U.S. Department of Housing and Urban Development

PUBLIC AND INDIAN HOUSING

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Special Attention of:

Notice PIH 94-63 (HA)

Secretary\'s Representatives;

Field Office Public Housing Issued: September 14, 1994

Directors; ONAP Administrators; Expires: September 30, 1995

Public Housing Agencies;
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Indian Housing Authorities Cross References:

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Subject: Line of Credit Control System/Voice Response System (LOCCS/VRS)
for

Modernization Program Areas

Section 1. Introduction

1-1 Purpose. LOCCS/VRS is the Department\'s disbursement system for
Public

Housing Agencies and Indian Housing Authorities (herein referred to as

HAs) to draw down approved Modernization funds and for HUD Field

Offices (FOs) to monitor HA obligation and expenditure progress

against funds disbursed by HUD. This Notice informs HAs and FOs of

changes in LOCCS/VRS affecting the three Modernization program areas:

Comprehensive Grant Program (COMP); Comprehensive Improvement

Assistance Program (CIAP); and Lead-Based Paint Risk Assessment (LBP).

These abbreviations designate the program areas in LOCCS. This Notice

is organized into the following Sections:

Section 2: Conversion of CIAP loans, approved in Fiscal Year (FY)

1986 and prior years and not fully disbursed, from the Rapid Housing

Payments System (RHPS) to LOCCS/VRS. COMP/CIAP/LBP grants, approved

in FY 1987 and subsequent years, are currently disbursed from

LOCCS/VRS. Note: This Notice does not address the conversion of

Major Reconstruction of Obsolete Projects (MROP) grants, which are

covered in a separate Notice.

Section 3: Change in Budget Line Item (BLI) edits for COMP to reflect

revised requirements related to fungibility of work within the

approved Five-Year Action Plan, as well as a summary of the BLI edits

for CIAP and LBP which are not being changed.

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PCM : Distribution: W-3-1, W-2(H), R-6, R-7, R-9, 138-2, 138-7

Previous Editions Are Obsolete HUD 21B (3-80)

GPO 871 902

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Section 4: Obligation and expenditure information, changes relating

to data entry, linkage of Modernization program areas, and FO reports.

Section 5: Entry of Obligation End Date, Pre-Audit End Date and

Post-Audit End Date for each COMP and LBP grant and each CIAP

grant/loan in LOCCS.

Section 6: LOCCS-generated reminder and late letters and correction

of drawdowns against the wrong grant/loan.

Section 7: Suspension and automatic review of payment requests by

the FO.

1-2 User Guide. For additional information on LOCCS/VRS, refer to the

following documents:

A. For HAs, refer to the LOCCS User Guide Part I, dated January

1994\. If the HA does not have a copy of this Guide, the HA

should request a copy from the FO.

B. For FOs, refer to the LOCCS PIH Program User Guide for HUD Staff,

dated January 1994. If the FO needs additional copies, the FO

should contact Mildred M. Hamman in HUD Headquarters on either

electronic mail (PIHPOST) or at 202-708-0846.

1-3 Notices Superseded. This Notice supersedes the following Notices:

A. Notice PIH 92-47 (HUD), CGP/CIAP Instructions for LOCCS/VRS,

dated 10/9/92;

B. Notice PIH 93-47 (HA), Change in Requisition Method for CIAP

Grant Funds Approved in FY 1987 and Subsequent FYs, dated

9/16/93; and

C. Notice PIH 93-55 (HA), Requirement for Entering Cumulative

Obligation and Expenditure Data When Requisitioning Modernization

Funds, dated 10/27/94.

1-4 Technical Assistance. If the HA has any questions pertaining to

LOCCS/VRS, the HA should contact the FO for assistance.

Section 2. Conversion of CIAP Loans from RHPS to LOCCS/VRS

2-1 Schedule. The conversion from RHPS to LOCCS/VRS applies to CIAP
loans

approved in FY 1986 and prior years which have not been fully

disbursed. To ensure a smooth transition, the following dates have

been established for the conversion:

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A. By Close of Business (COB). October 7, 1994, the HA shall submit

to the FO requests for payment of eligible CIAP expenditures,

both due and estimated to be due through November 10, 1994. Any

requests for payments through RHPS that are not received by COB,

October 7, 1994, will be returned to the HA and may be

requisitioned again through LOCCS/VRS on or after November 14,

1994\.

B. By COB, October 14, 1994, the FO shall complete RHPS processing

and data entry. The FO shall not enter payment due dates which

are after October 14, 1994. Payment due dates which are after

October 14, 1994, will not be processed since RHPS will be shut

down for the conversion on October 15, 1994.

C. On November 14, 1994, and thereafter, the HA shall requisition

CIAP funds approved in FY 1986 and prior years through LOCCS/VRS.

2-2 HA Access.

A. With Authorization. If the HA already has a current LOCCS/VRS

authorization for the CIAP program area, the HA does not need to

take any action to have access to LOCCS/VRS for CIAP loans.

Authorization for CIAP in LOCCS/VRS gives the authorized user

access to all CIAP programs, including both grants and loans.

B. Without Authorization. If the HA does not have a current

LOCCS/VRS authorization for the CIAP program area, the HA shall

follow the instructions in Attachment 1 of this Notice.

