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Data analytics programs [Jump to this question in video]

• Data analytics programs were discussed, are there any recommendations/ general experiences for small to midsized firms performing small to midsized audits?

SEFA [Jump to this question in video]

• The projects we audit receive section 8 money through a contract administrator vs HUD directly. Because of this, we are showing as a passthrough on the SEFA as the money isn’t directly received by HUD, even though it is a section 8 federal program awarded to the project.
  Is this accurate ?

Audit Due Dates [Jump to this question in video]

• All of our new companies are requiring tax due dates and audit due dates of 2/15, if not earlier. This is required by syndicator. What can we do to extend these dates so that our work load is more manageable?

Section 4 – rural Development Reporting Requirements [Jump to this question in video]

• Will the removal of the agreed-upon procedures requirements affect individual state reporting requirements? We have property management clients with projects in California and Pennsylvania. California requires more information to be reported than Pennsylvania.

Signing 3560s [Jump to this question in video]

• Now that RD is doing away with AUP engagement, how do you think CPAs should sign off on the 3560s?
  • For projects with audit requirement
  • For projects without audit requirement

RD New Requirements [Jump to this question in video]

• If 2018 is first year audit, will they require comparative financial statements?
• If project has never had an audit reporting requirement & now they will have audit requirement, what will need to be done with projects that use tax depreciation for book purposes?

Cash Flow Reconciliation [Jump to this question in video]

• Under the new NFP ASU standard, the requirement for the indirect reconciliation on the direct method cash flow is removed. Will HUD still require the reconciliation when this ASU is effective or will HUD follow the new NFP ASU and also remove this requirement?

HUD Sale – Leaseback [Jump to this question in video]

• If a HUD-insured property is sold and leased back, the lease requires the lessee comply with HUD, should the lessor be utilizing or relying on the lessee’s auditor’s work? If so, should they issue a special type of engagement letter and/or Report?

Rural Development [Jump to this question in video]

• What should clients with RD loans be doing to prepare for upcoming changes?

Getting info updated in REMS [Jump to this question in video]

• I have a client that has a HUD insured loan with an audit requirement. The audit was completed, but REAC says no audit is required. Multiple calls to Project manager have been made requesting REMS be change, but no response. What to do to fix?

Compliance Finding [Jump to this question in video]

• When there is a compliance finding there is an internal control finding. Do you write one finding for compliance and one for IC, or combine both findings into one.

RD 515 Original Capital/ Loan to Fund
Tax/Insurance Reserve [Jump to this question in video]

• On older projects 1970 etc that have repaid can they request repayments?
• If so can some come from overfunded replacement reserve?

Very important to many developers

RDA Reporting Uniformity [Jump to this question in video]

With new RDA audits, will there be more uniformity between the various offices concerning report content requirements? Some offices like California RDA required additional supplemental data schedules while offices required only the specific items noted in part 3560. Will there still be local office discretion on any additional information that they might want in the reporting package?

Going Concern Calculation [Jump to this question in video]

• Hardly any of our clients are going to perform a going concern calculation. We’re talking small companies here. What do you suggest?

Update Filing Requirement in REMS [Jump to this question in video]

I obtained a new for profit client several years ago that had a major program (section 8 contract). They weren’t filing with REAC and I never have either. Have I missed the boat on this? If so, should I try to flag it down, or just continue to let it sail by? If I notify HUD what are the implications of prior years not being filed?

Internal control Walk-Through [Jump to this question in video]

• Can you give us an example (maybe post to website) of internal control walk through documentation? I’m struggling with the format/flow, what to include, etc.

Sample Sizes [Jump to this question in video]

• Can you quickly go over sample sizes as it relates to cash receipts testing, cash disbursements testing and tenant eligibility recertification, etc?

Tenant Application Eligibility and Recertification Testing [Jump to this question in video]

If a for profit project has only a non-major program (section 8) what is required for tenant application eligibility and recertification testing?

