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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.


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The following are areas of legislative and administrative changes:

2019 Operating Cost Adjustment Factors (OCAFs)

On November 23, 2018, The Operating Cost Adjustment Factors (OCAF) for 2019 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, 2019.

2019 Utility Allowance Factors

Utility Allowance Factors for 2019, 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

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 to require second appraisal for certain reverse mortgages.

On September 28, 2018, The Federal Housing Administration (FHA) announced that it will begin requiring lenders originating new Home Equity Conversion Mortgages (HECMs), commonly referred to as reverse mortgages, to provide a second property appraisal under certain circumstances. FHA is instructing lenders to provide a second independent property appraisal in cases where FHA determines there may be inflated property valuations.

FHA’s new requirement takes effect for case numbers assigned on or after October 1, 2018 through September 30, 2019. FHA will periodically review this guidance and, based on the results, may renew these requirements beyond fiscal year 2019.

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 starting 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/Goverment 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 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
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