Summary of Changes and How to Save Time and Money
Wilson & Associates, CPAs 2019 HUD Audit Guide – 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 2019 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 2019
MULTIFAMILY PROGRAM CHANGES FOR THE YEAR END 2019
The following are areas of legislative and administrative changes:
– 2019 Operating Cost Adjustment Factors (OCAFs)
Notice of Certain Operating Cost Adjustment Factors for 2019 was published by Housing and Urban Development Department on November 23, 2018. Application date is February 11, 2019.
– 2019 Utility Allowance Factors
Multifamily Utility Allowance Factors are available now. Effective date is February 11, 2019.
– Standardization of REAC Inspection Notification Timelines
On February 22, 2019, HUD issued Standardization of REAC Inspection Notification Timelines.
LENDER PROGRAM CHANGES FOR THE YEAR END 2019
– FHA proposed new lender certification requirements.
On May 9, 2019, the Federal Housing Administration (FHA) proposed new lender certification requirements.
– Quality Control Changes
FHA-approved lenders need to have a Quality control plan to meet the compliance requirement. The Quality control need to be reviewed on timely basis.
HOW TO SAVE TIME AND MONEY
- 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.
- 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.
- 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.
- 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.
- 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.
- Be sure any HUD physical inspection exceptions are handled in a timely fashion.
- Have a dedicated Company Officer work with the external auditor and answer all questions in a timely fashion.
- Use HUD Chart of Accounts when you can.
- Comply with all HUD document requirements in a timely fashion. An example would be Repair and Replacement requests.
- 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.
- 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.
- Get your REAC filing started early because since most Financial Statements are filed the week before the filing deadline.
- With a new property, be sure the property is completely registered in the HUD system well before the financial statement reporting time deadlines.
- On Section 8 Housing, be sure you have reviewed all your tenant files for accuracy before your auditor asks to see them.
- For lender client, be sure you have reviewed all your loan files.
- For lender client, make sure you are familiar with the Quality Control changes as revised October 2016.
- For lender client, make sure you are familiar with the HUD Audit Guide Chapter 7FHA–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