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Wilson & Associates, CPAs 2023 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 2023 and examines a number of areas that can help prepare you and make the Audit process go smoother and save you time and money.

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The following are areas of legislative and administrative changes:

  • Continued Availability COVID-19 Supplemental Payments
    The Notice H 2020-11 was issued on November 24, 2020, about the continued availability of supplemental operating funds for Section 8, Section 202, and Section 811 properties to prevent, prepare for, and respond to the coronavirus disease discovered in 2019 (COVID-19) and establish an application process for owners of properties assisted under these programs to request funds for one or more of these purposes. Appropriations provided under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. 116-136) are being provided via a special payment process that supplements the amount currently provided under existing Section 8, Section 202, and Section 811 rental assistance contracts administered by the Office of Multifamily Housing.
  • 2021 Operating Cost Adjustment Factors (OCAFs)
    On November 27, 2020, The Operating Cost Adjustment Factors (OCAF) for 2021 were published in the Federal Register. This notice establishes operating cost adjustment factors (OCAFs) for project-based assistance contracts issued under Section 8 of the United States Housing Act of 1937 and renewed under the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA) for eligible multifamily housing projects having an anniversary date on or after February 11, 2021. Reference:
    (Page 263)
  • 2021 Utility Allowance Factors
    FY 2021 UAFs Table is applicable to Utility Allowance adjustments effective February 11, 2021, and later. The Department of Housing and Urban Development’s Office of Housing permits owners/agents to use Utility Allowance Factors (UAFs) for projects subject to the requirements found in Housing’s Utility Analysis Notice.
  • 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 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


  • FHA announces new single-family loan limits for 2021
    On December 2, 2020, The Federal Housing Administration (FHA) today announced the agency’s new schedule of loan limits for the calendar year 2021 for its Single Family Title II forward and Home Equity Conversion (reverse) Mortgage insurance programs. Loan limits for most of the country will increase in the coming year resulting from robust house price appreciation, which is factored into the statutorily mandated calculations FHA uses as part of its methodology for determining the limits each year. The new loan limits are effective for FHA case numbers assigned on or after January 1, 2021.
  • 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 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.


  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 records.
  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 the 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 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 clients, be sure you have reviewed all your loan files.
  16. For lender clients, make sure you are familiar with the Quality Control changes as revised in October 2016.
  17. For lender clients, 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
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