[Federal Register Volume 82, Number 205 (Wednesday, October 25, 2017)]
[Rules and Regulations]
[Pages 49282-49286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-23082]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Part 3560

RIN 0575-AC98


Multi-Family Housing Program Requirements To Reduce Financial 
Reporting Requirements

AGENCY: Rural Housing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Rural Housing Service (RHS) is revising its existing 
regulations regarding financial reporting. This action is necessary to 
align RHS requirements with those of the United States Department of 
Housing and Urban Development (HUD) utilizing a risk-based threshold 
reporting which will reduce the burden on the borrower to produce 
multiple financial reports; focus on high-risk properties; and, reduce 
the financial cost of reporting on properties.

DATES: This rule is effective November 24, 2017.

FOR FURTHER INFORMATION CONTACT: Janet Stouder, Deputy Director, Multi-
Family Housing Portfolio Management Division, Rural Housing Service, 
Room 1237S--STOP 0782, 1400 Independence Avenue SW., Washington, DC 
20250-0782, Telephone: (202) 720-9728.

SUPPLEMENTARY INFORMATION: 

Executive Order 12866, Classification

    This final rule has been determined to be non-significant and, 
therefore was not reviewed by the Office of Management and Budget (OMB) 
under Executive Order 12866.

Authority

    The Multi-Family Housing program (MFH) is administered, subject to 
appropriations, by the U.S. Department of Agriculture (USDA) as 
authorized under Sections 514, 515, 516 and 521 of the Housing Act of 
1949, as amended (42 U.S.C. 1484, 1485, 1486, and 1490).

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR part 1970, 
``Environmental Program.'' RHS has determined that this action does not 
constitute a major Federal action significantly affecting the quality 
of the environment. In accordance with the National Environmental 
Policy Act of 1969, Public Law 91-190, an Environmental Impact 
Statement is not required.

Regulatory Flexibility Act

    This final rule has been reviewed with regard to the requirements 
of the Regulatory Flexibility Act (5 U.S.C. 601-612). The undersigned 
has determined and certified by signature on this document that this 
rule will not have a significant economic impact on a substantial 
number of small entities since this rulemaking action does not involve 
a new or expanded program nor does it require any more action on the 
part of a small business than required of a large entity.

Executive Order 13132, Federalism

    The policies contained in this rule do not have any substantial 
direct effect on States, on the relationship between the National 
Government and the States, or on the distribution of power and 
responsibilities among the various levels of Government. This rule does 
not impose substantial direct compliance costs on State and local 
Governments; therefore, consultation with the States is not required.

Executive Order 12988, Civil Justice Reform

    This rule has been reviewed under Executive Order 12988. In 
accordance with this rule: (1) Unless otherwise specifically provided, 
all State and local laws that are in conflict with this rule will be 
preempted; (2) no retroactive effect will be given to this rule except 
as specifically prescribed in the rule; and (3) administrative 
proceedings of the National Appeals Division of the Department of 
Agriculture (7 CFR part 11) must be exhausted before bringing suit in 
court that challenges action taken under this rule.

[[Page 49283]]

Unfunded Mandate Reform Act (UMRA)

    Title II of the UMRA, Public Law 104-4, establishes requirements 
for Federal Agencies to assess the effects of their regulatory actions 
on State, local, and tribal Governments and on the private sector. 
Under section 202 of the UMRA, Federal Agencies generally must prepare 
a written statement, including cost-benefit analysis, for proposed and 
Final Rules with ``Federal mandates'' that may result in expenditures 
to State, local, or tribal Governments, in the aggregate, or to the 
private sector, of $100 million or more in any one-year. When such a 
statement is needed for a rule, section 205 of the UMRA generally 
requires a Federal Agency to identify and consider a reasonable number 
of regulatory alternatives and adopt the least costly, more cost-
effective, or least burdensome alternative that achieves the objectives 
of the rule.
    This rule contains no Federal mandates (under the regulatory 
provisions of title II of the UMRA) for State, local, and tribal 
Governments or for the private sector. Therefore, this rule is not 
subject to the requirements of sections 202 and 205 of the UMRA.

Paperwork Reduction Act of 1995

    The information collection requirements contained in this 
regulation have been approved by OMB and have been assigned OMB control 
number 0575-0189. This final rule contains no new reporting or 
recordkeeping requirements that would require approval under the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

E-Government Act Compliance

    RHS is committed to complying with the E-Government Act to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services and for other purposes.

