CHAPTER 12. FISCAL CLOSEOUT OF MODERNIZATION PROGRAMS

12-1. INTRODUCTION. This Chapter provides instructions on the

fiscal closeout of modernization programs that are

completed or being terminated because of poor performance

or other reasons. Program completion means that all

authorized CIAP costs have been fully paid and no further

CIAP funds will be expended for that particular

modernization program.

12-2. FINAL BUDGET REVISIONS. When a modernization program is

nearing completion, the PHA shall consult with the Field

Office regarding the need for any final budget revisions.

12-3. PHA SUBMISSION OF FINAL, QUARTERLY REPORT AND ACTUAL

MODERNIZATION COST CERTIFICATE. Upon completion or

termination of a modernization program, the PHA shall

submit to the Field Office, Attention: Chief, Assisted

Housing Management Branch (AHMB), Form HUD-52826,

Schedule/Report of Modernization Expenditures, and Form

HUD-53001, Actual Modernization Cost Certificate (AMCC), as

explained below:

a\. \"Final\" Quarterly Report. The PHA shall submit the

quarterly report, marked \"final\", in an original and

two copies.

b\. AMCC. The PHA shall submit the AMCC in an original

and one copy. A completed sample of the AMCC is

attached as Appendix 21. Instructions for preparation

of the form are contained on the reverse side of the

form.

12-4. HUD REVIEW. Upon receipt of the required documents, the

Field Office shall review the documents as follows:

a\. The amounts on the \"final\" quarterly report and the

AMCC must agree as to funds approved, advanced, and

expended (see funding limitation in paragraph 10-10).

\* b. The amount of funds approved and advanced must agree

with Departmental records, as contained in the Rapid

Housing Payment System (RHPS). \*

c\. If the \"final\" quarterly report and the AMCC indicate

that excess funds have been provided to the PHA, the

Field Office shall direct the PHA to remit immediately

the excess funds, without waiting for the audit, and

then subsequently to submit a revised \"final\"

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quarterly report and AMCC, showing that total funds

advanced, obligated and expended are equal amounts.

If the audit of the AMCC shows that the PHA

overremitted funds, HUD will return the amount of the

overremittance to the PHA.

\* d. In addition, refer to paragraphs 10-17b regarding

final inspections of completed construction contracts

and modernization programs. Where there were equal

opportunity-related physical or management

improvements, the HMS shall forward the \"final\"

quarterly report to the FHEO Division for review to

ensure that such improvements were carried out in an

acceptable manner. \*

12-5. AUDIT VERIFICATION OF ACTUAL MODERNIZATION COST

CERTIFICATE. When the submitted documents are correct, the

HMS shall prepare a letter for the signature of the Field

Office Manager or designee to the PHA, advising that the

AMCC must be included as a financial statement in the next

regularly scheduled fiscal audit conducted by the

Independent Auditor (IA). The audit shall follow the

requirements of 24 CFR Part 44 (Single Audit Act of 1984

(31 U.S.C. 7501-7507)). HUD reserves the right to conduct

audits.

12-6. HUD APPROVAL OF ACTUAL MODERNIZATION COST CERTIFICATE.

Upon acceptance of the fiscal audit, the Regional Inspector

General for Audit (RIGA) shall furnish a copy of the audit

report to the Field Office. The HMS and the Financial

Management Analyst (FMA) shall review the audit report to

determine if the audited costs agree with the costs shown

\* on the AMCC. If the audited AMCC indicates that there are

still excess funds, the PHA shall remit the excess funds,

directed by the Field Office. If the audited AMCC

discloses unauthorized expenditures, the PHA shall take

such corrective actions as HUD may direct. After all \*

audited costs have been reconciled, the HMS shall forward

the original AMCC to the Director, Housing Management

Division, for signature, indicating that the AMCC has been

audited and is correct, and to the Field Office Manager for

signature, indicating approval.

a\. Distribution. After signature, the HMS shall arrange

for the original and copies of the approved AMCC to be

distributed as follows:

\(1\) To the PHA, one copy for records purposes.

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\(2\) To the Regional or Chief Counsel, one copy for

attachment to the ACC amendment.

