What HUD Auditors Are Really Looking For: Insider CPA Insights

HUD audits can feel intimidating, especially if you’re unsure what auditors will be focusing on. The truth is, HUD auditors follow a detailed roadmap—the HUD Consolidated Audit Guide—and they’re trained to look for specific compliance issues, financial inconsistencies, and internal control weaknesses.

As CPAs who specialize in HUD audits, we’ve been on both sides of the process: performing audits and helping housing providers prepare for them. In this blog, we share insider insights into what HUD auditors are really looking for—and how your organization can meet those expectations with confidence.

Compliance with Program Requirements

At the heart of every HUD audit is a fundamental question: Are you following the rules of the program you’re funded under?

Auditors will closely review whether your organization is:

  • Serving eligible tenants
  • Calculating rent correctly
  • Charging only allowable costs
  • Following timelines for recertifications, inspections, and reporting

Insider Tip: HUD expects a high standard of documentation. Auditors won’t take your word for it—if it’s not documented, it didn’t happen. Keep everything organized and easy to access.

Accurate and Complete Financial Statements

Your financial records should tell a consistent, accurate story of how HUD funds are being used. Auditors will examine:

  • The general ledger
  • Expense classifications
  • Bank reconciliations
  • Year-end financial statements

Insider Tip: One of the most common findings is misclassifying expenses or co-mingling HUD funds with unrelated accounts. Use separate accounting codes or funds to keep HUD finances crystal clear.

Internal Controls That Actually Work

It’s not enough to say you have internal controls—auditors want proof they’re working. This includes:

  • Segregation of duties
  • Formal policies and procedures
  • Oversight of financial transactions
  • Regular reviews or audits

Insider Tip: Internal controls are one of the first things auditors test. If one person has control over both approving and recording transactions, that’s a red flag.

Procurement and Vendor Management

Auditors are often on the lookout for procurement violations—especially with large contracts or services. They will check:

  • Competitive bidding processes
  • Vendor selection documentation
  • Contract terms
  • Conflict-of-interest disclosures

Insider Tip: Even if you consistently use the same vendor, you must still document competitive pricing or justify a sole-source decision. HUD expects transparency and fair competition.

Adherence to Reporting Deadlines

HUD requires timely reporting—both financial and programmatic. Late or inaccurate submissions are frequent audit findings.

Insider Tip: Maintain a compliance calendar with key HUD deadlines and assign responsibility for each task. Don’t wait until the last minute to prepare reports.

Alignment with the HUD Audit Guide

The HUD Consolidated Audit Guide is the gold standard for how auditors perform their work. It outlines what procedures they must follow, what tests they must run, and what documentation they’ll need.

Insider Tip: Housing providers can benefit from reviewing the guide themselves or working with a CPA who knows it inside and out. Being familiar with it puts you a step ahead of the audit process.

Let Wilson & Associates CPA Help You Get Audit-Ready

We’ve helped hundreds of HUD-funded organizations prepare for and pass audits with minimal findings and zero surprises. Our team knows exactly what HUD auditors are looking for—because we’ve been there.

Whether you need a pre-audit review, internal control assessment, or year-round compliance support, we’re here to help you stay confident, compliant, and focused on your mission.

📞 Need HUD audit support? Contact us today to learn how Wilson & Associates CPA can make your next audit your easiest yet.