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Audits of HUD-Assisted Projects

Author/Moderator: Max E. Hunt, MBA, CPA and Peter Bell, CPA
Publisher: AICPA
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Description

Gain in-depth, hands-on information regarding HUD organization, programs, policies and procedures. Review the professional standards affecting specific federal programs.

Objectives:

  • Understand which HUD programs require audited financial statements
  • Comply with specific HUD regulations, contracts and procedures
  • Understand the effect that Government Auditing Standards (Yellow Book), AICPA standards, OMB requirements and the Consolidated Audit Guide have on the design of the audit plan

Prerequisite: Basic knowledge of auditing HUD-assisted projects

Value Aid! Consolidated Audit Guide for Audits of HUD Programs

Table of Contents

  • Chapter 0 - Overview
    • Course Goals
    • Introduction
    • Helpful Web Sites
  • Chapter 1 - Overview of Key HUD Offices and Helpful Information Resources
    • Learning Objectives
    • Key Offices within HUD
      • Office of Community Planning and Development
      • Office of Public and Indian Housing
      • Office of Housing
      • Office of Insured Health Care Facilities
      • Office of Affordable Housing Preservation (OAHP)
      • Real Estate Assessment Center
      • Departmental Enforcement Center
      • Office of Inspector General
    • Important HUD Systems
      • Wide Area Subsystem
      • Multifamily Financial Assessment Subsystem
      • The Lender Assessment Subsystem
    • Additional Information Resources
    • Question
    • Appendix 1A
  • Chapter 2 - HUD Programs
    • Learning Objectives
    • Introduction
    • The Scope of HUD Activity in Housing in America
    • Multifamily Housing
      • Key Concepts
      • Why Developers Pursue HUD
      • Project Ownership
      • Project Development through Housing Development Branch
      • Development Cost Audit
      • Tenant Subsidy Programs
    • Questions
  • Chapter 3 - Key Regulatory and Contract Provisions
    • Learning Objectives
    • Introduction
    • Overview
      • Computing Surplus Cash
      • Distributions to Owners
      • Unauthorized Loans of Project Funds
      • Replacement Reserve
      • Cash Receipts
      • Cash Disbursements
      • Property Physical Condition
      • Owner Advances
    • Fair Housing and Non-Discrimination
      • Tenant Application, Eligibility, and Recertification
    • Section 8, 202, and 811 Programs
      • Funding Procedures for Projects Assisted through the Section 8 Program and the Section 202 and 811 Programs
      • Program Requirements for the Section 8 Program
      • Eligibility for Assistance
      • Marketing and Outreach Requirements
      • Fair Housing Poster
      • Admissions and Tenant Selection Criteria
      • Usability of Assisted Housing by Persons with Handicaps
      • Certification of Tenant Eligibility/Calculation of Tenant Rent
    • Leasing, Deposits, and Termination of Tenancy
      • Leasing
      • Other Charges
      • Termination of Tenancy
      • Recertification and Interim Adjustment
    • Billing for Assistance Payments
    • Audit Considerations Re: Monthly Billings
    • Questions
    • Appendix 3A
  • Chapter 4 - The Effect of the Yellow Book, Statement on Auditing Standards 74, and the Consolidated Audit Guide
    • Learning Objectives
    • Introduction
    • Government Auditing Standards
      • General Standards (Yellow Book)
      • Field Work Standards for Financial Audits (Yellow Book)
      • Reporting Standards for Financial Audits (Yellow Book)
      • Fraud Auditing Standards
      • Additional Reporting Considerations and HUD Requirements
      • Attestation Requirements
  • Chapter 5 - Annual Financial Statement Requirements
    • Learning Objective
    • Introduction
    • Projects Subject to Audit
    • Projects Not Subject to Audit
      • Reporting Timeframes
    • Required Financial Statement Information
      • REAC
    • Appendix 5A - Example Financial Statements
    • Appendix 5B
    • Appendix 5C
    • Appendix 5D
  • Chapter 6 - Financial Statement Requirements for HUD-Assisted Nonprofits
    • Learning Objectives
    • Introduction
    • HUD, the Single Audit Act and OMB Circular A-133
    • Audit Scope and Reporting to HUD under A-133
    • FAS 116 and the Capital Advance Program
    • Non-Profit Organizations and Reporting via REAC
    • Appendix 6A
    • Appendix 6B - Section 202 and 811 Capital Advance Compliance Requirements Locator
    • Appendix 6C
  • Chapter 7 - Applying the Consolidated Audit Guide to HUD-Regulated Mortgagees
    • Learning Objectives
    • Introduction
    • Use of the LASS System
    • Key Regulatory Requirements for Nonsupervised Mortgagees and Loan Correspondents
      • Audit Requirements
      • Compliance Areas and HUD Issued Guidance
    • Question
    • Appendix 7A - Example Financial Statements
  • Chapter 8 - Latest Developments
  • Appendix A - 2007 Yellow Book Excerpts
  • Appendix B - Update on the HUD Consolidated Audit Guide Revision Project
  • Value Aid
  • Consolidated Audit Guide for Audits of HUD Programs

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Excerpts

Chapter 1 - Overview of Key HUD Offices and Helpful Information Resources

Learning Objectives
• Better understand the scope of HUD activity in housing in America.

• Identify key offices within HUD that have an impact on multifamily housing programs.

• Identify the general responsibilities of the HUD field offices' staff who regulate your client.

