Multifamily Audit Thresholds and FASSUB Validation Issue

February 12, 2026 – AHACPA has received numerous inquiries regarding the current audit threshold requirements for multifamily submissions, particularly in light of the increased Single Audit threshold for non-profit entities.

The summary below is intended to clarify the applicable thresholds and outline the current system-related issue affecting certain owner-certified submissions.

Audit Threshold Summary – Multifamily Submissions

For purposes of determining audit requirements, “federal awards” refers to federal financial assistance as defined in 2 CFR Part 200.

  • Multifamily profit-motivated entities with $500,000 or more in federal awards must file an audited submission.
  • Multifamily non-profit entities:
    • FYE on or after 09/30/2025 with $1,000,000 or more in federal awards must file an audited submission.
    • FYE prior to 09/30/2025 with $750,000 or more in federal awards must file an audited submission.
  • As of 02/10/2026, REAC’s FASSUB system has not been updated to reflect the non-profit threshold increase. It remains at $750,000. See below for further discussion.

Profit Motivated Entities

The threshold for profit-motivated entities is $500,000. There is some confusion regarding this threshold due to an erroneous FASSUB system update which occurred in the fall of 2024. At that time the FASSUB system was temporarily changed to display a threshold of $750,000 for profit-motivated entities.  This was later reversed. The threshold for profit-motivated entities remains $500,000.

Non-Profit Entities

In accordance with 2 CFR Part 200, Subpart F, the Single Audit threshold for fiscal years beginning on or after October 1, 2024 increased from $750,000 to $1,000,000. As of February 10, 2026 the FASSUB submission template does not appear to reflect this updated threshold.

In most cases, this does not create a problem. Audited nonprofit submissions typically exceed the threshold, and most owner-certified submissions fall well below it. However, when total federal awards fall between $750,000 and $1,000,000, owner-certified submissions will not validate and therefore cannot be completed in FASSUB.

Specifically, if the sum of the following accounts exceeds the programmed threshold, the system requires the submission to be entered as audited:

Projects with HUD-Insured Mortgages

  • 2170 – Mortgage Payable – First Mortgage (Short Term)
  • 2175 – Flexible Subsidy Loan Payable (Short Term)
  • 2320 – Mortgage (or Bonds) Payable – First Mortgage (or Bonds)
  • 5121 – Tenant Assistance Payments
  • 5193 – Special Claims Revenue

Projects without HUD-Insured Mortgages

  • 5121 – Tenant Assistance Payments
  • 5193 – Special Claims Revenue

Interim Filing Considerations

Based on the guidance contained in Attachment 1, Section C of Submission and Review Requirements & REMS Critical Data Fields for Annual Financial Statements
(“Miller Memo”) AHACPA previously advised affected clients to request an
extension of the submission filing deadline. This issue is HUD-system-driven and
appears to align with the criteria set forth in the Miller Memo, which states
that approvals may occur when circumstances beyond the owner’s control exist or
when database problems prevent timely filing.

However, extension requests submitted on this basis are currently being denied
by REAC’s Technical Assistance Center (REAC-TAC) with the following explanation:

“This request for extension is being disapproved because it fails to meet the criteria established by HUD’s Office of Asset Management. FASS-FHA has not been given authority to grant a Global Extension or any other extensions. For purposes of the Owner Certified, please select the Owner Certified Greater than $750K.”

This response does not appear to account for the updated $1,000,000 Single Audit threshold or the resulting
FASSUB validation limitation.

As a result, owners filing owner-certified submissions where total federal awards fall between $750,000 and $1,000,000 currently face limited options:

  • Delay submission until FASSUB is updated to reflect the current threshold, which may result in referral to DEC for late filing;
  • Reclassify amounts out of the triggering FASSUB
    accounts to allow validation, which would not accurately reflect the
    financial statement presentation;
  • Submit as “Owner Certified Greater than $750K”, which
    causes the system to expect an audited submission and may require subsequent
    clarification or waiver request.

At this time, no formal written guidance has been issued addressing how these submissions will be treated once the FASSUB system is updated to reflect the $1,000,000 threshold.

Filers choosing this approach should retain documentation of:

  • Their federal award calculation,
  • The applicable Uniform Guidance threshold,
  • The REAC-TAC response advising this selection.

AHACPA will continue to monitor the situation and will provide updates if formal written guidance is issued.

Multifamily Threshold Resources

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