Attachment 1 includes a sample Form HUD-27054, LOCCS Voice

Response System Access Authorization, with Example #1 for adding

a program area for an already authorized user, and Example #2

for adding a new user for a specified program area or areas.

Note: MROP grants, including those approved as Modernization

Projects, are under the Development not the CIAP, program area.

Therefore, to draw down MROP funds in LOCCS/VRS after the

conversion from RHPS, the HA user will have to have authorization

for the Development program area (PDEV).

C. Multiple Users. If the HA wishes to have more than one user

draw down funds, an access authorization form must be completed

for each user not currently authorized in LOCCS/VRS. The

Department recommends that the HA have at least one back-up user.

If an HA user needs access for more than one Modernization

program area (i.e., COMP, CIAP and LBP), the user shall request

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one access authorization for each program area; the request for

access to more than one program area may be combined on the

same form.

D. Direct Deposit Form. The HA is not required to submit a new

SF-1199A, Direct Deposit Sign-Up Form. If the HA wishes to

change its bank account, the HA shall submit a new SF-1199A to

the FO. The FO shall review the form to verify the accuracy of

the information, including the Tax Identification Number, and

then initial and forward the form to Headquarters, Office of

Chief Financial Officer/Office of Finance and Accounting

(CFO/OFA), Cash and Credit Management Division, Attention:

ACH, P.O. Box 44816, Washington, DC 20026-4816. The HA is only

allowed to have one bank account of record for direct deposits

from HUD through the U.S. Treasury.

E. No Minimum Drawdown. There is no minimum drawdown requirement.

The HA shall draw down that amount of funds necessary to meet its

immediate cash needs \-- no more, no less.

2-3 HUD Access. Each proposed new FO user shall submit Form HUD-27054-A,

Access Authorization Security Form for HUD Staff, to Headquarters,

Attention: Pat Payne, LOCCS Security Officer, Room 3184. See

Attachment 2 for a sample form. The FO should refer to the LOCCS PIH

Program User Guide for HUD Staff, dated January 1994, for additional

instructions.

Note: MROP grants, including those approved as Modernization

Projects, are under the Development, not the CIAP, program area.

Therefore, to draw down MROP funds in LOCCS/VRS after the conversion

from RHPS, the FO user will have to have authorization for the

Development program area (PDEV).

2-4 HA Payment Voucher. The HA should refer to the LOCCS User Guide

Part I, dated January 1994, for generic instructions on preparation of

payment vouchers. See Attachments 3, 4 and 5, respectively, for the

following sample payment voucher forms: Form HUD-50080-CIAP, Payment

Voucher; Form HUD-50080-COMP, Payment Voucher; and Form HUD-50080-LBP,

Payment Voucher.

2-5 No Spread of BLIs. CIAP loans approved in FY 1986 and prior years

will be entered automatically during the conversion on BLI No. 1500.

The FO is not required to spread the loan on BLIs Nos. 1408 through

1495\. The HA shall request payment for CIAP loans against BLI

No. 1500 on Form HUD-50080-CIAP.

Section 3. BLIs: FO Entry and LOCCS Edits

3-1 Introduction.

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A. As quickly as possible after the funds for a grant have been reserved

and obligated (ACC amendment) and entered in the Program Accounting

System (PAS) by the Field Accounting Division (FAD), each FO shall

access LOCCS and prepare the grant for disbursement by entering the

BLIs. Using the F01 screen from the Program Area Menu, the FO shall

enter the original BLI amounts, corresponding to the approved amounts

in Part I of the COMP Annual Statement or the CIAP Budget (used for

both CIAP and LBP), into LOCCS. The sum of the BLIs must equal the

total grant amount or LOCCS will prevent the FO user from finalizing

the BLI entry. Refer to the LOCCS PIH Program User Guide for HUD

Staff, dated January 1994, for a listing of BLIs for each

Modernization program area.

B. Although the HA is responsible for accounting for the funds by the

development accounts identified in the Accounting Handbook 7510.1,

LOCCS will track the disbursement of funds only by BLIs, which

represent summary development accounts.

C. LOCCS/VRS contains \"hard\" and \"soft\" edits by BLI to monitor
program

requirements and guard against excessive drawdowns of cash, as

follows:

1\. General Edits.

a\. The HA is limited to one transaction per day, per

grant/loan. LOCCS/VRS will not allow the HA to enter a

payment request until all previous payment requests have

been processed by LOCCS. Therefore, if the HA has a pending

payment which is being reviewed by the FO prior to payment,

the HA cannot enter any subsequent payment requests until

the previous request is either rejected or approved.

b\. LOCCS/VRS will not allow the HA to enter a payment request

which when added to previously paid requests, would exceed

the total amount of the grant/loan.

2\. Soft Edits. Soft edits are limits placed on certain BLIs which

prevent the HA from being paid when certain thresholds are

exceeded, but do not prevent the HA from completing its payment

request. The request is flagged for FO review prior to payment.

Where this occurs, the HA should contact the FO for further

instructions. For CIAP and LBP, the HA may be required to submit

a budget revision before the payment request can be approved.