Programs Affected

    The programs affected by this regulation are listed in the Catalog 
of Federal Domestic Assistance under number 10.405--Farm Labor Housing 
Loans and Grants (Sections 514 and 516); 10.415--Rural Rental Housing 
Loans (Section 515); and 10.427--Rural Rental Assistance Payments 
(Section 521).

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    This executive order imposes requirements on RHS in the development 
of regulatory policies that have tribal implications or preempt tribal 
laws. RHS has determined that the final rule does not have a 
substantial direct effect on one or more Indian tribe(s) or on either 
the relationship or the distribution of powers and responsibilities 
between the Federal Government and the Indian tribes. Thus, the final 
rule is not subject to the requirements of Executive Order 13175. If 
tribal leaders are interested in consulting with RHS on this final 
rule, they are encouraged to contact USDA's Office of Tribal Relations 
or Rural Development's Native American Coordinator at (720) 544-2911 or 
<a href="/cdn-cgi/l/email-protection#2b6a626a656b5e584f4a054c445d"><span class="__cf_email__" data-cfemail="b0f1f9f1fef0c5c3d4d19ed7dfc6">[email protected]</span></a> to request such consultation.

Executive Order 12372, Intergovernmental Consultation

    These loans are subject to the provisions of Executive Order 12372 
which require intergovernmental consultation with State and local 
officials. RHS conducts intergovernmental consultations for each loan 
in accordance with 2 CFR part 415, subpart C.

Non-Discrimination Policy

    In accordance with Federal civil rights law and U.S. Department of 
Agriculture (USDA) civil rights regulations and policies, the USDA, its 
Agencies, offices, and employees, and institutions participating in or 
administering USDA programs are prohibited from discriminating based on 
race, color, national origin, religion, sex, gender identity (including 
gender expression), sexual orientation, disability, age, marital 
status, family/parental status, income derived from a public assistance 
program, political beliefs, or reprisal or retaliation for prior civil 
rights activity, in any program or activity conducted or funded by USDA 
(not all bases apply to all programs). Remedies and complaint filing 
deadlines vary by program or incident.
    Persons with disabilities who require alternative means of 
communication for program information (e.g., Braille, large print, 
audiotape, American Sign Language, etc.) should contact the responsible 
Agency or USDA's TARGET Center at (202) 720-2600 (voice and TTY) or 
contact USDA through the Federal Relay Service at (800) 877-8339. 
Additionally, program information may be made available in languages 
other than English.
    To file a program discrimination complaint, complete the USDA 
Program Discrimination Complaint Form, AD-3027, found online at http://www.ascr.usda.gov/complaint_filing_cust.html and at any USDA office or 
write a letter addressed to USDA and provide in the letter all of the 
information requested in the form. To request a copy of the complaint 
form, call (866) 632-9992. Submit your completed form or letter to USDA 
by:
    (1) Mail: U.S. Department of Agriculture, Office of the Assistant 
Secretary for Civil Rights, 1400 Independence Avenue SW., Washington, 
DC 20250-9410;
    (2) Fax: (202) 690-7442; or
    (3) Email: <a href="/cdn-cgi/l/email-protection#1363617c7461727e3d7a7d6772787653666077723d747c65"><span class="__cf_email__" data-cfemail="80f0f2efe7f2e1edaee9eef4e1ebe5c0f5f3e4e1aee7eff6">[email protected]</span></a>.
    USDA is an equal opportunity provider, employer, and lender.