\(3\) To the AHMB files, one copy for records purposes.

\(4\) To the Regional Public Housing Director, one copy

for informational purposes, where requested.

\(5\) To the RIGA, one copy for audit and records

purposes.

\* (6) To the Regional Accounting Division (RAD) or

Office of Finance and Accounting (OFA), the

original in accordance with subparagraph c. \*

b\. For modernization approved before modernization as a

separate project (before July 1, 1978) the audited and

approved AMCC shall be attached to the ACC amendment

and shall be deemed to further amend the ACC, where

necessary, to reduce the amount of loan authority for

the modernization to the actual modernization cost.

No revised Form HUD-5079B, Modernization List (Part

II), Form HUD-52540, Project Accounting Data (PAD), or

additional ACC amendment is required. No updates will

be processed in the Assisted Housing Accounting System

(AHAS).

c\. For modernization approved after modernization as a

separate project (on or after July 1, 1978), the

audited and approved AMCC shall be attached to the ACC

amendment and shall be deemed to further amend the

ACC, where necessary, to reduce the amount of the

Modernization Project to the actual modernization

cost.

\(1\) Modernization Approved in FFY 1986 and Prior

Years. Where there is a downward adjustment, the

Field Office shall prepare a revised Form

HUD-52540, PAD (11/85 version), showing the

reduced contract, loan and budget authority

amounts (refer to paragraph 4-3) and transmit it

and the original of the audited and approved AMCC

to the RAD. The RAD will adjust the obligation

and reservation amounts in AHAS, as it would for

any other decrease amendment, and then forward

the AMCC to OFA. Where there is no downward

adjustment, the Field Office shall forward the

original of the AMCC directly to OFA. Recaptured

budget authority will be available for reuse as

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a capital grant only when reassigned by

Headquarters.

\(2\) Modernization Approved in FFY 1987 and Subsequent

Years. Where there is a downward adjustment, the

Field Office shall prepare a revised Form

HUD-52541, PAD (2/87 version), showing the

reduced budget authority amount and transmit the

PAD and the original of the audited and approved

AMCC to the RAD. The RAD will adjust the

obligation and reservation amounts in the Program

Accounting System (PAS), and then forward the

AMCC to OFA. Where there is no downward

adjustment, the Field Office shall forward the

original of the AMCC directly to OFA. Recaptured

\* budget authority will be available for reuse as a

capital grant only when reassigned by \*

Headquarters.

12-7. RECAPTURES AS PART OF FORGIVENESS. The Housing and

Community Development Reconciliation Amendments of 1985

(P.L. 99-272) authorize the Secretary to forgive

outstanding principal and interest on loans made by the

Secretary to PHAs.

a\. Forgiveness is limited to loans held by HUD which were

to be repaid using annual contributions. Forgiveness

does not extend to debt evidencing financing through

the sale of bonds, the Federal Financing Bank, or to

PHA notes to HUD which would not be retired using debt

service annual contributions, such as preliminary

loans, administrative loans and portion of notes

representing excess financing. The Act states that

the cancellation of principal and interest payments

shall not affect any other terms and conditions of the

ACC.

b\. For modernization approved before modernization as a

separate project (before July 1, 1978), it is

unnecessary for the Field Office to send a copy of the

audited and approved AMCC to RAD or OFA. OFA

processed recaptures as part of forgiveness

automatically at the end of FFY 1987.

c\. For modernization approved after modernization as a

separate project (on or after July 1, 1978), where

there is a downward adjustment under paragraph 12-6c,

the Field Office shall forward the revised PAD and the

original of the audited and approved AMCC to the RAD.

The RAD then will forward the original of the audited

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and approved AMCC to OFA. OFA will process recaptures

as part of forgiveness automatically at the end of

each FFY. Where there is no downward adjustment, the

Field Office shall forward the original of the audited

and approved AMCC directly to OFA. Upon receipt of

the AMCC, OFA will determine the amount of excess

financing (if any), reclassify the amounts of loans

that represent excess financing (if any), record the

AMCC amount in AHAS, and process contract and budget

recaptures as part of forgiveness automatically at the

end of each FFY.

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