3\. Hard Edits. Hard edits are limits placed on certain BLIs which

will not allow the HA to request more funds than is entered by

the FO for those BLIs in LOCCS. When a hard edit occurs, the

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payment request is denied and the HA should contact the FO for

further instructions. The HA may be required to submit a budget

revision before the payment request can be approved. If the FO

wishes to approve the payment request, the FO must first increase

the BLI amount which triggered the hard edit (and also reduce

another BLI by the same amount) and then direct the HA to make

another request in accordance with the revised amounts. The FO

should promptly notify the HA by telephone of when the revised

BLIs have been entered.

3-2 Revised BLI Edits for COMP. The COMP program area has been revised
to

allow for the fungibility (interchangeability) of work within the

HUD-approved Five-Year Action Plan. (Refer to the Comprehensive Grant

Program final rule, published on August 30, 1994, at 59 FR 44810.)

Beginning with approval of the FY 1995 annual grant, the COMP HA will

be allowed to move work between the Annual Statement and years two

through five of the latest HUD-approved Five-Year Action Plan. To

accommodate this program change, the current edits on the BLIs for the

COMP program area will be revised, effective October 3, 1994, as

follows:

A. BLI 1408, Management Improvements.

1\. The soft edit will be 20 percent of the grant amount or the

FO-entered BLI, whichever is greater. The FO has the

authority to approve an amount exceeding 20 percent for this

BLI. Example 1: If the grant amount is \$1,000,000 and the

FO enters \$150,000 (15 percent) for this BLI, the soft edit

will allow a cumulative drawdown of up to \$200,000 (20

percent) against this BLI. If the HA tries to draw down

cumulatively over \$200,000, the draw will trigger FO review

of the payment request. Example 2: If the grant amount is

\$1,000,000 and the FO enters \$225,000 (25 percent) for this

BLI, the soft edit will allow a cumulative drawdown of up to

\$225,000 against this BLI. If the HA tries to draw down

cumulatively over \$225,000, the draw will trigger FO review

of the payment request.

2\. Under the revised final rule, HAs which are high overall

performers, as well as high Mod performers, have no

programmatic limit on the amount they may draw/expend on BLI

1408\. Therefore, if such HAs wish to increase this BLI

above 20 percent after the BLI is initially entered by the

FO, the HAs must inform the FO so that the FO may reenter a

higher amount for BLI 1408 and a lower amount for another

BLI. The HA may so inform the FO by telephone and the FO

shall make the BLI adjustments as quickly as possible.

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B. BLI 1410, Administration. The soft edit will be 10 percent of

the grant amount or the FO-entered BLI, whichever is greater.

The FO has the authority to approve an amount exceeding 10

percent for this BLI. Example 1: If the grant amount is

\$1,000,000 and the FO enters \$90,000 (9 percent) for this BLI,

the soft edit will allow a cumulative drawdown of up to

\$100,000 (10 percent) against this BLI. If the HA tries to draw

down cumulatively over \$100,000, the draw will trigger FO review

of the payment request. Example 2: If the grant amount is

\$1,000,000 and the FO enters \$110,000 (11 percent) for this BLI,

the soft edit will allow a cumulative drawdown of up to

\$110,000. If the HA tries to draw down cumulatively over

\$110,000, the draw will trigger FO review of the payment request.

C. BLI 1411, Audit Cost. The soft edit for BLI 1411 is unchanged

and will not allow disbursements which exceed 110 percent of the

FO-entered BLI amount without FO review of the payment request.

D. BLI 1430 through 1495. The soft edit which flagged for FO review

all HA payment requests which exceeded 110 percent of the

originally entered BLI amount will be removed for the following

BLIs: 1430, Fees and Costs; 1440, Site Acquisition; 1450, Site

Improvement; 1460, Dwelling Structures; 1465, Dwelling Equipment

\- Non-expendable; 1470, Nondwelling Structures; 1475, Nondwelling

Equipment; and 1495, Relocation Costs.

E. BLI 1490, Replacement Reserve. The hard edit for BLI 1490 is

unchanged and will not allow disbursements which exceed the

FO-entered BLI amount.

F. BLI 1502.

1\. This new development account 1502 is being provided on the

Annual Statement to allow the HA to budget initially up to 8

percent of its annual grant for contingencies. If the HA

initially budgets funds for account 1502, the FO will enter

the budgeted amount, not to exceed 8 percent, into BLI 1502

when initially spreading the BLIs.

2\. When the HA needs to use the funds in this contingency

account for cost overruns or other work within its Five-Year

Action Plan, the HA is required to rebudget the funds,

within the Annual Statement, from the contingency account

1502 to other eligible development accounts and then draw

down the funds from the other BLIs. Since fungibility

permits the HA to move funds among development accounts

without prior FO approval and the 110 percent soft edits on

BLIs 1430 through 1495 are being removed (see subparagraph

D), the HA may draw down funds from these BLIs without the

FO entering revised BLI amounts into LOCCS/VRS, as long as

the total grant amount is not exceeded.

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3\. After the HA has rebudgeted the funds, within the Annual

Statement, from account 1502 into other eligible development

accounts for purposes of obligation and expenditure, the HA

may not replenish account 1502. At program completion, the

revised budget amount for account 1502 must be zero. Since

the HA may not draw down funds against BLI 1502, it is not

listed on Form HUD 50080-COMP, Payment Voucher. LOCCS/VRS

will always show zero funds disbursed for BLI 1502.