I. Background

    Section 515(z)(1) of the Housing Act of 1949, as amended states 
that the Secretary shall require that borrowers in programs authorized 
by this section maintain accounting records in accordance with 
generally accepted accounting principles for all MFH projects that 
receive funds from loans made or guaranteed by the Secretary. Since RHS 
considers Sections 514 Farm Labor Housing loans to have similar risks 
as Section 515 Rural Rental Housing loans, the regulatory accounting 
requirements apply to both types of loans. See 7 CFR 3560.578.
    RHS published the financial reporting proposed rule in the Federal 
Register on August 6, 2015, (80 FR 46853-46855). A 60-day comment 
period was provided that ended October 5, 2015. The Agency received 
twenty-two comments from ten stakeholders, including Certified Public 
Accountant (CPA) groups, USDA employees, and MFH owners/borrowers.
    RHS proposed to remove engagement requirements, as well as unit-
based requirements from 7 CFR 3560.11, 3560.301, 3560.302, 3560.303 and 
3560.308 and replace it with risk-based requirements for audits 
utilizing a modified version of the HUD Office of Inspector General's 
(OIG) Consolidated Audit Guide standard. This proposed change was a 
result of RHS's participation in the White House's Domestic Policy 
Council's Rental Policy Working Group (RPWG) on an initiative to reduce 
duplication of requirements on customers, eliminate conflicting 
administrative requirements, and align program requirements in the 
affordable rental housing industry. RHS believes that high-risk 
properties should receive more stringent evaluation of financial 
performance and that it can be accomplished in a more cost-effective 
manner. Implementation of this rule will reduce cost to properties, 
eliminate duplicate reporting to federal agencies, and further 
alignment objectives. HUD will accept the RHS audit in compliance

[[Page 49284]]

with their requirements for Section 8 subsidized properties. High-risk 
properties are those with combined Federal financial assistance above 
$750,000 for non-profit entities and $500,000 involving for-profit 
entities.
    Combined Federal financial assistance includes a combination of any 
or all of the sources identified below:
    <bullet> The outstanding beginning principal balance of a USDA 
Mortgage, a mortgage insured by the Federal Housing Administration 
(FHA) or HUD-held mortgages or loans (including flexible subsidy 
loans);
    <bullet> Any RHS Rental Assistance or Project-based Section 8 
assistance received during the fiscal year;
    <bullet> Interest reduction payments received during the year 
(interest subsidy) and/or;
    <bullet> Federal grant funds received during the year.
    The thresholds established in the proposed rule for non-profits are 
herein modified in order to conform to thresholds established by the 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards, 2 CFR parts 200 and 400.
    The threshold level for the non-profit ownership audit reporting 
requirement has been changed to $750,000 from $500,000. For non-profit 
borrowers that receive $750,000 or more in Federal financial 
assistance, RHS will accept the audit required under 2 CFR part 200 as 
compliance with RHS financial reporting requirements; non-profit 
borrowers that receive less than $750,000 in Federal financial 
assistance must submit owner certified prescribed forms on the accrual 
method of accounting in accordance with Statements for Account and 
Review Services promulgated by the Accounting and Review Services 
Committee of the American Institute of Certified Public Accountants.
    There has been no change to the threshold requirement for for-
profit ownership entities and it remains at $500,000.
    Through this rule change, the Agency has removed requirements for 
an engagement that examines records using agreed upon procedures 
established by the Agency as part of the annual financial reporting 
requirements. Although the Section 514 and Section 515 proposals for 
new development are still subject to the agreed upon cost certification 
procedures set-forth in 7 CFR 3560.72(b).
    In addition to the changes in the annual reporting requirements 
outlined herein, the Agency is adding three additional certifications 
to the Performance Standards required under 7 CFR 3560.308(c). The 
proposed rule included two certifications: The borrower would be 
required to certify there have been no changes in project ownership 
other than those approved by the Agency and identified in the 
certification; and that real estate taxes are paid in accordance with 
state and/or local requirements and are current. This rule adds a third 
certification that Replacement Reserve accounts were used only for 
authorized purposes. This revision simply reflects what is required in 
the borrower's Loan Agreement and therefore does not constitute an 
additional burden on the borrower.

II. Summary of Comments

7 CFR 3560.302(b)(1) and (2) and Sec.  3560.308

    Two comments received indicated there is disparity and possible 
confusion in the citation as it relates to the establishment of a 
project's financial management procedures: i.e. ``. . . various methods 
of accounting are allowed (accrual, cash, or modified accrual); 
however, Sec.  3560.308 then requires that financial statements must be 
prepared in accordance with generally accepted accounting principles 
(GAAP). Why keep the accounting records on one bases of accounting, 
only to be forced to convert to generally-accepted accounting 
principles for annual reporting? It would be helpful if this section 
indicated what the annual financial reports must include.''
    The Agency appreciates the comments received and to alleviate 
disparity and confusion at both Sec.  3560.302(b)(1) and Sec.  
3560.308, RHS has revised Sec.  3560.302(b)(1) to indicate that the 
accrual accounting method is required. The Agency will revise Sec.  
3560.308(a)(1) and (a)(2) to indicate the documentation required to 
provide a complete financial report under 2 CFR parts 200 and 400. 
Federal financial assistance is defined in accordance with 2 CFR 
200.40.

