Management Agent for PHA – Contractor/Vendor or Subrecipient

ID Status Date Public/Private Industry AHACPA Contact
#7028 Closed public PHA Les Sparks
Customer Reply

We are a nonprofit who acts as a management agent for some PHAs in administering Housing Choice Voucher programs. We’ve recently been going back and forth with our auditors on whether or not we should be considered a subrecipient of the funds or treated as a contractor/vendor. Historically we’ve been considered a contractor and that was based on the guidance we went off of from a HUD rep years back. What is the correct accounting treatment for situations where nonprofits act as management agents for PHAs? I realize there aren’t that many of us out there.

Kathy Christensen

From Les Sparks:

I believe that there should be very little question that you are NOT a subrecipient. The ACC is in the name of the PHA and that chain of money through HUD is not being presented to you as a award. In the new parlance you are a contractor and you work for a fee.

Let me say as I go through the language contained below, I can easily be confused by the arrangement that the entities have entered into. In most cases a normal look would indicate that all management agents are contractors. They determine who is eligible, etc.

Having said all of that let me just give you an insight into the 23,000 HUD multifamily projects. 98% use a management agent. I have never seen any of those entities be determined to be or reported as subrecipients. Never. Of course, I have not seen them all, but we see over 900 of those in a given year and support over 600 member firms with questions. The only time this have ever came up is in regard to PHAs acting as agents.

So, all I would do is look at the agreement you have in place and ask whether the intention is to be a contractor or whether you are in effect becoming the PHA. SInce it is difficult to determine intent, this can be problematic.

Practically, as the agent I would indicate in my agreement that you are acting as a contractor and not as a subrecipient. I think that is important. I can easily see someone at the receiving PHA to determine when all goes wrong that the agent is the subrecipient.

I know of no reason why a PHA acting as a management agent should be treated any differently than a multifamily agent. In that industry this issue never comes up.

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