3-3 BLI Edits for CIAP/LBP. The BLI edits for CIAP and LBP are
unchanged,

as follows:

A. CIAP. The hard edit for BLIs 1408 and 1410 is unchanged and will

not allow disbursements which exceed the FO-entered BLI amounts.

The soft edit of 110 percent for BLIs 1430 through 1495 is

unchanged and will trigger FO review before payment of an amount

exceeding 110 percent of the FO-entered BLI amount.

B. LBP. This program areas has only two BLIs \-- 1410 and 1430. The

hard edit for these two BLIs is unchanged and will not allow

disbursements which exceed the FO-entered BLI amounts.

3-4 One-Month Review Edit. For all three Modernization program areas,

there is a current soft edit, which flags for FO review, HA payment

requests which cumulatively exceed a specified percentage of the

annual grant amount in a current month. This edit does not mean that

the HA cannot draw down more than its percentage limit in a current

month; it does mean that the payment request causing the limit to be

exceeded is flagged for FO review.

A. For the COMP and CIAP program areas, the one-month review edit is

not being changed at this time, but is being reevaluated to

determine if the percentages are overly restrictive and result

in an excessive number of payment requests requiring FO review.

The one-month review percentages are as follows:

Grant Amount Percentage

\$150,000,000 - or more 2.0%

\$100,000,000 - \$149,999,999 3.0%

\$ 50,000,000 - \$ 99,999,999 4.0%

\$ 10,000,000 - \$ 49,999,999 5.0%

\$ 1,000,000 - \$ 9,999,999 6.0%

\$ 1 - \$ 999,999 8.0%

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B. For the LBP program area, the one-month review edit of 10 percent

of the grant amount is not being changed.

3-5 FO Review.

A. The FO should query LOCCS daily, but no less frequently than

twice weekly, depending on the activity level, to determine if

there are any Vouchers Out for Review (Q10 screen). The FO

should query for any workload (Q40 screen) at the same time to

see if any BLI data entry is needed. Where LOCCS shows payment

requests flagged for review, the FO is responsible for evaluating

whether the request should be released for payment. FO review of

and action on any payment request flagged for review should be

completed within no more than three working days.

B. When the one-month review is triggered, the HA should immediately

call the FO to explain the payment request. Based on the HA\'s

telephone explanation, the FO may release the payment without

further delay or require that the HA send in additional

documentation. In cases where the HA has awarded a large

construction contract, and the schedule for periodic payment,

when added to other routine payments during a month, will cause

the HA to exceed the percentage limit for a number of months, the

FO may wish to request that the HA send or fax in the schedule

when the one-month review is first triggered. Thereafter, a

telephone call from the HA should be sufficient for the FO to

release the payment request. Where necessary, the FO may direct

the HA to submit back-up documentation in support of the payment

request. In most cases, a simple note to the files will suffice

in lieu of extensive documentation.

Section 4. Obligation/Expenditure Information

4-1 General. The HA is required to enter cumulative obligation and

expenditure data on a quarterly basis when requisitioning

modernization funds from any of the three Modernization program areas.

Obligation and expenditure data are entered at the Modernization

Project (grant/loan) level.

4-2 Defining Obligations and Expenditures.

A. Obligations. Obligations mean the cumulative amount of

modernization commitments entered into by the HA; i.e., contract

execution for contract labor, materials or services; start and

continuation of physical work by force account labor; and start

and continuation of administrative expenses. Contract execution

means execution of the contract by both the HA and the

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contractor. For force account work, all funds for a group of

sequentially-related physical work items are considered obligated

when the first work item is started, such as kitchen cabinet

replacement followed by kitchen floor replacement, but only

where funds continue to be expended at a reasonable rate. Where

one force account physical work item is started and is not

sequentially related to other physical work items, such as site

improvements and kitchen remodeling, then only the funds for the

one physical work item started are considered obligated.

B. Expenditures. Where funds have been obligated, the HA is

expected to show reasonable progress through increasing fund

expenditures each quarter at a rate which would allow completion

within the time frame set forth in the implementation schedule.

The HA shall requisition funds only when payment is due and after

inspection and acceptance of the work and shall distribute

the funds within three working days of receipt of the funds.

4-3 Time Frame for Entering Cumulative Obligation and Expenditure Data.

A. During the grace month following a quarter end (i.e., January,

April, July or October), LOCCS/VRS gives the HA the option to

either enter/update cumulative obligation and expenditure data

without drawing down or continue the drawdown without entering

the data. The requested data include the total cumulative

obligation and expenditure amounts for each grant/loan for which

funds are being requisitioned. If no obligation or expenditure

activity has occurred since the last quarterly update, the HA

must reenter the existing cumulative obligation and expenditure

data in order for LOCCS/VRS to acknowledge data entry for the

most recent previous quarter. During the grace month, there is

no limit on the number of times that the HA may enter/update

obligation/expenditure information.

B. Beginning on the first day of the month following end of the

grace month (i.e., February 1, May 1, August 1, or November 1),

the HA is not allowed to continue a drawdown until the cumulative

obligation and expenditure data for that grant/loan for the

previous quarter have been entered. For example, for the quarter

ending December 31, the HA is required to enter obligation and

expenditure data during the month of January. If the HA has not

done so by January 31, and the HA attempts to requisition funds

on February 1, LOCCS/VRS will not process the requisition until

the required data are entered/updated. Refer to paragraph 4-4

regarding linkage of the three Modernization program areas.

