4560.3

Signature Date: February 22, 1988 Appendix 3

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MEMORANDUM FOR: All Regional Administrators; All Office

Managers; All Directors of Housing Management,

Categories A, B and C Offices; and All Loan

Management Branch Chiefs

FROM: Thomas T. Demery, Assistant Secretary for Housing, H

SUBJECT: Handbook 4370.2, Financial Operations and Accounting

Procedures for Insured Multifamily Housing Projects

Amendments and Additions

On June 23, 1987, we distributed Change 1 to HUD Handbook

4370.2, Financial Operations and Accounting Procedures for HUD

Multifamily Housing Projects. This Handbook change provided a

revised and expanded chart of accounts and a revised Form

HUD-92410, Statement of Profit and Loss. This submitted by all

HUD-insured projects and on those properties on which the mortgage is

held by HUD.

The changes published were prompted by: (1) a need to

provide a chart of accounts most commonly used by project owners;

\(2\) to eliminate different HUD Forms 92410 (e.g., 92410-NH for

Nursing Homes); and (3) to our haste to publish a new Form, we

overlooked some items which are necessary, as follows:

A. New (revised) Sub-Accounts

1\. For Nursing Homes, Section 232; Elderly Projects,

Sections 231 and 202; Retirement Service Centers,

Section 221(d)(4), it is necessary to provide a separate

schedule of Revenue sources in the Account Group 5300,

Elderly and Congregate Services Income broken into

sub-accounts, as follows:

Revenue Accounts (5300)

a\) Account 5360 - Drugs and Medical Supplies;

b\) Account 5365 - Food Service;

c\) Account 5370 - Health and Medical Services

(Physicians, Lab, etc.);

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4560.3

Appendix 3

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d\) Account 5375 - Housekeeping (e.g., maid service);

e\) Account 5380 - Recreation and Rehabilitation;

f\) Account 5390 - Other Service Revenue.

Additionally, as indicated on the new Form HUD-92410 a

separate schedule must be attached reflecting the

appropriate sub-accounts to which the expense is

charged, in accordance with the 6900 series of accounts.

B. For all project types, a separate schedule must be attached

to reflect a Sub-Account 6230, Concessions to Tenants and a

Sub-Account 6240, Alterations. Concession expenses are

currently lumped into Sub-Account 6250, Other Renting

Expense. Alterations Expenses are currently lumped into

Sub-Account 6390, Miscellaneous Administrative Expense.

C. A separate Sub-Account 6220, Commissions, must be established

and separate schedule attached to the 92410, to reflect

commissions paid to tenants (reasonable payments made to

third parties for tenant referrals and allowances given

tenants in lieu of rent). This expense is currently lumped

in Sub-Account 6250, Other Renting Expenses. Also,

Sub-Account 6290, Misc. Rental Expense lumped in 6250.

D. A separate schedule must be attached to reflect Sub-Account

6543 Repairs - Extraordinary and Non-Recurring. This expense

is currently lumped into Account 6590, Miscellaneous

Operating and Maintenance Expense.

E. Date of Required Submission of New Form 92410, Statement of

Profit and Loss

There is confusion concerning the effective date that the

revised Form must be submitted. The revised Form must be

submitted to HUD for any project whose Fiscal Year ends

December 31, 1987 and subsequent years. These Financial

Statements are due to HUD by March 1, 1988, (60 days after

the end of the project\'s Fiscal Year ending after December

1987, the financial statement will be accepted. However,

owners will be required to resubmit the Profit and Loss

Statement on the revised Form.

Failure to receive the revised Form will result in the

inability to enter data into the automated Multifamily

Information Processing System (MIPS) scheduled to be

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4560.3

Appendix 3

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implemented nationwide during the third quarter of Fiscal

Year 1988.

F. Expense for Conversion to new Accounting System

The cost of converting from the old accounting codes to the

new codes may be charged to the project as an allowable

expense item.

This memorandum is to be transmitted in total to all project

owners and managers in your respective jurisdiction. The changes

indicated herein will be incorporated into Handbook 4370.2 in the

near future.

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