Multifamily Housing - Highlights and Announcements

January 2024 System Release – User Archive of Draft Submissions

FASS-FHA added a New ‘Archive’ Option to the Submission Status Box page. This option will allow the authorized users to archive/delete a selected submission in Draft Status. When the Archive button is selected, a Warning Message will be displayed warning the Users that they are about to delete the submission. They will also be given the option to cancel the request. If the User chooses to continue archiving the submission, the submission will no longer be displayed on the Submission Status Box page. With this new option, Users can delete an errant Draft Submissions and Recreate/Create New submissions without the assistance of REAC’s Technical Assistance Center (TAC). See Chapter 5 - Submission Status Box in the 7.0 Industry User Guide for the Financial Assessment Subsystem - Multifamily Housing (FASSUB) for further instructions.

December 2023 System Release - Mortgagee Letter 2022-16 – Monthly Distributions

Pursuant to this Mortgagee Letter, HUD will permit modification of Section 13 of the Regulatory Agreement (form HUD-92466M) to allow Distributions from Surplus Cash as frequently as Monthly for eligible Borrowers. This policy is limited to FHA-insured Multifamily Properties not subject to a Section 8 project-based rental assistance payments contract or a HUD held mortgage note. This policy aligns HUD’s multifamily insurance for unassisted projects with industry standards and increases its competitive standing in the lending industry. Please use the following link to read about the specific changes and effective dates. Distributions from Surplus Cash

Statement on Federal Audit Clearinghouse Website

As of October 1, 2023, the Federal Audit Clearinghouse website will transition from the U.S. Census to the General Services Administration. Single Audit (Non-Profit) entities who receive over $750k in federal funding are required to upload annual audits to the Federal Audit Clearing House (FAC) as required by OMB.

New Lease Standard from FASB (ASC 842)

Some leases will need to be recorded as assets on the balance sheet in the financial statements. These will be known as right-to-use assets. The amount represents the net present value of the lease. In response to this change in accounting standards, we have added an account to the drop-down list for Account 1590, Miscellaneous Other Assets, titled “Right-to-Use Asset.”

Statement on Auditing Standards Nos. 134-140 - Final Draft HUD Reports Posted

REAC received the following information from the AICPA:
The AICPA Governmental Audit Quality Center (GAQC) has worked collaboratively with HUD Office of Inspector General staff to update the illustrative auditor reports included in Chapter 2 of the HUD Guide for the impact of Statement on Auditing Standards Nos. 134-140. Those standards are effective for audits of periods ending on or after December 15, 2021. Currently, the reports, along with other revisions to Chapter 2, are in the HUD clearance process. The GAQC has obtained permission from HUD to post the final drafts of the illustrative reports on the GAQC Illustrative Reports Web page (scroll down to the HUD Report Illustrations section). This page is open to GAQC and AICPA members, as well as the public (only an AICPA account is needed to access them). These GAQC posted reports are intended to assist auditors that need to issue reports prior to HUD’s formal issuance. Once HUD issues the final reports (and an updated Chapter 2), auditors should look to the HUD Guide to access the final illustrations.

The American Institute of CPAs’ Auditing Standards Board has released Statement on Standards for Attestation Engagements No. 19, Agreed-Upon Procedures Engagements. The new standards are effective for agreed-upon procedures engagements performed after July 15, 2021. The FASS-FHA team is currently working on updating the FASSUB system to incorporate new language that meets the requirements. We are anticipating these updates to be in place in six to seven weeks. Below are links to the new attestation language we will be using.

The following chart summarizes the revised due dates for submissions that were/are due within 90 days of the fiscal year end. The submission types are as follows:

Audited submissions for profit-motivated entities prepared in accordance with the HUD Consolidated Audit Guide IG2000.04
Owner-certified submissions for profit-motivated entities receiving less than $500,000 in federal awards
Owner-certified submissions for nonprofits receiving less than $750,000 in federal awards
Owner-certified submissions for nonprofits receiving greater than $750,000 in federal awards who intend to file an audited OMB submission within 9 months of the fiscal year end (or audited submissions prepared in accordance with OMB Uniform Guidance for nonprofit owners choosing not to file an owner-certified submission)

Owner-Certified and Audited Submissions Due Within 90 Days of Fiscal Year End
Fiscal Year End	Original Due Date	Revised Due Date
7/31/2020	10/31/2020	6/30/2021
8/31/2020	11/30/2020	6/30/2021
9/30/2020	12/31/2020	6/30/2021
10/31/2020	1/31/2021	6/30/2021
11/30/2020	2/28/2021	6/30/2021
12/31/2020	3/31/2021	6/30/2021
1/31/2021	4/30/2021	6/30/2021
2/28/2021	5/31/2021	6/30/2021

The following chart summarizes the revised due dates for OMB Uniform Guidance audits for owners who chose to file an owner-certified submission and follow up with an audit:

Audited OMB Submissions Due Within 9 Months the Fiscal Year End
Fiscal Year End	Original Due Date	Revised Due Date
1/31/2020	10/31/2020	6/30/2021
2/28/2020	11/30/2020	6/30/2021
3/31/2020	12/31/2020	6/30/2021
4/30/2020	1/31/2021	6/30/2021
5/31/2020	2/28/2021	6/30/2021
6/30/2020	3/31/2021	6/30/2021
7/31/2020	4/30/2021	6/30/2021
8/31/2020	5/31/2021	6/30/2021