C. Where the HA has not requisitioned funds during a previous

Quarter or quarters, the HA is not allowed to requisition funds

until the cumulative obligation and expenditure data for that

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grant/loan for the most recent previous quarter have been entered.

For example, if the HA has not requisitioned funds during the

quarters ending March 31 and June 30, but needs to requisition

funds in August, LOCCS/VRS will not process the requisition until

the required data for the quarter ending June 30 are entered/updated.

D. For the initial drawdown for a particular grant, the procedure

set forth in subparagraph C applies. Where the cumulative

obligation and expenditure data for the most recent previous

quarter are zero, the HA shall enter zeroes for both amounts.

For example, where the ACC was amended in December and the HA

is requisitioning funds in February, the HA must enter zeroes for

the quarter ending December 31.

4-4 Linkage of Modernization Program Areas.

A. Definition and Consequences. To ensure complete entry and update

of all modernization obligation and expenditure information by

the HA on a quarterly basis, the active grants/loans within each

of the Modernization program areas (COMP, CIAP and LBP) will be

linked, effective January 1, 1995. An active grant/loan is

defined as one which has not reached its Pre-Audit End Date (see

Section 5). This means that HA failure to update information on

a particular active CIAP grant/loan will, after the grace month,

result in the suspension of drawdowns on all other active CIAP

grants/loans, COMP grants, and LBP grants.

B. HA Responsibility. Because of the linkage of the three

Modernization program areas, it is extremely important that the

HA make a final update of obligation/expenditure data after all

funds for a particular grant/loan have been drawn down. HA

failure to update after 100 percent disbursement on a particular

Modernization grant/loan will result in a suspension of drawdowns

on all other Modernization grants/loans.

4-5 Data Entry Edits.

A. If the entered cumulative obligation or expenditure amount is

less than the prior quarter\'s obligation or expenditure amount,

LOCCS/VRS will ask the HA whether the entered amount is correct.

If the amount is incorrect, the HA may correct the amount. For

example, the obligation amount may decrease due to a contract

modification, reducing the fixed price of the contract.

B. If the entered cumulative obligation amount is greater than the

grant/loan amount, LOCCS/VRS will ask the HA to enter a corrected

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amount. The obligation amount cannot exceed the grant/loan amount.

C. If the entered cumulative expenditure amount is greater than the

obligation amount, LOCCS/VRS will ask the HA to enter a corrected

amount. The expenditure amount cannot exceed the obligation

amount.

4-6 FO Entry of Obligation/Expenditure Information. Effective October 3,

1994, the FO will be able to enter or change obligation/expenditure

information for the last quarter on behalf of the HA at any time up

until entry of the Pre-Audit End Date (see Section 5). FO entry or

correction of information may be necessary where the HA determines

that it has made a mistake in updating its information and is unable

to correct the mistake because the grace month is over.

4-7 FO Action on HA Failure to Enter Information. If the HA persistently

fails to enter obligation/expenditure information during the grace

month or repeatedly enters incorrect information, the FO should

require automatic review of every payment request in the affected

program area. Refer to paragraph 7-3 for additional information on

automatic review.

4-8 Obligation/Expenditure Information and Reports. Effective November

14, 1994, for the quarter ending September 30, 1994, the following

information and reports will be available showing obligation/expenditure

information by each of the three Modernization program areas:

A. On the 31st day after the quarter end, the FO should use the Q29A

function, which is an on-line query, to determine those HAs, by

program area, which have not updated obligation/expenditure

information. The FO should immediately contact those HAs and

request entry/update of obligation/expenditure information no

later than the 45th day after the quarter end.

B. On the 31st day after the quarter end, LOCCS will generate a hard

copy preliminary report for the FO showing obligation/expenditure

information sorted by FY and by HA, within each program area.

Using a risk management approach, the FO shall review the report

for apparent inaccuracies and request the HA to make corrections,

where necessary, between the 31st and 45th day after the quarter

end.

C. On the 46th day after the quarter end, LOCCS will generate a hard

copy final report for the FO showing obligation/expenditure

information sorted by FY and by HA, within each Modernization

program area.

D. Addition of FY Identifier. As part of the conversion of the CIAP

loans from RHPS to LOCCS/VRS, the CFO/OFA is adding the FY of

approval to the Modernization Project numbers in LOCCS/VRS for

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13

all CIAP grants/loans and LBP grants approved before FY 1993.

In doing so, the CFO/OFA will use the FY of the initial

reservation date. The FY identifier is necessary for LOCCS to

sort obligation/expenditure reports by FY of approval.

Section 5. Addition of End Dates

5-1 General. For each COMP and LBP grant and each CIAP grant/loan in

LOCCS/VRS, one of the following three dates shall be entered into

LOCCS by December 31, 1994. For grants already in LOCCS, the FO may

begin entering a date on October 3, 1994. For loans being converted

from RHPS to LOCCS, the FO may begin entering a date on November 14,

1994\.

A. Obligation End Date is the date by which all funds for a specific

grant/loan will be obligated. If the implementation schedule for

a grant/loan has multiple obligation deadline dates (e.g., dates

for each development and HA-wide management improvement included

in the grant/loan), the last obligation deadline date is the

Obligation End Date for the entire grant/loan. The Obligation

End Date must be a quarter end date; i.e., 12/31, 3/31, 6/30

or 9/30. This date is entered by the FO, as set forth in

paragraph 5-2.

