FINANCIAL STATEMENTS

The principal financial statements have been prepared to report the financial position and results of operations of HUD, pursuant to the requirements of 31 U.S.C. 3515(b). While the financial statements have been prepared from HUD's books and records in accordance with formats prescribed by OMB, the statements are in addition to the financial reports used to monitor and control budgetary resources, which are prepared from the same books and records.

The principal financial statements and notes should be read with the realization that they are for a component of the U.S. Government, a sovereign entity.

The financial statements presented herein are:

The Consolidated Balance Sheet, as of September 30, 2012 and 2011, which presents those resources owned or managed by HUD that are available to provide future economic benefits (assets); amounts owed by HUD that will require payments from those resources or future resources (liabilities); and residual amounts retained by HUD comprising the difference (net position).

The Consolidated Statement of Net Cost, which presents the net cost of HUD operations for the years ended September 30, 2012 and 2011. HUD's net cost of operations includes the gross costs incurred by HUD less any exchange revenue earned from HUD activities.

The Consolidated Statement of Changes in Net Position, which presents the change in HUD's net position resulting from the net cost of HUD operations, budgetary financing sources other than exchange revenues, and other financing sources for the years ended September 30, 2012 and 2011.

The Combined Statement of Budgetary Resources, which presents the budgetary resources available to HUD during FY 2012 and 2011, the status of these resources at September 30, 2012 and 2011, and the outlay of budgetary resources for the years ended September 30, 2012 and 2011.

The Notes to the Financial Statements provide important disclosures and details related to information reported on the statements.