HUD Issues Revised Chapter 1 of HUD Guide
Temporary Guidance Issued for 2013
In GAQC Alert #221, we informed you about the OMB proposed changes to the DCF and guidance that was being developed for situations when 2013 single audits are completed prior to the final 2013 DCF being available. That guidance has been finalized and posted to the home page of the Federal Audit Clearinghouse and is as follows:
“If a single audit for a fiscal period ending in 2013 is due before the 2013 Form is available, auditees will not be able to meet the thirty day deadline for submission prescribed by OMB Circular A-133, section. 320(a). Therefore, OMB has granted an extension until September 30, 2013 for reporting packages due to the Clearinghouse before that date. The extension is automatic and there is approval required. The Extension applies only to single audits for the fiscal periods ending in 2013. ”
Update to the HUD Guide Issued
Late last week, HUD issued a revision to Chapter 1, General Audit Guidance, of the HUD Guide. The revised Guidance applies to all entities required to undergo an audit under the HUD Guide and is effective for audits of entities with year ends ending on or after June 30, 2013. The transmittal letter for Chapter 1 indicates that the revision is intended to reflect changes in Government Auditing Standards.
The last time this chapter was significantly revised was in mid-2011. After the 2011 update, the GAQC communicated certain comments and questions to HUD about the chapter. Some of the new revisions to Chapter 1 are also addressing the previous GAQC feedback. In January 2013, a mre directed change was made to Chapter1 to eliminate the $2 million major program threshold for FHA-approved lenders (see GAQC Alert #210). That change continues to be reflected in the new chapter.
Some of the changes being made to Chapter 1 are as follows:
The chapter clarifies that the HUD Guide is mandatory for audits of for-profit entities that are subject to HUD’s uniform financial reporting standards and related mortgage letters. Additionally, it more clearly explains that the HUD Guide requires a financial statement audit and a compliance audit of the major HUD programs and that the HUD Guide is to be used for the compliance audit portion of the audit.
- The chapter clarifies that audits of states, local governments and not-for-profit organizations (NPOs) are subject to Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Government, and Nonprofit Organizations, and that auditors should use the OMB Compliance Supplement (Supplement ) and not the HUD Guide for those audits. It goes on to state that the HUD Guide can be used to build an audit program in accordance with Part 7 of the Supplement when a program covered in the HUD Guide is not included in the Supplement. Finally, it removes the previous discussion in Chapter 1 of the submission of the single audit reporting package directly to HUD.
- The Auditor qualifications section of the previous chapter was removed. That section discussed matters such as peer review, licensing, and independence. Even though these items were removed for the chapter, auditors should keep in mind that Government Auditing Standards applies to these HUD audits and includes many of the same topic areas within its general standards. Note that HUD did add paragraph 1-8 to the new chapter to remind auditors about the Government Auditing Standards requirement for peer review and to emphasize that the peer review report does not need to be submitted by the auditor the HUD or HUD Office of Inspector General unless requested or provided for in another chapter of the HUD Guide.
- The previous table that described major program threshold amounts has been deleted and the threshold requirements are now discussed in paragraph format. In general, the information provided on this topic area is unchanged.
- Government Auditing Standards and Circular A-133 Audits (GAS – A 133 Guide). Note that Chapter 11 of the GAS –A 133 Guide (which is the chapter that discusses attribute sampling in a single audit) will provide useful guidance to auditors even if they are using the sampling guidance in Chapter 1 of the HUD Guide. Finally, the Chapter 1, Appendix A, guidance on sampling was revised to define small populations as 250 items or fewer, to be more consistent with the AICPA GAS/A-133 Guide. The previous threshold for small items in the Chapter 1 Appendix was 200.
- The chapter was updated to remove material that was duplicative or conflicting with other chapters. It was also streamlined to remove duplicative references to or restatements of requirements in Government Auditing Standards or Generally Accepted Auditing Standards. Auditors should closely look at paragraph 1-5, Planning the Audit, Which includes a number of these types of “streamlining” changes.
- Discussion regarding the corrective action plan and Fair Housing and Nondiscrimination requirements were removed from Chapter 1 as these topics are covered elsewhere in the HUD Guide.