How ASU 2016-18 Will Impact Your Upcoming Audits

Published: 08/30/2019


How ASU 2016-18 will Impact your Upcoming Audits

With 2019 audit planning right around the corner, AHACPA wants to let you know of a significant change that will impact your audits. ASU 2016-18 is effective for fiscal years beginning after December 15, 2018. Accordingly, calendar 2019 year ends are required to adopt this standard. In short, this standard changes certain disclosure requirements related to all project’s cash flow statements. The standard attempts to eliminate the diversity in how restricted cash is presented. Affordable housing projects will be impacted due to the number of restricted cash accounts such as:

  • Security Deposits
  • Mortgage escrows
  • Reserve for Replacements
  • Residual receipts
  • Other

The standard requires that changes in restricted cash accounts be accounted for as changes in cash and cash equivalents. Restricted cash accounts related to mortgage escrows, and reserve for replacement and residual receipts will no longer be included as investing activities. Total cash on the cash flow (line S1200T) will now include the following REAC accounts:

1120 – Cash – Operations
1121 – Construction Cash Account
1125 – Cash – Entity
1191 – Tenant/Patient Deposits Held in Trust
1310 – Escrow Deposits
1320 – Replacement Reserve
1330 – Other Reserves
1340 – Residual Receipts Reserve
1355 – Bond Reserves
1367 – Sinking Fund
1381 – Management Improvement and Operating Plan

Account 1170 (Short Term Investments – Operations) will no longer be included in S1200T but will be included in the investing section of the cash flow statement.

S1200-160 (Security Deposits) will no longer equal the sum of S1200-530 (Decrease/increase in Cash Restricted for Tenant Security Deposits) and S1200-580 (Increase/decrease in Tenant Security Deposits Liability). Security deposits (S1200-160) will now only equal S1200-580.

The total lines on the cash flow will be renamed to: “Cash, Cash Equivalents and Restricted Cash”. This description will be used for the beginning and ending balances.

A footnote will now be included to provide a detail of the accounts included in the total of cash in the cash flow statement as follows:

ASU-10-50-8

  • When cash and equivalents are presented in the balance sheet an entity shall present in the statement of cash flows or disclose in the notes to the financial statements:
    • Line items and amounts of cash and equivalents
    • The amounts, disaggregated by the line item in which they appear within the statement of financial position
    • A sum of the total of cash and equivalents that agrees to the cash flows statement
    • This disclosure may be provided in either a narrative or a tabular format

REAC will be updating the chart of accounts to accommodate the changes. These changes will be effective for submissions with a 12/31/2019 FYE and thereafter.


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Objective: To learn HUD accounting, auditing, and electronic submission requirements and how to efficiently implement those requirements.
Prerequisites / Advanced Preparation: General HUD accounting or audit experience. You do not need to print any course materials prior to your arrival. All materials will be provided for you.
Instructional Method: Group-Live with interactive discussion and Group Internet Based
Length / CPE Credits: One-day Update Courses provide up to 8 hours CPE credit (4 hours governmental accounting and 4 hours governmental auditing). Two-day Conferences provide up to 16 hours CPE credit (8 hours governmental accounting and 8 hours governmental auditing).
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