The release of this was not accompanied by any announcement or other commentary on implementation of the Audit Guide.  This Guide is intended to be used in conjunction with the Unnumbered Letter issued February 7, 2019. Excerpts of that document with AHACPA comments can be found here.

Per conversations with the personnel at RD, they recognize that the lateness of the release of this Guide presents challenges to CPAs and clients in meeting the 90-day filing deadline.  Although there is no official statement on this, RD officials assured us that extensions would be available on a case-by-case basis by calling the relevant state office.  We hope to see a formal announcement of this in the future.

The Handbook is organized in the following Sections:

Section 1 – Accounting Systems
Section 2 – Project Accounts
Section 3 – Reserve Accounts
Section 4 – Project Budgets
Section 5 – Reporting and Financial Examination

Appendices are as follows:

4-A – Capital Budgets
4-B – Amendments to Loan Agreements
4-C – Allowable and Unallowable Project Expenses
4-D – Proposed Budget and Year End Analysis
4-E – Audit Program, Cost Certification Engagements
4-F – Performance Standards/Borrower Self-Certification Letter
4-G – MFH Program Determination Worksheet
4-H – Example Engagement Letter – For-profit >$500,000
4-I – Annual RD Compliance Audit
4-J – Compliance Requirements and Audit Areas
4-K – Example Independent Accountants’ Compilation Report
4-L – Owner Certified Prescribed Forms
4-M – Example Reports
4-N – Year End Financial Reporting Requirements
4-O – Agency Review of Annual Financial Reports

Summary of Changes in the Attachments to Chapter 4

• 4-A - Not many changes, just a few rewordings and one addition. Also, lawnmowers and snowblowers were taken off the list.
• 4-C - The boxes giving clarification have been updated, with some being moved around and new clarification given.
• 4-D – One word change
  • Alaska is now part of Group 10
• 4-E - Mostly minor changes:
  • Requirement of 3560-7 was removed from the first paragraph of section B
  • The paragraph on Management of Ongoing Operations no longer mentions instructions on eligible costs
  • The fourth paragraph of section A part two, no longer mentions that contractors, etc., need to serve the general public to be considered.
  • The page titled “Annual Agreed Upon Procedures for Annual Attestation Engagement” has been removed.
• 4-F - One addition, see document for details
• 4-G - Some additions, mostly clarifications in Step 2 on the audit determination worksheet
• 4-H - Entirely new
• 4-I - One addition, see document for details
• 4-J - Minor rewording, plus the addition of one new suggested audit procedure for cash disbursements
• 4-K - Added an example title page and an example table of contents
  • Additions to the example compilation report, see document for details
• 4-L - Entirely new
• 4-M - Added an example title page and an example table of contents
  • New words added to the example independent auditor’s reports
  • New examples provided
• 4-N - Entirely new
• 4-O - Some rewording
  • Major additions
  • New questions in the agency review of annual financial reports
  • Section K is new
  • Added a single audit checklist

Attachment 4-I – Comments on Audit Requirements

This attachment gives general instructions on implementation of the chapter 4 guidance. Here are a few clarifications on statements made in this attachment.  The statements are based on conversations with RD officials.  We hope to obtain printed guidance from RD at a later date.

Major programs are defined at $500,000 of total Federal awards for for-profits and $750,000 for NFP entities.

Group Project-Based Testing as defined by the HUD Audit Guide is not allowed.  This phrase was discussed with RD officials. Based on those discussions, they indicated that their intent was to require that the auditor is required to test each project on a stand-alone basis. This phrase should not be construed to mean that another method of group testing is allowed.

Non-Major Program Testing – There is no non-major testing under this Guide.

Sample Tables and Methodology – Although RD did not implement the complete HUD Appendix A on sampling, they have included minimum sample size requirements similar to the HUD Audit Guide. They have also adopted attribute sampling methodology.

Internal Control Over Compliance – The auditor is required to test internal control over compliance.  This is in alignment with both the HUD Audit Guide and Uniform Guidance.

Findings – Material noncompliance, significant deficiencies or material weaknesses, as well as equity skimming are to be reported as findings. All non-material noncompliance is to be reported to management in writing.

Additional Comments related to the Audit Guide
 
The actual Audit Guide is an adaptation of the HUD Audit Guide. However, there are certain aspects of the HUD Guide that were not used.  For instance, there is no tenant file testing in the RD Audit Program.  A comparison of the two Audit Guides follows:

Get the latest HUD Information!
Attend one of these upcoming courses in Las Vegas

AHACPA's 21st Annual Multifamily Conference
December 10th & 11th, 2019

Nationally Recognized Speakers:

• Peter B Bell, CPA, Peter B. Bell, CPA, LLC
• Sara Farina, CPA, MSA, Senior Associate – Plante Moran
• Marlow Hunter, CPA, Marlow C. Hunter, P.C.
• Kelly Perlman, CPA,  Audit Manager, Plante Moran
• Les Sparks, President, AHACPA

December 10th & 11th, 2019
Dec. 10th: 8:00 am - 5:00 pm
Dec. 11th: 8:00 am - 3:10 pm
16 hours of governmental CPE

The Cosmopolitan of Las Vegas
3708 Las Vegas Blvd South Las Vegas, NV 89109

Course Fee: $650 ($600 for AHACPA Members)
Register before Nov. 22 for a $50 early-registration discount

Topic Highlights:

• FASB Audit Issues including:
  • Refi vs Modification
  • Accounting for insurance events (involuntary conversion)
  • Upcoming accounting pronouncements that effect non-profit sponsor
  • New profit format (quick review)
  • Reserves/escrows reporting changes
• Yellowbook Update
• New RD Audit and Reporting Requirements
• Responding to Risk Assessment Risk
• HUD Audit Guide Update
• Discussion of REAC Position on Restricted Cash & ASU 2016-18
• RAD 202 Conversions Discussion of changes to reports, representation letters, engagement letters, etc

FHA-Lender Update
December 9th, 2019

Nationally Recognized Speakers:

• Marlow Hunter, CPA, Marlow C. Hunter, P.C.
• Dr. Andrew Schell, CPA, CMB, Managing Partner – MBS
• Les Sparks, President, AHACPA
• Monique White-Chiselom, Supervisory Auditor, HUD-FHA

December 9th, 2019
8:30 am - 4:30 pm
8 hours of governmental CPE

The Cosmopolitan of Las Vegas
3708 Las Vegas Blvd South Las Vegas, NV 89109

Course Fee: $395 ($345 for AHACPA Members)

Topic Highlights:

• Update from HUD-FHA, Financial Audit Requirements for FHA Lenders
• HUD Audit Guide & Compliance
• Yellowbook Update
• Mortgage Accounting and Mortgage Financing, including IRLC, ASC Levels, and Fair Value Measurements
• Risk Assessment Overview

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).
Cancellation Policy: All cancellation requests must be received in writing (email or fax is fine). Registration fees are fully refundable provided the request is received at least three weeks prior to the course. Requests received after this date, but one week before the course will receive a refund less an administration fee of $25 for Webinars, $50 for Update Courses, and $75 for Conferences. Due to financial obligations incurred by AHACPA, no refunds will be issued for cancellation requests received less than a week before the course.
Substitutions: If you are unable to attend a course you may substitute another individual or change locations without penalty. The location change must be within the same calendar year. For proper CPE credit and record keeping, you must notify us in advance of any substitution or change in location.
Contact Information: For more information regarding refund, complaint, and/or program cancellation policies, please contact our office at 801-547-0809.