Section 3560.303(Q) Housing Project Budgets and Sec.  3560.308(a)(2) 
Annual Financial Reports

    Five comments were received regarding the requirements of ``owner-
certified financial statements'' and expressed concern about the impact 
this may have on smaller property owners and the potential of increased 
CPA fees on project operating budgets.
    The Agency agrees with the commenters' concerns and has amended the 
requirements for those for-profit borrowers receiving less than 
$500,000 in combined Federal financial assistance, and non-profit 
borrowers receiving less than $750,000 in combined Federal financial 
assistance, to a compilation of prescribed forms. The compilation of 
prescribed forms will include Form RD 3560-7, ``MFH Project Budget/
Utility Allowance'' and Form RD 3560-10, ``MFH Borrower Balance 
Sheet'', and include supporting schedules for those forms within the 
report package. It is believed this will be more cost effective for 
smaller property owners that do not have other audit requirements. 
Language at Sec.  3560.308 (a)(2) is revised as stated in the preceding 
comment.
    Three comments were received regarding the Agency's modified 
version of the HUD OIG Consolidated Audit Guide. The comments expressed 
concern about when the ``modified version'' of the HUD OIG Consolidated 
Audit Guide would be released and that it had not been shared in the 
proposed rule. The commenters felt that it would be beneficial to 
release, as soon as possible, a draft version of the proposed HUD audit 
guide in order to better assess any possible changes in audit fees as 
well as the cost of preparing owner-certified statements.
    The HUD OIG Consolidated Audit Guide is not being modified for the 
purpose of this rule. The Agency anticipates additional cost savings to 
MFH property owners as the Agency will not utilize the HUD Chart of 
Accounts, nor will the report require the CPA to review tenant files, 
as that compliance test is being conducted by MFH field staff during 
supervisory visits and annual improper payment auditing. HUD has agreed 
to accept the RHS audit in lieu of a HUD audit for those projects where 
RHS and HUD have financing in common (i.e. Section 8/Section 515 
properties). No changes were made to the proposed rule regarding this 
comment.
    One commenter questioned the requirement within the Audit Guide, 
wherein CPAs are tasked with assessing housing quality standards as ``. 
. . this is not typically in their skillset.''
    The Agency does not expect CPAs to have a skillset that qualifies 
them to determine whether physical standards are met. However, RHS 
anticipates that upon determining whether the owner (borrower) or 
management agent has responded to all Agency management review reports, 
physical inspections, and inquiries regarding financial statements or 
monthly accounting reports (reference Sec.  3.5 M. 2. E of the Audit 
Guide), the auditor can make a reasonable determination that the

[[Page 49285]]

housing meets physical standards. The auditor should be reviewing all 
known reports, inspections, management reviews, etc. from each Agency 
holding an interest in the housing, to include RHS, HUD, Housing 
Finance Agencies, and Investors/Syndicators. The auditor would rely on 
these organizations to point out deficiencies in the repair and 
condition of the housing. The auditor would report on any uncorrected 
deficiencies within the report on audit findings, on compliance, and/or 
with a major program report on compliance.
    Three comments were received regarding the threshold standard. OMB 
has established a new reporting threshold for non-profit organizations 
that are required to file a single audit. The audit threshold is 
$750,000, in accordance with Part 200, Uniform Administrative 
Requirements, Cost Principles and Audit Requirements for Federal 
Awards, Subpart F Audit Requirements. Commenters believed HUD would 
likely make changes in guidance to follow that threshold.
    The Agency recognizes the change in the reporting threshold. HUD 
and RHS jointly determined that they would establish similar audit 
thresholds for financial reporting of its financed or insured 
properties. Since issuance of the proposed rule, RHS and HUD agreed to 
modify the threshold to avoid potential conflicts in implementation. 
The preceding comments reflecting this change are in alignment between 
the two agencies.
    One comment was received requesting clarification of the agreed-
upon-procedure (AUP) requirements for annual operating audits and that 
these will no longer be required.
    This is correct. AUPs will no longer be required as part of the 
annual financial reporting requirements. It is noted, however, new 
construction projects for Section 514 and Section 515 are still subject 
to the agreed upon cost certification procedures as set-forth in 7 CFR 
3560.72(b). As a result, no changes were made to the proposed rule 
regarding this comment.
    One comment was received regarding ``non-cash interest subsidy'' 
and whether this should be included in addition to interest reduction 
payments as part of the combined Federal financial assistance?
    The Agency interprets the `interest reduction payments' to be the 
equivalent of the ``non-cash'' interest subsidy the borrower receives 
annually and is included in the calculation of Federal financial 
assistance. Since this comment was simply requesting a clarification, 
no changes have been made to the rule.
    One comment was received asking if there was a ``. . . minimum 
amount of combined Federal financial assistance that would not require 
financial statements presented in accordance with GAAP?''
    From earlier comments received in response to the owner-
certification requirements, the Agency has agreed to amend the 
requirements for those for-profit borrowers, and non-profit borrowers 
receiving less than $750,000 in combined Federal assistance, and with 
no other audit requirements, to the receipt of a compilation of 
prescribed forms. As a result the Agency revised the proposed language 
at 7 CFR 3560.308(a)(2). Please see preceding comments reflecting this 
change.