B. Pre-Audit End Date is the date on which the FO, after review,

accepts the HA\'s final progress report. This date is entered

by the FO, as set forth in paragraph 5-3.

C. Post-Audit End Date is the date on which the FO approves the

Actual Modernization Cost Certificate (AMCC) after audit. The

FO forwards the original of the approved AMCC to the FAD and this

date is entered by the FAD into LOCCS. LOCCS will interface with

PAS to record program closeout, as set forth in paragraph 5-4.

5-2 Obligation End Date.

A. Initial Entry.

1\. For grants approved and linked in LOCCS/VRS on or after

October 3, 1994, the FO is required to use the F01 screen

to enter the Obligation End Date at the time it initially

spreads the BLIs.

2\. For grants approved and linked in LOCCS/VRS before October

3, 1994, and for loans converted to LOCCS/VRS on November

14, 1994, the BLIs have already been spread. Therefore,

the FO shall use the A01 function to enter either the

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14

Obligation End Date or the Pre-Audit End Date, by December

31, 1994. If the Obligation End Date is blank when the FO

enters the Pre-Audit End Date, LOCCS/VRS will automatically

fill the Obligation End Date with the FO-entered Pre-Audit

End Date. If the Pre-Audit End Date is blank when the FAD

enters the Post-Audit End Date, LOCCS/VRS will automatically

fill the Pre-Audit End Date with the FAD-entered Post-Audit

End Date.

B. Revision of Initial Entry. Using the A01 function, the FO may

change the Obligation End Date at any time.

1\. If the FO approves a time extension of an obligation

deadline date in the implementation schedule and the

extension affects the Obligation End Date of the entire

grant/loan, the FO shall change the Obligation End Date in

LOCCS.

2\. If the HA self-executes a time extension of an obligation

deadline date in the implementation schedule and the

extension affects the Obligation End Date of the entire

grant/loan, the HA shall notify the FO which will change

the Obligation End Date in LOCCS. Note: The HA, regardless

of whether it is a COMP or CIAP HA, may not self-execute a

time extension for an LBP grant.

C. HA Update of Obligated Information. During the grace period

immediately following the Obligation End Date, LOCCS/VRS will

allow the HA to update obligated information. After the end of

the grace period immediately following the Obligation End Date,

the HA will be prevented from changing obligated information,

but will still be required to update expended information on a

quarterly basis.

D. Other Consequences. After the end of the grace period

immediately following the Obligation End Date, LOCCS/VRS will:

1\. prevent cumulative disbursements from exceeding cumulative

obligations; and

2\. continue reminder letters regarding updates of expended (not

obligated) information, which is required quarterly, and

progress reporting, which is required annually for COMP and

semi-annually for CIAP and LBP.

5-3 Pre-Audit End Date.

A. Initial Entry. The FO will enter the Pre-Audit End Date after

receipt, review and acceptance of the final progress report.

This date cannot be a future date and does not have to be a

quarter end date.

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B. Consequences. When the Pre-Audit End Date is entered, LOCCS

will:

1\. ensure that the obligated and expended amounts equal the

disbursed amount\*;

2\. ensure that there are no outstanding receivables associated

with the grant/loan\*;

3\. ensure that all required progress reports have been recorded

as having been received by the FO through the M10 screen\*;

4\. not allow any further HA updates of obligated/expended

information;

5\. not allow any further FO updates of obligated/expended

information;

6\. not allow any further drawdowns by the HA;

7\. automatically adjust obligated, expended and disbursed for

any collections posted after the Pre-Audit End Date; and

8\. stop all reminder letters.

\* If this is not the case, LOCCS will display an error message

and not accept entry of the Pre-Audit End Date.

5-4 Post-Audit End Date. After audit, the FO, in all instances, shall

send the original of the approved AMCC to the FAD, even where there is

no downward adjustment (recapture). Note: The FO shall no longer

send the original of the AMCC directly to Headquarters where there is

no downward adjustment. In accordance with subparagraphs A, B or C,

the FAD will enter the Post-Audit End Date, which is the date on which

the FO approved the AMCC after audit.

A. Where HUD records (LOCCS) and HA records (audit) agree as to

funds obligated, expended and disbursed, the FAD shall

immediately enter the Post-Audit End Date into LOCCS, which

interfaces with PAS to record that the grant/loan has been closed

out.

B. Where the HA owes funds to HUD (i.e., the amount disbursed by

LOCCS is greater than the amount obligated and expended by the

HA per the audit), the FAD shall establish an accounts receivable

in PAS through LOCCS, which will automatically adjust the

obligation/expenditure information downward by the amount of the

receivable. In addition, the FAD shall receivable in the

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Departmental Accounts Receivables Tracking System (DARTS).

Upon receipt of the remittance, the FAD shall record the

remittance so that the amount disbursed by LOCCS/VRS is

equal to the amount obligated/expended by the HA per the

audit. The FAD then shall enter the Post-Audit End Date. The

HA shall remit in accordance with the following:

1\. Where the remittance is \$2,000 or less, the HA shall send

a check, payable to the Department of HUD, to NationsBank,

Excess Financing, P.O. Box 100144, Atlanta, GA 30384. The

HA shall notate the Modernization program area (e.g., COMP,

CIAP or LBP) and the Modernization Project Number on the

check.

