USDA Issues Letter Clarifying New Reporting Requirements for FY 2017

In late 2017, the USDA Rural Development issued a Final Rule on revised audit procedures. Implementation of that rule will ultimately require a major program audit for for-profit projects in excess of $500,000. Concurrent with this change the Agency will be eliminating the current AUP requirement. Subsequent guidance indicated that audits for 2017 year ends would NOT be impacted by the Rule with the exception that the AUP may be eliminated. These preliminary announcements were pending the release of an Unnumbered Letter (UL) from the Agency. That UL was issued on January 24, 2018.

The UL indicates that the new rule is effective for fiscal year ends beginning January 1, 2018 and thereafter. It does not directly affect 2017 reporting requirements. The reporting change will be optional in FY 2018 and mandatory in FY 2019.

This rule removes the requirement for an AUP engagement as part of the annual audit. The Agency will allow borrowers to not submit AUPs for FY 2017 if they submit a statement with their 2017 annual report to the servicing official similar to the following:

Pursuant to the Final Rule 7 CFR Part 3560 to reduce MFH program financial reporting requirements, an engagement that examines records using agreed upon procedures has been eliminated. Accept this as our request to eliminate this engagement for year-end financial reporting of FY 2017 per 7 CFR Part 3560.308.

The statement must be for a single project and may be made by e-mail of written correspondence prior to or with the year end reports. Further guidance regarding FY 2018 year ends will be issued in the future.


  • Unnumbered letter: “Multi-Family Housing Reporting Requirements for Fiscal Year 2017” (dated Jan 24, 2018)
  • Federal Register Final Rule: “Multi-family Housing Program Requirements to Reduce Financial Reporting Requirements”

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