Surplus Cash Distributions [Jump to this question in video]

• Nonprofit client with a 223(f) insured loan. No residual receipts rider. Client should be able to take distributions, REAC template says no distribution allowed. Project manager won’t change REMS. If distributions are allowed, how to get REMS to allow distributions.

Compliance Testing [Jump to this question in video]

• Client purchased tax credit project after 15 year period with a HUD insured loan. How much compliance testing on tenant eligibility, rents charged is required.

Going Concern Requirement [Jump to this question in video]

• Is the going concern note from management required to be in every audit report?
• If so, what is the cure for the December 2016 and after audit reports that do not contain the note?

Residual Receipts [Jump to this question in video]

• Is the requirement for HUD 60 days or 90 days for deposit of surplus cash?
• Where do things stand with the residual receipts recapture? Does it apply to all HUD projects?

HUD $500,000 [Jump to this question in video]

• For project in which a for-profit owner is under an obligation to submit an audited financial statement, but receives less than $500,000 in combined federal financial assistance…such owner will be permitted to submit an owner certified financial statement.
• When calculating total federal funds received should the owner use cash basis or accrual basis figures?
• HUD requires accrual financial statements, does this mean the determination of funds received should be calculated using accrual figures?

Internal Control [Jump to this question in video]

• Can you please clarify internal control testing over compliance?
• Is performing compliance test work the same thing as testing controls around compliance? Our firm performs detail walkthroughs around certain processes. We have never had a peer review issue regarding internal control testing.

232/223f Project – Intercompany Activity [Jump to this question in video]

• A management company manages various HUD and non-HUD projects (all owned by common ownership). Certain costs are paid by the management company (like employee medical premiums) and then “billed” to the projects. The projects carry intercompany payables that are paid down monthly (although not fully – like 90%) for these types of costs.
• Are there any issues with paying back these costs monthly or are they considered owner advances and should be paid through surplus cash.

232/223f Project – Stub Periods [Jump to this question in video]
Please note, the  slide does not change for this question on the video, but the audio is okay.

• First year HUD audit with a stub period ( i.e. 6/1 – 12/31)
• The client would like the financial statements to cover the whole period (1/1 – 12/31). Are there any reporting issues with doing a full year financial statement audit, performing the compliance procedures over the stub period, and design addition of cut off procedures around the start of the stub period? The audit report would cover the whole year, but the compliance reports & REAC cover the stub period.

Yellow Book Audit Requirement [Jump to this question in video]

• I have a client whose mortgage was funded by a state housing authority. It was not HUD-insured, but the project has a HUD section 8 HAP contract. Because it was not HUD-insured, there was no REAC submission requirement. The mortgage was subsequently refinanced with a private lender, so we no longer file with the state housing authority.
• Because the section 8 contract is a major federal program, we have always done a Yellow Book audit. The client has now sold the project and has engaged us to perform an audit through the date of sale for their internal purposes.
• My question is: Must we perform a Yellow Book audit or can the client engage us to do a GAAS audit? There is no federal agency requiring an audit and it will not be submitted to any oversight body, so it would seem that performing a Yellow Book audit is a waste of time.

Compliance Testing on Non-Profit Audits [Jump to this question in video]

When the HUD Audit Guide was last revised it was made clear that compliance samples must include the entire year being audited. Non-Profit audits do not follow the HUD Guide, and the OMB Audit Guidance does not appear to address this. On a non-profit audit, may we test a sample from the first 9 or 10 months of the year and rely on those results or must we test the full year?

Management Letter [Jump to this question in video]

Is a written management letter required? Previously potential management comments could be discussed with management ( and a memo added to document) – then would not have to be transmitted to HUD?

Regulatory Agreement [Jump to this question in video]

If a Section 8 Project has no HUD Mortgage Guarantee (conventional financing) are they required to have a (or enter into) a regulatory agreement?