Section 3560.308(b)(8) Performance Standards

    One comment was received regarding the Performance Standards at 7 
CFR 3560.308(b)(8), which was proposed to read that no unauthorized 
change in ownership have taken place. The commenter requested the 
regulation set forth what is expected to be identified as a change 
(i.e. the Borrower entity; partners/managers within the entity; limited 
partnership with a large financial backing).
    In accordance with 7 CFR 3560.405(b)(1) and (2), borrowers must 
notify the Agency prior to the implementation of any changes in a 
borrower entity's organizational structure or to a change in a borrower 
entity's controlling interest. The Agency has decided that no revision 
to the rule is needed.

Section 3560.308(d)(3) Other Financial Reports

    One commenter questioned ``. . . in a situation where the USDA loan 
may be below the threshold and is subordinate to a large private 
mortgage or a Section 538 Guaranteed Rural Housing (GRRH) loan, other 
funding sources will likely still require an audit. Although not 
required by the Agency, will the Agency continue to require these same 
financial reports be provided for review?''
    7 CFR 3560.308(d)(3) states, ``. . . any audits independently 
obtained by the borrower must also be submitted to the Agency.'' As a 
note, the existence of the Section 538 GRRH loan constitutes ``Federal 
financial assistance'' and should be added to the total when 
calculating the threshold requirement.
General Comments
    One commenter requested a general clarification of determining 
combined Federal financial assistance, ``. . . should the beginning of 
the year or end of the year principal balance be used?''
    Since the auditor reports on activity from the beginning of the 
reporting year to the end, it is appropriate that the combined Federal 
financial assistance shall be deemed the outstanding principal balances 
at the beginning of the borrower's fiscal reporting period. No change 
to the rule is needed.
    One commenter requested the anticipated implementation date for 
submission under the new financial reporting requirements.
    The Agency anticipates the new rule will be effective for borrowers 
with fiscal years beginning January 1, 2018 and thereafter. No change 
is needed to the proposed rule.
    One commenter asked whether financial reports would be 
electronically submitted through the Real Estate Assessment Center 
(REAC).
    RHS reports are not submitted to REAC, which is owned by HUD. No 
change to the rule is needed.

List of Subjects in 7 CFR Part 3560

    Aged loan programs-Agriculture, loan programs-Housing and Community 
Development, Low- and moderate-income housing, Public Housing, rent 
subsidies.

    For the reasons set forth in the preamble, chapter XXXV, Title 7 of 
the Code of Federal Regulations will be amended as follows:

PART 3560--DIRECT MULTI-FAMILY HOUSING LOANS AND GRANTS

0
 1. The authority citation for Part 3560 continues to read as follows:

    Authority: 42 U.S.C. 1480.

Subpart A--General Provisions and Definitions


Sec.  3560.11  [Amended]

0
2. Amend Sec.  3560.11 by removing the definition of ``Engagement''.

Subpart G--Financial Management

0
3. Section 3560.301 is revised to read as follows:


Sec.  3560.301  General.

    This subpart contains requirements for the financial management of 
Agency-financed multi-family housing (MFH) projects, including 
accounts, budgets, and reports. Financial management systems and 
procedures must cover all housing operations and provide adequate 
documentation to ensure that program objectives are met.

