2011 PHFA Annual Report - Pennsylvania Housing Finance Agency

notes to
1. Reporting Entity
The Pennsylvania Housing Finance Agency (“Agency”) is a component unit of the
Commonwealth of Pennsylvania as described in Governmental Accounting Standards Board
(“GASB”) Statement No. 14, The Financial Reporting Entity, as amended by GASB Statement
No. 39, Determining whether Certain Organizations are Component Units. The Agency’s financial
information is included in the Commonwealth’s financial statements, but the Agency is not
considered part of the Commonwealth’s primary government.
The Agency was created by the General Assembly in 1972 to provide affordable housing for older
adults, persons and families of modest means and persons with disabilities. Pursuant to the Housing
Finance Agency Law, Act of December 3, 1959, P. L. 1688 (“Act”), as amended, the Agency is
authorized and empowered, among other things, to finance the construction and rehabilitation of
housing units for persons and families of low and moderate income, persons with special needs or
the elderly who receive subsidies or assistance from federal government programs.
The Act was amended to authorize the Agency to make or purchase mortgage loans to finance
the purchase, construction, improvement or rehabilitation of owner-occupied single-family
residences and to finance the construction and rehabilitation of housing units without requiring
the housing units to be subsidized or assisted by a federal government program. The initial
legislation and subsequent amendments grant the Agency the power to issue debt to finance its
programs and operations. Debt obligations issued under the provisions of the Act are not a debt or
pennsylvania housing finance agency
financial state ments
years ended June 30, 2011 and 2010
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liability of the Commonwealth of Pennsylvania or any of its political subdivisions or a pledge of
the faith and credit of the Commonwealth of Pennsylvania or of any of its political subdivisions.
A fourteen member Board governs the Agency. The Secretary of Banking, the Secretary of
Community and Economic Development, the Secretary of Public Welfare and the State Treasurer
serve by virtue of their offices. The majority and minority leaders of the State Senate and House
of Representatives name four members to the Board. Six private citizen members are appointed by
the Governor and confirmed by the State Senate.
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Agency are reported using the economic resources measurement
focus and the accrual basis of accounting. Revenues are recorded when earned, regardless of
when the cash flow takes place. Expenses are charged as incurred, except those directly related to
mortgage loan or program originations, which are deferred, netted against fee income for mortgage
loans originated and amortized over the contractual life of the related mortgage loan or program.
The Agency complies with GASB pronouncements in conformity with GASB Statement No. 20,
Accounting and Reporting for Proprietary Funds and Other Governmental Entities that Use Proprietary
Fund Accounting, which was issued to give guidance in determining generally, accepted accounting
principles for governmental proprietary funds. It provides that all proprietary funds follow all