| ID | Status | Date | Public/Private | Industry | AHACPA Contact |
|---|---|---|---|---|---|
| #7458 | Closed | public | Multifamily | Les Sparks |
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We have had some internal discussions about the Chicago Multifamily training, and I’m hoping you can clarify a few items for us: 1) Most of our client’s PRAC contracts are annual contracts, so they expire at some point during 2015 and are renewed. Our understanding would be that the old contract expiring during 2014 would be under Circular A-133 still and the new contract entered into during 2014 would be under Uniform Grant Guidance, correct? So you would have to have an opinion addressing both Circular A-133 and Uniform Grant Guidance? 2) There are still a couple PRAC contracts that are multi-year, so they may expire down the road, so let’s say in 2016. So for 2015, we would be issuing an opinion in accordance with Circular A-133. Then in 2016, in this example, we would issue an opinion inline with #1 above. Is this understanding correct? 3) Under Uniform Grant Guidance, the questioned cost threshold was raised, however you mentioned that for REAC is still looking at questioned costs over $10k. How does this impact our audit? Thank you and happy new year! |
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From Les Sparks: It is true that some contracts expire in a period after the Uniform Guidance and others, such as 20-year PRACs would not. Of course none of this addresses the applicability of the Capital Advance side of the issue and the date that Uniform Guidance becomes effective. Although this is clearly an interesting question, many of the largest firms are questioning how long this is intended to go under A-133. After all every audit beginning after 12/31/15 has to be performed under UG. Does this mean that all audits will be under UG,but the client is going to be under A-133 until a PRAC renewal. Most of us think that the intention was never to keep A-133 for an extended period of time. After all, most of the changes for the client are fairly insignificant. Yes, I know HUD has been silent on the impacts on mortgages, per se, however, I do not think they ever intended to keep A-133 for another 5, 10 or 20 years. Therefore, I would just assume most A-133 rules are gone after 12/31/15. I do not know of anything so significant as to be a material issue going forward. Of course, reports beginning at 12/31/2015 must be listed as UG as all audits at and after that date will be under UG, regardless of client implementation. As for the 10K. My point is that despite the raise to $25k for mandatory findings, REAC is still focused on $10k for their review. So, just be aware that they may have a different perspective when it comes to mandatory findings. From client: As a follow up to the question below, we performed our audit in accordance with both Circular A-133 and Uniform Grant Guidance. We are now performing the AUP for the REAC filing and we believe our opinion should reference both sets of guidance. However, the auditor procedures within REAC do not allow any manipulation of the standard report wording. Additionally, we issue formal AUP reports to the client that would then differ from the electronic submission through REAC in the guidance that is referenced. What is the risk with this? From Les: Elizabeth, there is no way to change the language in the REAC printed report. If you feel a language change is warranted, then make the change in your own copy of the report and indicate in a memo that you are unable to modify the REAC version. Should be no problem. |