THE PENNSYLVANIA DIVISION,

HORSEMEN’S BENEVOLENT & PROTECTIVE

ASSOCIATION
BENEFIT TRUST

FINANCIAL REPORT

DECEMBER 31, 2021

 CONTENTS

FINANCIAL STATEMENTS

Statement of Net Assets Available for Benefits 1

Statement of Changes in Net Assets Available for Benefits 2

Statement of Cash Flows 3

Notes to Financial Statements 4–6

 Independent Auditor’s Report

Board of Directors and Secretary Thall, Pennsylvania Office of the Budget

Pennsylvania Division, Horsemen’s Benevolent & Protective Association Benefit Trust

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of the Pennsylvania Division, Horsemen’s
Benevolent & Protective Association Benefit Trust (Trust), which comprise the statement of net assets
available for benefits as of December 31, 2021, and the related statements of changes in net assets
available for benefits and cash flows for the year then ended, and the related notes to the financial
statements.

In our opinion, the financial statements referred to above present fairly, in all material respects, the
net assets available for benefits of the Trust as of December 31, 2021, and the changes in its net
assets available for benefits and its cash flows for the year then ended in accordance with accounting
principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United
States of America (GAAS). Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are
required to be independent of the Trust, and to meet our other ethical responsibilities in accordance
with the relevant ethical requirements relating to our audit. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for
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.

In preparing the financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about the Trust's
ability to continue as a going concern within one year after the date that the financial statements are
available to be issued.

Pursuing the profession while promoting the public good© Pittsburgh | Harrisburg | Butler
www.md-cpas.com State College | Erie | Lancaster
Board of Directors and Secretary Thall, Pennsylvania Office of the Budget
Pennsylvania Division, Horsemen’s Benevolent & Protective Association Benefit Trust
Independent Auditor’s Report
Page 2

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute
assurance and therefore is not a guarantee that an audit conducted in accordance with generally
accepted auditing standards will always detect a material misstatement when it exists. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control. Misstatements, including omissions, are considered material if there is a substantial
likelihood that, individually or in the aggregate, they would influence the judgment made by a
reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

 Exercise professional judgment and maintain professional skepticism throughout the audit.
 Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, and design and perform audit procedures responsive to those risks.
Such procedures include examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements.
 Obtain an understanding of internal control relevant to the audit 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 Trust's internal control. Accordingly, no such opinion is
expressed.
 Evaluate the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluate the overall
presentation of the financial statements.
 Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about the Trust's ability to continue as a going concern
for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit, significant audit findings, and certain internal
control related matters that we identified during the audit.

Maher Duessel
Harrisburg, Pennsylvania
August 24, 2022
THE PENNSYLVANIA DIVISION,
HORSEMEN'S BENEVOLENT & PROTECTIVE ASSOCIATION
BENEFIT TRUST

STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS

December 31, 2021

Assets
Cash and cash equivalents $ 79,085
Contributions receivable 81,222

Property and equipment - net of accumulated depreciation 118,940

Total Assets $ 279,247

Liabilites and Net Assets

Accounts payable $ 10,109

Net assets available for benefits 269,138

Total Liabilities and Net Assets $ 279,247

See Notes to Financial Statements.

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THE PENNSYLVANIA DIVISION,
HORSEMEN'S BENEVOLENT & PROTECTIVE ASSOCIATION
BENEFIT TRUST

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

Year Ended December 31, 2021

Additions To Net Assets Attributed To:

Plan contributions $ 453,647
Horsemen bookkeeper reverts - net 155,210
Rental income 6,973
Interest income 730
Miscellaneous 12,299
Total additions 628,859

Deductions From Trust Assets Attributed To:

Payments for:
Medical benefits 116,207
Dental benefits 141,315
Vision benefits 69,709
Death benefits 3,050
Miscellaneous benefits 434
330,715

Administrative Expenses:
Professional services 14,127
Utilities and maintenance 482
Plan administration 844
Depreciation 4,612
20,065

Total deductions 350,780

Changes in net assets 278,079

Net Assets Available for Benefits:

Beginning (8,941)
Ending $ 269,138

See Notes to Financial Statements.

2
THE PENNSYLVANIA DIVISION,
HORSEMEN'S BENEVOLENT & PROTECTIVE ASSOCIATION
BENEFIT TRUST

STATEMENT OF CASH FLOWS

Year Ended December 31, 2021

Cash Flows From Operating Activities:

Changes in net assets $ 278,079
Adjustments to reconcile changes in net assets to
net cash used in operating activities:
Depreciation 4,612
Changes in assets and liabilities:
Increase in:
Contributions receivable (56,686)
Decrease in:
Accounts payable (5,962)
Due to Affiliate (314,650)
Net cash used in operating activities (94,607)

Net decrease in cash and cash equivalents (94,607)

Cash and Cash Equivalents:

Beginning 173,692
Ending $ 79,085

See Notes to Financial Statements.

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THE PENNSYLVANIA DIVISION,
HORSEMEN’S BENEVOLENT & PROTECTIVE ASSOCIATION
BENEFIT TRUST

NOTES TO FINANCIAL STATEMENTS

Note 1. Description of the Plan

The following description of The Pennsylvania Division, Horsemen’s Benevolent & Protective
Association Benefit Trust (Trust) provides only general information. Participants should refer to the
Trust agreement for a more complete description on the Trust’s provisions. The Pennsylvania Division,
Horsemen’s Benevolent and Protective Association Health Benefit Plan (Plan) was adopted by the Trust.

The Trust was established to provide benevolence benefits to trainers and other individuals whose
primary compensation is derived from racing, training, and care of thoroughbred race horses. Benefits are
determined by the Trustees and are for the purpose of fostering the growth and general welfare of the
industry.