REAC’s Position on Restricted Cash (and ASU 2016-18)
REAC decided not to modify FASSUB templates to adopt changes issued by the Financial Accounting Standards Board in ASU 2016-18. Read more…
Including Pending Reserve for Replacements Releases as Cash on the Computation of Surplus Cash
HUD’s policy is to allow owners to count reserve releases that were approved prior to the end of the fiscal year as cash on the computation of surplus cash.
This year, due to the government shutdown, many of these yearend requests did not get approved in time to meet this requirement. To address this situation
HUD will allow owners to count 2018 reserve release requests as cash for the fiscal year ending 12/31/18 if the following conditions were met:
- The request was received in the local field office on or before 12/31/18
- The request received subsequent approval from HUD

Any amounts disallowed by HUD cannot be included.

System Modifications to Address ASU 2016-14
The system will be modified to address auditing standards changes required by ASU 2016-14. We expect these modifications to occur before the end of 2018. Please use the following link to read about the specific changes and effective dates. Read More...
Statement on Standards for Attestation Engagements 18 (SSAE 18)
FASSUB requires that audited submissions contain an attestation in which a CPA compares the electronic submission with the hard copy audit report. In April of 2016 the AICPA released Statement on Standards for Attestation Engagements 18 (SSAE 18). The FASS-FHA team revised the language for the Independent Accountant’s Report on Applying Agreed-Upon Procedure to conform with the AICPA’s revised guidance. The changes to the attestation reports were implemented on October 14, 2017.
Account Changes Required for the Implementation of FASB ASU 2015-03
In April of 2015 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2015-03 (ASU 2015-03). ASU 2015-03 changes the way debt issuance costs are reported. Read more...
July 9, 2016 System Release
The FASS-FHA submissions templates were changed to require additional details for the balance sheet account 1330 – Other Reserves, and the statement of cash flows account S1200-255 – Net Deposits to Other Reserves. Submitters will now be required to disclose additional information about these accounts if account values are $1,000 or more. These account changes are part of the new version of the Industry User Guide which is posted on our website.
Auditor Attestation for Nonprofit Owners
The Federal Audit Clearinghouse (FAC) is currently modifying their electronic reporting system to be in compliance with the new OMB Uniform Administrative Requirements. These changes will not be implemented until sometime this summer. The text of the FASSUB auditor attestation for nonprofits requires auditors to certify that a copy of the reporting package required by OMB is available for review. Since the FAC has not yet modified their system we realize that it is currently not possible for owners to acquire the complete OMB reporting package. We are posting this notice to formally announce that we are suspending this part of the attestation requirement. There is not sufficient time before the filing deadline to modify the text of the electronic attestation, but we will not hold auditors/owners responsible for producing a complete OMB reporting package for the 12/31/15 fiscal year end reporting period.
Office of Management and Budget (OMB) Uniform Guidance
On the evening of December 23, 2015 the FASSUB data templates for nonprofit audits were updated to comply with the OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements. Major changes include increasing the federal awards threshold for audits from $500,000 to $750,000, changes to the titles and reporting requirements of auditor reports, and changes to the format and content of the auditor’s Schedule of Findings and Questioned Costs. Specific details regarding reporting changes can be found in the updated versions of Appendices E and F of the Industry User Guide.
Federal Audit Clearinghouse (FAC) Image Management System
Audit submissions due to the Federal Audit Clearinghouse between 7/22/2015 and 1/31/2016 have been granted extensions through February 1, 2016. Since the HUD audit attestation process references the submission of the OMB Data Collection Form, HUD is mirroring this extension for nonprofit audited FASS submissions with due dates between 7/22/15 and 1/31/16. These submissions will now be due on or before 2/1/16.
Office of Management and Budget (OMB) Uniform Guidance
On December 26, 2013, the OMB issued the final rule for the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). The Uniform Guidance supersedes several OMB circulars including A133. The new rule makes several important policy changes the most significant of which is increasing the federal audit threshold for nonprofits from the current limit of $500,000 to $750,000. This means that nonprofit owners of federally assisted multifamily properties that receive less than $750,000 in federal financial assistance will be able to file owner-certified financial statements instead of audited financial statements. The new rule is effective for owners with fiscal years beginning December 26, 2014 and thereafter, so this means that owners filing their yearend December 31, 2015 financial statements will be subject to the new requirements.

The federal awards threshold change only applies to nonprofit owners of HUD-assisted properties. Profit-motivated owners will still use the $500,000 federal awards threshold. Owners are reminded that owner-certified financial statements must be prepared in accordance with Generally Accepted Accounting Principles (GAAP) and must include a full set of notes to financial statements. Federal financial assistance for HUD multifamily properties includes the combination of:
- The outstanding beginning balance of HUD-insured or HUD-held mortgages
- The original amount of 202/811 capital grants
- Project-based rent subsidies received during the year
- Interest reduction payments receiving during the year
- Other federal grants received during the year (e.g. service coordinator)

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