2\. Where the remittance is over \$2,000, the HA shall request

its financial institution to wire the funds to HUD in

accordance with instructions set forth in the Financial

Management Handbook 7475.1, as revised.

C. Where HUD owes funds to the HA (i.e., the amount disbursed by

LOCCS/VRS is less than the amount obligated and expended by the

HA per the audit), the FAD shall enter the Post-Audit End Date

and the amount owed by HUD. LOCCS will automatically adjust the

obligation/expenditure information upward by the amount which HUD

owes and generate a voucher for that amount. However, the

voucher will not be paid until the FO indicates approval of the

voucher in LOCCS. After FO approval, LOCCS will generate a

letter to the HA identifying the grant/loan for which the

additional payment is being made.

D. Effective October 3, 1994, after the FAD enters the Post-Audit

End Date, all undisbursed balances will be automatically

recaptured through LOCCS. The FO will no longer be required to

prepare a Program Accounting Data (PAD) form to recapture excess

authority.

E. Where FO records indicate that the CIAP loan (approved in FY 1986

and prior years) was previously closed out, but accounting

records in PAS and/or disbursement records in LOCCS indicate that

there are undisbursed balances, the FO shall enter the correct

obligation and expenditure information into LOCCS and forward a

copy of the AMCC to the FAD. After the FAD enters the Post-Audit

End Date, all undisbursed balances will be automatically

recaptured through LOCCS.

Section 6. Reminder and Late Letters/Drawdowns Against Wrong Grant

6-1 Letters. Effective October 3, 1994, LOCCS will generate one reminder

and one late letter to the HA for each Modernization program area in

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17

lieu of one reminder and one late letter for each grant/loan. Letters

are generated as follows:

A. Obligation/Expenditure Information. The reminder letter is sent

quarterly, on the last day of the quarter end; i.e., 3/31, 6/30,

9/30, and 12/31. If the HA does not update the

obligation/expenditure information for any grant/loan in any of

the Modernization program areas (COMP, CIAP and LBP) during the

grace month, a late letter is sent on the last day of the grace

month following the quarter end and no further drawdowns will be

allowed until the required information is entered.

B. Progress Reports. Using the M10 screen, the FO shall enter

receipt of required progress reports into LOCCS. If, after entry

of receipt, FO review of the progress report indicates that the

report is incomplete so that progress status cannot be determined

or indicates unacceptable progress, the FO shall take appropriate

action to obtain correction from the HA.

1\. COMP. For COMP, the Performance and Evaluation (P&E) Report

on each grant is due annually from the HA on 9/30 for the

program year ending 6/30. The reminder letter is sent on

9/1 and the late letter is sent on 10/15, 15 days after the

due date. If FO receipt of the P&E Report for a particular

COMP grant is not entered into LOCCS by 10/15, all future

payments for that grant will be suspended until such time

as FO receipt of the P&E report is entered.

2\. CIAP and LBP. For CIAP and LBP, the Progress Report on each

grant/loan is due semi-annually from the HA; i.e., on 4/30

for the six-month period ending 3/31; and on 10/30 for the

six-month period ending 9/30. The reminder letters are sent

on 3/31 and 9/30 and the late letters are sent on 5/15 and

11/15, 15 days after the due dates. If FO receipt of the

Progress Report for a particular CIAP or LBP grant is not

entered into LOCCS by 5/15 and 11/15, all future payments

for that grant will be suspended until such time as FO

receipt of the Progress Report is entered.

6-2 Drawdowns Against Wrong Grant/Loan. Where the HA mistakenly draws

down funds against the wrong grant/loan, the HA shall take one of the

following actions:

A. Where the HA immediately realizes its mistake, the HA should

contact the FO and request that the FO cancel the voucher using

Option V31. The FO may cancel the voucher only on the same day

on which the HA called it in.

B. Where the HA realizes its mistake the following day or later, the

HA should contact the FO and ask for a payment adjustment. The

FO shall prepare a memorandum to the FAD requesting an

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18

requesting an adjustment and identifying the grant/loan and

BLI from which the funds were mistakenly drawn and the

grant/loan and BLI from which the funds should have been

drawn. The FAD will make the adjustment.

Section 7. Suspension and Automatic Review

7-1 General. On a quarterly basis, using a risk management approach, the

FO should check that HA expenditures are consistent with drawdowns

made. Where drawdowns exceed expenditures and the variance is not

explained by the disbursement information being more current than the

expenditure information, the FO should:

A. Review the grant activities to determine if the HA is in

compliance with all applicable requirements of the Modernization

program area;

B. Where appropriate, stop any further drawdowns until the HA is in

compliance with applicable requirements;

C. In the event that the HA has a significant cash balance on hand

and disbursement is not imminent, the FO shall direct the HA in

writing to remit immediately the excess amount. The HA shall

remit funds in accordance with the instructions in paragraph

5-4B; and

D. Document all actions taken and the rationale for those actions.

7-2 Suspension of Payments by FO. Using the M01 screen, the FO has the

ability to stop payments to a specific HA at any time such action is

justified.

