respective services provided. These expenses have been recorded in accounts 6310, 6330, and 6510 based on the type of employee, office assistant, manager, or maintenance, respectively. In addition, the expense for payroll processing, payroll taxes, workers compensation, health insurance, and miscellaneous expenses related to these employees is recorded in accounts 6520, 6711, 6722, and 6723, respectively. Certified Heat & Air, LLC provides contract maintenance services and heating and air equipment to the Community as needed. During the year ended June 30, 2016, this vendor was paid $3,075 for these services.

Intrepid Investments, Inc. provides background check services to the Community as needed. During the year ended June 30, 2016, this vendor was paid $126 for these services. Intrepid Flooring, Inc. provides flooring products and services to the Community as needed. During the year ended June 30, 2016, this vendor was paid $1,456 for these services.

JCC I-30, LLC provides data storage and archival services to the Community as needed. During the year ended June 30, 2016, this vendor was paid $61 for these services.

United Properties Management provides central administrative services to the Community as needed. During the year ended June 30, 2016, this vendor was paid $425 for these services.

Schultz Landscaping, LLC provides lawn maintenance and landscaping services to the Community as needed. During the year ended June 30, 2016, this vendor was paid $12,170 for these services. See Note 9 for details of the management fee paid to IMI.

SUPPLEMENTARY INFORMATION


SUPPLEMENTARY DATA REQUIRED BY HUD COMPUTATION OF SURPLUS CASH (DEFICIENCY) - ANNUAL

JUNE 30, 2016

See Independent Auditors’ Report - 16 -

CASHCash - operations 4,081$ Tenant deposits held in trust 4,509

Total Cash 8,590

CURRENT OBLIGATIONSAccounts payable due within 30 days 4,429Accrued wages payable 181Accrued management fee payable 5,704Tenant security deposits liability 4,232 Other loans and notes (short term) 38,336 Prepaid revenue 891

Total Current Obligations 53,773

SURPLUS CASH (DEFICIENCY) (45,183)$


SUPPLEMENTARY DATA REQUIRED BY HUD SCHEDULE OF CHANGES IN FIXED ASSETS

JUNE 30, 2016


BEGINNING ENDING BALANCE ADDITIONS DEDUCTIONS BALANCE

Land 53,105$ -$ -$ 53,105$

Buildings 1,035,269 - - 1,035,269

Building equipment - portable 3,566 - - 3,566

Miscellaneous fixed assets 20,670 - - 20,670

Total assets 1,112,610 - - 1,112,610

Less accumulated depreciation (710,716) (42,242) - (752,958)

401,894$ (42,242)$ -$ 359,652$


SUPPLEMENTARY DATA REQUIRED BY HUD SCHEDULE OF RESERVE ACCOUNTS

JUNE 30, 2016


BALANCE, BEGINNING OF YEAR 10,582$

Total monthly deposits 12,864 Net interest income 2 Less:

Approved withdrawals (88)Other withdrawals (13,578)

BALANCE, END OF YEAR 9,782$

BALANCE, BEGINNING OF YEAR 728$

Total monthly deposits - Net interest income - Less:

Approved withdrawals (96)

BALANCE, END OF YEAR 632$

Schedule of Reserve for Replacements

Schedule of Residual Receipts


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2016


FEDERAL AGENCY/PASS - CLUSTER/PROGRAM THROUGH ENTITY CFDA NUMBER AMOUNT

Supportive Housing for the U.S. Department of Housing andPersons with Disabilities - Urban DevelopmentSection 811 Capital Advance 14.181 1,113,400$

Section 8 Housing U.S. Department of Housing andAssistance Payments Urban DevelopmentProgram 14.856 90,081

Total 1,203,481$

Notes to Schedule:

1.

2.

3.

This schedule of expenditures of Federal awards includes the Federal awards activity ofCommunity Housing of Little Rock, Inc. and is presented on the accrual basis of accounting.The information in this schedule is presented in accordance with the requirements of Title 2 U.S.Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles,and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedulepresents only a selected portion of the operations of Community Housing of Little Rock, Inc., it isnot intended to and does not present the financial position, changes in net assets, or cash flowsof Community Housing of Little Rock, Inc.

Expenditures reported on the schedule are reported on the accrual basis of accounting. Suchexpenditures are recognized following the cost principles contained in the Uniform Guidance,wherein certain types of expenditures are not allowable or are limited as to reimbursement.Community Housing of Little Rock, Inc. has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.

