Summary of Changes and How to Save Time and Money
Wilson & Associates, CPAs HUD Audit Guide – 2018 and Summary of Changes
There are a number of things that you can do to save money and prepare for your annual audit. This HUD Audit Guide goes over some major Program Changes for the year ended 2018 and examines a number of areas that can help prepare you and make the Audit process go smoother and save you time and money.
OFFICIAL HUD CONSOLIDATED AUDIT GUIDE YEAR END 2018
MULTIFAMILY PROGRAM CHANGES FOR THE YEAR END 2018
The following are areas of legislative and administrative changes that occurred in 2018:
2018 Operating Cost Adjustment Factors (OCAFs)
The Operating Cost Adjustment Factors (OCAF) for 2018 were published in the Federal Register. These factors are used for adjusting or establishing Section 8 rents under the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA), as amended, for projects assisted with Section 8 Housing Assistance Payments. The factors are effective February 11, 2018.
2018 Utility Allowance Factors
Utility Allowance Factors for 2018, which may be used to adjust baseline utility allowances prepared in accordance with Housing Notice 2015-04.
It is now available on HUD User at https://www.huduser.gov/portal/datasets/muaf.html
DUNS Number Required on All Voucher Submissions
Effective December 1, 2017, vouchers that do not contain an active Dun & Bradstreet’s (DB) Data Numbering System (DUNS) Number will generate a Tenant Rental Assistance Certification System (TRACS) fatal error and will not receive payment until corrected. Attached is the memorandum dated June 2, 2017, that implements the requirement to include the DUNS numbers on all vouchers submitted to the Tenant Rental Assistance Certification System (TRACS).
For technical support questions regarding a DUNS number, contact the SAM Federal Service Desk at 1-866-606-8220.
Lender Program Changes for the Year-end 2018
HUD Audit Guide Chapter 7, FHA-Approved Lenders Audit Guidance is revised in October 2016.
Quality Control Changes
Compliance Requirement. The adoption and implementation of a quality control plan is a required element of a lender’s application for approval to participate in FHA programs.
Implementation. FHA-approved lenders must implement a quality control plan consistent with their needs and the above-referenced guidance to assist corporate management in determining whether their personnel are following HUD requirements and corporate policies and procedures.
Audit Procedures. Auditors are required to test Compliance and Implementation of Quality Control as detailed in HUD Audit Guide Chapter 7.
FHA Single Family Housing Policy Handbook 4000.1 is revised in September 2016
The Federal Housing Administration’s (FHA) Single Family Housing Policy Handbook 4000.1 (SF Handbook) is a consolidated, consistent, and comprehensive source of FHA Single Family Housing policy.
Change to Annual Recertification on LEAP
On August 1, 2016, FHA implemented revised certification statements. The changes will be applied to start with lenders with Fiscal Year End July 2016. The following documents describe changes and a comparison of the previous versions to the current versions by mortgagee type.
- Supervised/Non-supervised Mortgagees
- Investing/Government Mortgagees
A lender that does not wish to retain its FHA approval must submit a request for voluntary withdrawal of FHA approval.
How to Save Time and Money
1. Be sure your accounting records are in good shape and all Balance Sheet accounts are supported by backup documentation. Your accounting staff can create what is called a lead sheet for all Balance Sheet accounts. A lead sheet details all account activities including attachments that support all major entries. I would recommend you have a qualified accountant do this step as it can save you money if done right. Be sure you give your accountant full access to the general ledger and books or record.
2. Be sure any Section 8 project has its required DUNS number. You obtain this number from Dun & Bradstreet for each physical location of your business for U.S. Government Contracts.
3. For Section 8 Housing be sure you hire a competent Property Manager who is familiar with Section 8 housing and the voucher subsidy system. Good Property Managers familiar with Section 8 housing will have competent staff who are trained with filing voucher subsidy requests plus handling all the complicated paperwork necessary for a Section 8 housing project.
4. Be sure you have read your Regulatory Agreement and understand it. Too many clients neglect this step and find themselves in serious trouble for not adhering to all the agreements they have made with HUD. If you have any questions about your agreement, please contact my office.
5. Be sure you respond to any requests from the Contract Administrator in a timely fashion as these can overwhelm an onsite Property Manager who is not experienced in Section 8 housing.
6. Be sure any HUD physical inspection exceptions are handled in a timely fashion.
7. Have a dedicated Company Officer work with the external auditor and answer all questions in a timely fashion.
8. Use HUD Chart of Accounts when you can.
9. Comply with all HUD document requirements in a timely fashion. An example would be Repair and Replacement requests.
10. Get all audit work papers “audit ready” for your accountant by the first week of February as the Financial Statements need to be filed with REAC by March 31 or March 30 if in a leap year.
11. Make sure all REAC access to your financial statement file is obtained well before the REAC financial statement filing deadline date, as the process can be time-consuming.
12. Get your REAC filing started early because since most Financial Statements are filed the week before the filing deadline.
13. With a new property, be sure the property is completely registered in the HUD system well before the financial statement reporting time deadlines.
14. On Section 8 Housing, be sure you have reviewed all your tenant files for accuracy before your auditor asks to see them.
15. For lender client, be sure you have reviewed all your loan files.
16. For lender client, make sure you are familiar with the Quality Control changes as revised October 2016.
17. For lender client, make sure you are familiar with the HUD Audit Guide Chapter 7 FHA-Approved Lenders Audit Guidance as revised October 2016.
Online resources for multifamily housing:
HUD website contains a wealth of information from phone numbers of HUD staff to excerpts from recent Congressional hearings.
HUD Mailing Lists
Sign up for Multifamily Housing Rental Housing Integrity Improvement Program Tips
Tenant Rental Assistance Certification System (TRACS)
TRACS is a HUD computer system developed to help improve financial controls over assisted housing programs by automating manual procedures and incorporating automated controls.
The Real Estate Assessment Center’s “product” is information; accurate, credible and reliable information assessing the condition of HUD’s housing portfolio. PIH-REAC Technical Assistance Center Phone: 1-888-245-4860
If you have any questions, contact Gregory K. Wilson CPA
3525 Fourth Avenue
San Diego, CA 92103