The Plan provides the following benefits:

General Benefits: The Plan provides health benefits (hospital, surgical, major medical, dental, vision),
death and emergency benefits (determined on a financial need basis and approved by the Trustees)
covering Trainers (Members) who have their horses stabled on a full-time basis at Penn National Race
Course or another stabling area approved by the Pennsylvania Division, Horsemen’s Benevolent &
Protective Association, Inc. (Association) at least 30 days prior to the date his/her participation is to
commence at Presque Isle Race Course; 60 days prior to commence at Penn National Race Course.
Additionally, to qualify, the Trainers must be duly licensed by the Pennsylvania State Horse Racing
Commission and have their primary place of business in Pennsylvania.

Other eligible participants of the Plan include Trainer's employees. The Plan pays benefits to
Member/Employees who are employed on a substantially full-time basis and their dependents up to age
19. No Member shall become a participant until he has completed an application. The Plan also provides
funding for a free health clinic for trainers and grooms. The Plan also provides a doctor on-site to treat the
participants for the common cold and/or other minor procedures, which the Plan does not cover.

Contributions: By agreement with the Mountainview Thoroughbred Racing Association and the
Pennsylvania National Turf Club, Inc., dated July 1, 2019, 3% of the purse money paid to the owner of
the winning horse is to be allocated to the Association. A Board Resolution, adopted in 2019, directs 2%
of the monthly purse money paid to be transferred directly to the Trust for the benefit of its members,
and the remaining 1% is retained within the Association. The amount received for membership
contributions in 2021 was $453,647. The live racing agreement also provides that all unclaimed inactive
horsemen’s bookkeeper accounts shall be turned over to the Trust for purposes described in the Trust
agreement. The amount received for horsemen bookkeeper reverts – net in 2021 was $155,210.

Note 2. Summary of Significant Accounting Policies

Basis of Accounting: The Trust’s financial statements have been prepared using the accrual basis of
accounting. The accrual basis of accounting is in accordance with accounting principles generally
accepted in the United States of America and provide that revenue be recognized when earned and
expenses are recorded when the corresponding liability is 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 at the date of the financial

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THE PENNSYLVANIA DIVISION,
HORSEMEN’S BENEVOLENT & PROTECTIVE ASSOCIATION
BENEFIT TRUST

NOTES TO FINANCIAL STATEMENTS

statements, and the reported amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates.

Property and Equipment: Property and equipment are recorded at cost. Depreciation is provided on the
straight-line method over the estimated useful lives of the individual assets. The Trust follows the
practice of capitalizing expenditures for property and equipment with a cost greater than $1,000 and a
useful life greater than one year.

Administrative Fees: Administrative expenses are paid by the Trust if not paid by the Association.

Subsequent Events: In preparing these financial statements, the Trust has evaluated events through the
Independent Auditor’s report date, which is the date the financial statements were available to be issued.

Note 3. Cash and Cash Equivalents

The total amount being carried as cash represents a petty cash account, the operating (checking account)
and an interest bearing money market account. At times, these deposits may exceed federally insured
limits. The Trust has not experienced any loss from maintaining its cash accounts in excess of federally
insured limits. Management believes it is not exposed to any significant credit risks on its cash accounts.

Note 4. Property and Equipment

The following is a summary of property and equipment, at cost less accumulated depreciation, at
December 31:

2021

Building - clinic/laundromat $ 159,712

EKG machine 3,433
Security system 4,543
167,688
Less: accumulated depreciation (48,748)
$ 118,940

Depreciation of property and equipment amounted to $4,612 for 2021.

Note 5. Related Party Transaction

In prior years, the Association loaned working capital to the Trust to help pay for medical benefits.
During 2021, the Trust repaid the working capital loan received from the Association. The Trust charges
rent to the Association of $581 monthly for the portion of the building being used for laundry services by
the Association. The terms of the rental agreement are month-to-month. Rental income for the year ended
December 31, 2021 totaled $6,973. During the year ended December 31, 2021, the Trust paid $307,677 to
the Association for the loan balance net of rent. As of December 31, 2021, the Trust has no amounts due
to or due from the Association.

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THE PENNSYLVANIA DIVISION,
HORSEMEN’S BENEVOLENT & PROTECTIVE ASSOCIATION
BENEFIT TRUST

NOTES TO FINANCIAL STATEMENTS

Note 6. Trust Termination

Under certain conditions, the Trust may be terminated. Upon termination, the assets then remaining shall
be subject to the applicable provisions of the Trust then in effect and shall be used until exhausted to pay
benefits to participants in the order of their entitlement.

Note 7. Tax Status

The Trust is not exempt from income tax, with the net investment income (after expenses) subject to tax.
The Trust files an annual tax return, U.S. Income Tax Return for Estates and Trusts, for each year ending
December 31. The filed tax return is subject to examination by the Internal Revenue Service generally for
three years after it is filed.

Additionally, an advisory opinion was sought that the benefits provided did not constitute a plan that was
subject to the Employee Retirement Income Security Act of 1974 and its reporting requirements. On
February 13, 1995, the U.S. Department of Labor issued an opinion that stated the Health Benefit Plan
was not subject to the Employee Retirement Income Security Act of 1974 and the annual filing
requirement of preparing Federal Form 5500.

Note 8. Donated Services

A number of unpaid volunteer officers and committees have made significant contributions of their time
toward developing and achieving the Trust’s goals and objectives. Contributions of donated services that
create or enhance nonfinancial assets, or that require specialized skills, are provided by individuals
possessing those skills, and would typically need to be purchased if not provided by donation, are
recorded at their fair values in the period received. During the year ended December 31, 2021, there were
no donated services that met the reporting requirements.