0
 4. Amend Sec.  3560.302 by revising paragraphs (a), (b)(1) and (2), 
and (e)(1) to read as follows:

[[Page 49286]]

Sec.  3560.302  Accounting, bookkeeping, budgeting, and financial 
management systems.

    (a) General. Borrowers must establish the accounting, bookkeeping, 
budgeting and financial management procedures necessary to conduct 
housing project operations in a financially safe and sound manner. 
Borrowers must maintain records in a manner suitable for an audit, and 
must be able to report accurate operational results to the Agency from 
these accounts and records.
    (b) * * *
    (1) Borrowers are required to use the accrual method of accounting 
in preparing annual financial reports, as identified in Sec.  3560.308.
    (2) Borrowers must describe their accounting, bookkeeping, budget 
preparation, and financial reporting procedures in their management 
plan.
* * * * *
    (e) * * *
    (1) Borrowers must retain all housing project financial records, 
books, and supporting material for at least three years after the 
issuance of their financial reports. Upon request, these materials will 
immediately be made available to the Agency, its representatives, the 
USDA Office of Inspector General (OIG), or the Government 
Accountability Office (GAO).
* * * * *

0
5. Amend Sec.  3560.303 by revising paragraph (b)(1)(vi)(Q)to read as 
follows:


Sec.  3560.303  Housing project budgets.

* * * * *
    (b) * * *
    (1) * * *
    (vi) * * *
    (Q) Professional service contracts (audits, owner-certified 
submissions in accordance with Sec.  3560.308(a)(2), tax returns, 
energy audits, utility allowances, architectural, construction, 
rehabilitation and inspection contracts, etc.)
* * * * *

0
6. Amend Sec.  3560.308 by:
0
 a. Revising paragraph (a).
0
b. Removing paragraph (b).
0
c. Redesignating paragraphs (c) and (d) as (b) and (c) respectively.
0
d. Revising the newly redesignated paragraph (b) introductory text.
0
e. Adding paragraphs (b)(8),(b)(9), and (b)(10).
0
f. Revising the newly redesignated paragraph (c)(1).

    The revisions and additions read as follows:


Sec.  3560.308  Annual financial reports.

    (a) General. (1) For-profit borrowers that receive $500,000 or more 
in combined Federal financial assistance must include an independent 
auditor's report that includes, financial statements and notes to the 
financial statements, supplemental information containing Agency 
approved forms for project budgets and borrower balance sheets, a 
report on internal control over financial reporting and on compliance 
and other matters based on an audit of financial statements in 
accordance with Government Auditing Standards; a report on compliance 
for each major program and internal control over compliance (if 
applicable). Federal Financial Assistance is defined in accordance with 
2 CFR 200.40.
    (2) Non-profit borrowers that receive $750,000 or more in combined 
Federal financial assistance must meet the audit requirements set forth 
by OMB, Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards, found at 2 CFR parts 200 and 400. 
Borrowers must provide a copy of this audit to RHS in compliance with 
these financial reporting requirements.
    (3) Non-profit borrowers that receive less than $750,000, and for-
profit borrowers that receive less than $500,000in combined Federal 
financial assistance will submit annual owner certified prescribed 
forms on the accrual method of accounting in accordance with the 
Statements on Standards for Accounting and Review Services promulgated 
by the Accounting and Review Services Committee of the American 
Institute of Certified Public Accountants (AICPA). Borrowers may use a 
CPA to prepare this compilation report of the prescribed forms.
    (b) Performance standards. All Borrowers must certify that the 
housing meets the performance standards below:
* * * * *
    (8) There have been no changes in project ownership other than 
those approved by the Agency and identified in the certification.
    (9) Real estate taxes are paid in accordance with state and/or 
local requirements and are current.
    (10) Replacement Reserve accounts have been used for only 
authorized purposes.
    (c) * * *
    (1) Non-profit and public borrower entities subject to OMB Uniform 
Guidance: Cost Principles, Audit, and Administrative Requirements for 
Federal Awards, must submit audits in accordance with 2 CFR parts 200 
and 400.
* * * * *

    Dated: September 28, 2017.
Richard A. Davis,
Acting Administrator, Rural Housing Service.
[FR Doc. 2017-23082 Filed 10-24-17; 8:45 am]
BILLING CODE 3410-XV-P


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