Prior to July 1, 2015, Community Housing of Little Rock, Inc. received a U.S. Department ofHousing and Urban Development capital advance under CFDA number 14.181. The amount ofthe capital advance received is included in the Federal expenditures presented in the schedule.Community Housing of Little Rock, Inc. received no additional capital advances during the year.

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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

Board of Directors Community Housing of Little Rock, Inc. Pine Bluff, Arkansas We have audited, 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, the financial statements of Community Housing of Little Rock, Inc. (a nonprofit organization) HUD Community No. 082-HD037, which comprise the statement of financial position as of June 30, 2016, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements and have issued our report thereon dated January 10, 2017. This report includes a disclaimer of opinion on the changes in net assets and cash flows for the year ended June 30, 2016, and on the consistency of application of accounting principles with the preceding year, due to the inability of management to provide sufficient appropriate audit evidence about the classifications and amounts comprising the statement of financial position at June 30, 2015. Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered Community Housing of Little Rock, Inc.’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 the entity’s internal control. Accordingly, we do not express an opinion on the effectiveness of the entity’s internal control.

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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 Community Housing of Little Rock, Inc.’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 or other matters 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 the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.



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INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR

EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

Board of Directors Community Housing of Little Rock, Inc. Pine Bluff, Arkansas Report on Compliance for The Major Federal Program We have audited Community Housing of Little Rock, Inc.’s (a nonprofit organization) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on the entity’s major Federal program for the year ended June 30, 2016. The entity’s major Federal program is identified in the summary of independent auditors’ results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the Federal statutes, regulations, and the terms and conditions of its Federal awards applicable to its Federal programs. Auditors’ Responsibility Our responsibility is to express an opinion on compliance for Community Housing of Little Rock, Inc.’s major Federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on the major Federal program occurred. An audit includes examining, on a test basis, evidence about the entity’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

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We believe that our audit provides a reasonable basis for our opinion on compliance for the major Federal program. However, our audit does not provide a legal determination of the entity’s compliance. Opinion on the Major Federal Program In our opinion, Community Housing of Little Rock, Inc. complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major Federal program for the year ended June 30, 2016. Report on Internal Control Over Compliance Management of Community Housing of Little Rock, Inc. is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the entity’s internal control over compliance with the types of requirements that could have a direct and material effect on the major Federal program as a basis for designing the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for the major Federal program and to test and report on internal control over compliance in accordance with Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the entity’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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Purpose of this Report The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of Uniform Guidance. Accordingly, this report is not suitable for any other purpose.



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SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

Summary of Independent Auditors’ Findings 1. The opinions expressed in the independent auditors’ report were:

☒ Unmodified – Statement of Financial Position ☐ Qualified ☐ Adverse ☒ Disclaimer – Statement of Activities, Statement of Cash Flows

2. The independent auditors’ report on internal control over financial reporting

disclosed:

Significant deficiency(ies)? ☐ Yes ☒ None reported Material weakness(es)? ☐ Yes ☒ No

3. Noncompliance considered material to the financial statements was disclosed by the audit? ☐ Yes ☒ No

4. The independent auditors’ report on internal control over compliance with requirements that could have a direct and material effect on each major Federal awards program disclosed:

Significant deficiency(ies)? ☐ Yes ☒ None reported Material weakness(es)? ☐ Yes ☒ No

5. The opinions expressed in the independent auditors’ report on compliance for the major Federal award programs were:

☒ Unmodified ☐ Qualified ☐ Adverse ☐ Disclaimer

6. The audit disclosed findings required to be reported by the

Uniform Guidance? ☐ Yes ☒ No

7. The Organization’s major programs were:

CFDA Number

Supportive Housing for the persons with disabilities (Section 811 Capital Advance) 14.181

Cluster/Program

8. The threshold used to distinguish between Type A and Type B programs as those

terms are defined in Uniform Guidance was $750,000. 9. The Organization qualified as a low-risk auditee as that term is defined in

Uniform Guidance? ☐ Yes ☒ No

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SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

SECTION II. FINDINGS RELATING TO THE FINANCIAL STATEMENT AUDIT AS

REQUIRED TO BE REPORTED IN ACCORDANCE WITH GENERALLY ACCEPTED GOVERNMENT AUDITING STANDARDS

None SECTION III. FINDINGS AND QUESTIONED COSTS FOR MAJOR FEDERAL AWARD

PROGRAM AUDIT None

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SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED JUNE 30, 2016

