Q: I am preparing the financial statements for my client seeking initial FHA approval. Does HUD require to report the financial data template as supplementary information in the financial statements? Does initial FHA approval use the same financial date template as for re certification?
A: For initial FHA approval, HUD requires an audit. There is no financial data template for initial approval. When you and your client submit the application, one of the requirements is to have an audit. The audit of the financial statements is included with the application seeking FHA approval. This audit must include a computation of Adjusted Net Worth, as supplemental data. The computation of Adjusted Net Worth, must show that your client has $1,000,000 in Net Worth and $200,000 in liquid assets. A report on Internal Controls and a report on Compliance are not requited for initial FHA approval. The only report included with the audit is the Independent Auditors Report.
The financial data template is used only for re-certification.