A. Reasons for immediate action to suspend payments include, but are

not limited to: clear evidence of fraud; abuse or mismanagement

of funds previously drawn down; persistent holding of a

substantial amount of funds before disbursement for more than

three working days after receipt; and chronically late or

insufficient progress reports.

B. The FO shall document the basis for the suspension of payment

and inform the HA in writing of the reason prior to the

suspension.

C. Payments may be resumed only after the FO is satisfied that

appropriate actions have been taken by the HA to avoid

recurrences and restitution for any improper use of funds has

been made.

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7-3 Automatic Review of Payments by FO. By using the M09 screen, the FO

may require review of every payment request from a particular HA for

a specific program area. Note: Effective October 3, 1994, automatic

review may be placed on an entire program area, rather than on

individual grants/loans within a program area. Reasons for automatic

review include, but are not limited to: the PHA is designated as Mod

Troubled in accordance with the Public Housing Management Assessment

Program (PHMAP); or the HA has consistently shown that it is a proven

poor cash manager. If the FO determines that the HA must submit

additional documentation prior to payment, the FO shall formally

notify that HA in writing. (Note: the FO shall provide written

notification to the COMP HA through either a Notice of Deficiency or

Corrective Action Order.) Automatic review should remain in place

until the HA has demonstrated that it has taken appropriate corrective

action.

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Joseph Shuldiner

Assistant Secretary

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Attachment 1

FOR AN HA EMPLOYEE: BECOMING AN AUTHORIZED LOCCS/VRS USER

1\. Do you have access to LOCCS/VRS for any other Public and Indian

Housing programs, such as the Comprehensive Grant Program, Drug

Elimination Program, etc?

If YES, do the following:

a\. For each proposed user, complete attached Form HUD-27054, LOCCS

Voice Response System Access Authorization, 8/92 version only.

Check item 2 (Add/Change Authority) on Block 1. Enter your User

ID number on Block 2a and your Social Security Number on Block

2b.

b\. The LOCCS program area (Block 5a) is CIAP. The program name

(Block 5b) is Comprehensive Improvement Assistance Program.

c\. The approving official must fill out and sign Block 7. Please

note that the approving official\'s Social Security Number is

required. The signature must be notarized on Block 8.

d\. See Example #1 for reference.

If NO, do the following:

a\. For each proposed user, complete attached Form HUD-27054, 8/92

version only. Check item 1 (New User) on Block 1. Leave Block

2a blank, but enter your Social Security Number on Block 2b.

b\. The LOCCS program area (Block 5a) is CIAP. The program name

(Block 5b) is Comprehensive Improvement Assistance Program.

c\. The approving official must fill out and sign Block 7. Please

note that the approving official\'s Social Security Number is

required. The signature must be notarized on Block 8.

d\. See Example #2 for reference.

1

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2\. After completing Form HUD-27054, mail the original notarized form to

the FO as soon as possible. DO NOT mail the form directly to HUD

Headquarters since all access forms that have not been reviewed by

the FO will be returned unprocessed to you.

3\. The FO will complete its review and forward all access forms by

overnight mail to Headquarters, Attention: Pat Payne, LOCCS

Security Officer, AISAO, Room 3184.

4\. You will receive one of two documents indicating that you now have

access to the system depending on the following:

a\. If you are a current LOCCS/VRS user, you will receive a letter

indicating that the CIAP program has been added as a function to

your current password and User ID. You will not receive a new

password and User ID.

b\. If you are not a current LOCCS/VRS user, you will receive a

letter from HUD Headquarters, containing your User ID and a

LOCCS/VRS card with the telephone number for LOCCS and basic

instructions. The letter also provides instructions on how to

activate your User ID, which must be done within 30 calendar

days of the postmark of the letter.

c\. If you have not received one of these two documents within four

weeks, immediately contact the FO.

5\. You will receive a letter from HUD Headquarters advising you of your

VRS grant number (one number for each Modernization Project for years

1986 and prior). If you do not receive your VRS grant number

notification letter within four weeks, immediately contact the FO.

6\. Once you have received your VRS number and have access to the
system,

you may begin requisitioning funds on November 14, 1994, using a touch

tone telephone for eligible expenditures incurred. Make sure that

before calling LOCCS/VRS, you have completed Form HUD-50080-CIAP,

Payment Voucher, using line item 1500 only for 1986 and prior year

CIAP loans.

7\. If you experience any problems with the system, immediately call the

FO. The FO will assist you directly or contact the system experts in

Headquarters on your behalf.

2

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Attachment 1

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LOCCS

Voice Response System

Access Authorization

Link to HUD-27054

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Instructions for the

LOCCS Voice Response Access Authorization

Security Form

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Example #1

LOCCS

Voice Response System

Access Authorization

Link to HUD-27054

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Example #2

LOCCS

Voice Response System

Access Authorization

Link to HUD-27054

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Attachment 2

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LOCCS Access Authorization

Security Form

for HUD Staff

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Attachment 3

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LOCCS / VRS

Comprehensive Improvement

Assistance Program

Payment Voucher

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Attachment 4

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LOCCS / VRS

Comprehensive Grant Program

Payment Voucher

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Attachment 5

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LOCCS / VRS

Lead-Based Paint Risk

Assessment

Payment Voucher

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\* GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED \*

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