None

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JUNE 30, 2016

Certification of Community Owner We hereby certify that we have examined the accompanying financial statements and supplemental data of Community Housing of Little Rock, Inc., HUD Community No. 082-HD037 and, to the best of our knowledge and belief, the same are accurate and complete. Community Housing of Little Rock, Inc. Identification Number: 71-0696408

platham

Stamp

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JUNE 30, 2016

Management Agent's Certification We hereby certify that we have examined the accompanying financial statements and supplemental data of Community Housing of Little Rock, Inc., HUD Community No. 082-HD037 and, to the best of our knowledge and belief, the same are accurate and complete. Intrepid Management, Inc. Identification Number: 20-4202042

platham

Stamp

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INDEPENDENT ACCOUNTANTS’ REPORT ON APPLYING AGREED-UPON PROCEDURE

Board of Directors Community Housing of Little Rock, Inc. Little Rock, Arkansas We have performed the procedure described in the second paragraph of this report, which was agreed to by Community Housing of Little Rock, Inc. and the U.S. Department of Housing and Urban Development, Public Indian Housing - Real Estate Assessment Center (PIH-REAC), solely to assist them in determining whether the electronic submission of certain information agrees with the related hard copy documents included within the Uniform Guidance reporting package. Community Housing of Little Rock, Inc. is responsible for the accuracy and completeness of the electronic submission. This agreed-upon procedure engagement was conducted in accordance with the attestation standards established by the American Institute of Certified Public Accountants and the standards applicable to attestation engagements contained in Government Auditing Standards issued by the Comptroller General of the United States. The sufficiency of the procedure is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedure described in the attached schedule either for the purpose for which this report has been requested or for any other purpose. We compared the electronic submission of the items listed in the “UFRS Rule Information” column with the corresponding printed documents listed in the “Hard Copy Documents” column. The results of the performance of our agreed-upon procedure indicate agreement or non-agreement of the electronically submitted information and hard copy documents as shown in the attached schedule. We were engaged to perform an audit in accordance with OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), by Community Housing of Little Rock, Inc. as of and for the year ended June 30, 2016, and have issued our reports thereon dated January 10, 2017. The information in the “Hard Copy Documents” column was included within the scope, or was a by-product of that audit. Further, our opinion on the fair presentation of the supplementary information dated January 10, 2017, was expressed in relation to the

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basic financial statements of Community Housing of Little Rock, Inc. taken as a whole. A copy of the reporting package required by Uniform Guidance, which includes the auditors’ reports, is available in its entirety from Community Housing of Little Rock, Inc. We have not performed any additional auditing procedures since the date of the aforementioned audit reports. Further, we take no responsibility for the security of the information transmitted electronically to the U.S. Department of Housing and Urban Development, PIH-REAC. This report is intended solely for the information and use of Community Housing of Little Rock, Inc. and the U.S. Department of Housing and Urban Development, PIH-REAC, and is not intended to be and should not be used by anyone other than these specified parties.



See Independent Accountants’ Report on Applying Agreed-Upon Procedure. - 32 -

COMMUNITY HOUSING OF LITTLE ROCK, INC. COMMUNITY NO. 082-HD037

ATTACHMENT TO INDEPENDENT ACCOUNTANTS’ REPORT ON APPLYING AGREED-UPON PROCEDURE

UFRS Rule Information Hard Copy Document(s) Findings

Balance Sheet, Revenue and Expense and Cash Flow Data (account numbers 1120 to 7100T and the S1200 series)

Supplemental Schedules with Financial Statement Data

Agrees

Surplus Cash (S1300 series of accounts)

Computation of Surplus Cash, Distributions and Residual Receipts (Annual)

Agrees

Footnotes (S3100 series of accounts)

Notes to the Financial Statements Agrees

Type of Opinion on the Financial Statements and Auditor Reports (S3400, S3500 and S3600 series of accounts)

Auditors’ Reports on the Financial Statements, Compliance and Internal Control

Agrees

Type of Opinion on Supplemental Data (account number S3400-100)

Auditors’ Report on Supplemental Data

Agrees

Audit Findings Narrative (S3800 series of accounts)

Schedule of Findings and Questioned Costs

Agrees

General Information (S3300, S3700 and S3800 series of accounts)

Schedule of Findings and Questioned Costs and OMB Data Collection Form

Agrees