• Understand the role of HUD's Office of Inspector General in program enforcement and independent auditor workpaper review.

• Identify key sources of information to keep abreast of program changes.
Key Offices within HUD

The Department of Housing and Urban Development (HUD) plays both a direct and indirect role in the arena of housing in the United States and its territories through its component offices. Following is an introduction to the component offices and sub-offices.

Office of Community Planning and Development

The Office of Community Planning and Development (CPD) seeks to develop viable communities by promoting integrated approaches that provide decent housing, a suitable living environment, and expand economic opportunities for low and moderate income persons. The primary means towards this end is the development of partnerships among all levels of government, state, county, and local jurisdictions and the private sector, including for-profit and non-profit organizations.

Consistent with these objectives, the Office of Community Planning and Development has developed a set of underlying principles that are used in carrying out its mission.
1. Community building begins with job creation, employment, and creation of safe, decent and affordable housing.

2. Planning and execution of community development initiatives must be bottom up and community driven.

3. Complex problems require coordinated, comprehensive, and sustainable solutions.

4. Government must be streamlined to be made more efficient and effective.

5. Citizen participation in Federal, State and local government can be increased through communication and better access to information.
CPD seeks to encourage empowerment of local residents by helping to give them a voice in the future of their neighborhoods; stimulate the creation of community based organizations; and enhance the management skills of existing organizations so they can achieve greater production capacity. Housing and community development are not viewed as separate programs, but rather as among the myriad elements that make up a comprehensive vision of community development. These groups are at the heart of a bottom-up housing and community development strategy.

Office of Public and Indian Housing


The second component of HUD’s mission to provide housing is the Office of Public and Indian Housing. The aim of the Office of Public and Indian Housing (PIH) is to ensure safe, decent, and affordable housing; create opportunities for residents' self-sufficiency and economic independence; and assure fiscal integrity by all program participants.

PIH is responsible for administering and managing a range of programs authorized and funded by Congress under the basic provisions of the U.S. Housing, Act of 1937. The Act created the public and Indian housing program, which now provides affordable housing to over 1.3 million households nationwide.

Congress has provided funds not only for the development of additional public and Indian housing units, but also for the modernization of the housing stock, the improvement of the management of the programs by the public and Indian housing authorities which own the housing, and for programs to address crime and security and provide supportive services and tenant opportunities.

Office of Housing

The third component supporting of HUD’S mission is the Office of Housing, which is the focus of this course. Within the Office of Housing there are two business areas, Single Family Housing and Multifamily Housing. Multifamily Housing supplies the financing and tenant subsidies for the HUD-assisted projects. Single Family supplies the FHA insured mortgage program for mortgage lenders. Both of these offices require annual financial and compliance audits for their respective programs and have guidance in the HUD Consolidated Audit Guide.

The Office of Housing provides vital public services through its nationally administered programs. It oversees the Federal Housing Administration (FHA), the largest mortgage insurer in the world, as well as regulates housing industry business.

The mission of the Office of Housing is to
• Contribute to building and preserving healthy neighborhoods and communities;

• Maintain and expand homeownership, rental housing and healthcare opportunities;

• Stabilize credit markets in times of economic disruption; and

• Operate with a high degree of public and fiscal accountability.
Single Family Housing

HUD's Single Family programs include mortgage insurance on loans to purchase new or existing homes, condominiums, manufactured housing, houses needing rehabilitation, and for reverse equity mortgages to elderly homeowners. Single Family Insured Loans, the program participants, and program requirements are the focus of Chapter 7 of this course.

FHA Single Family Lender Approval Types

Nonsupervised Loan Correspondent: This is the only type of approval mortgage brokers can apply for and allows them to originate Title II single family loans and/or Title I loans. Correspondent lenders and mortgage lenders who only want to originate should apply for this type of approval.

Nonsupervised Mortgagee: Correspondent lenders and mortgage lenders should apply for this type of approval if they want to do any of the following lender functions in addition to origination: underwriting, servicing and owning any type of FHA insured loan.

Supervised Loan Correspondent:
Banks, savings banks and credit unions should apply for this type of approval if they only want to originate Title II single family loans and/or Title I loans.

Supervised Mortgagee: Banks, savings banks and credit unions should apply for this type of approval if they want to do any of the following lender functions in addition to origination: underwriting, servicing and owning any type of FHA insured loan.

Government Mortgagee: Federal, State and local government agencies should apply for this type of approval if they want to do any of the following lender functions: origination, underwriting, servicing and owning any type of FHA insured loan.

Investing Mortgagee: Any entity that only wants to own FHA insured loans should apply for this type of approval.

All approval types, except an investing mortgagee, can fund FHA loans. http://www.hud.gov/offices/hsg/sfh/lender/approvalreq20080529.pdf provides a two page summary of the lender approval requirements.

http://www.hud.gov/offices/hsg/sfh/lender/mtgeekit.cfm provides a listing of the essential HUD Handbooks for HUD approved mortgagees.

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/ provides access to current and prior year’s mortgagee letters. FHA utilizes mortgagee letters to disseminate HUD policy to program participants.

FHA provides initial approval to eligible mortgagees and loan correspondents for participation in the program. On an annual basis, FHA approves lenders for continued participation in the FHA...

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Videocourse Details

NASBA Field of Study: Auditing (Governmental)
Level: Basic
Recommended CPE Credit: 16
Yellow Book Hours: 16
AUDITS OF HUD ASSISTED PROJ TX09
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