REAC Thresholds

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#7396 Closed public Multifamily Les Sparks
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We audit HUD For-Profit and HUD Non-Profit Multifamily HUD projects. Often, our clients teeter just above and below the $500K and $750K threshold, causing us to issue a compliance audit one year, and an owner certified submission the next. Is there an option to do a compliance audit each year even if the federal awards are under the threshold?

Kathy Christensen

From Les Sparks:
Frankly the only good answer that I have heard of is just doing a GAAP audit every year. This allows you to be ready to audit for compliance every other year without having the hassle of on-again, off-again audits.

I believe that the issue for most auditors in those cases is not the compliance audit, but the financial audit. SO, if they hover around the threshold every year, they do the financial audit to ensure that in any given year they are ready for a full HUD/Single audit. The only other choice is to do another type of engagement in the off years, such as a good review. As long as it would include procedures to ensure that the last year (before the audit year) has enough coverage to allow you to opine.

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