49282 Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Rules and Regulations 

annuity that starts at the rate of $1 a 

month and is payable in monthly 

installments for the annuitant’s lifetime 

based on mortality rates for annuitants 

paid from the Civil Service Retirement 

and Disability Fund; and increases each 

year at an assumed rate of cost-of-living 

adjustment. Assumed rates of interest, 

mortality, and cost-of-living adjustments 

used in computing the present value are 

those used by the Board of Actuaries of 

the Civil Service Retirement System for 

valuation of the Federal Employees’ 

Retirement System based on dynamic 

assumptions. The present value factors 

are unisex factors obtained as a 

composite of sex-distinct present value 

factors. Separate present value factors 

apply for FERS annuities that receive 

cost-of-living adjustments before the 

retiree attains age 62, versus FERS 

annuities that do not receive cost-ofliving adjustments before the retiree 

attains age 62. 

* * * * * 

■ 24. Add § 842.616 to subpart F to read 

as follows: 

§ 842.616 Publication of present value 

factors. 

When OPM publishes in the Federal 

Register notice of normal cost 

percentages under § 841.407, it will also 

publish updated present value factors. 

Subpart G—Alternative Forms of 

Annuities 

■ 25. Amend § 842.702 by revising the 

definition of ‘‘present value factor’’ to 

read as follows: 

§ 842.702 Definitions. 

* * * * * 

Present value factor has the same 

meaning in this subpart as defined in 

§ 842.602. 

* * * * * 

PART 847—ELECTIONS OF 

RETIREMENT COVERAGE BY 

CURRENT AND FORMER EMPLOYEES 

OF NONAPPROPRIATED FUND 

INSTRUMENTALITIES 

■ 26. The authority citation for part 847 

continues to read as follows: 

Authority: 5 U.S.C. 8332(b)(17) and 

8411(b)(6) and sections 1131 and 1132 of 

Pub. L. 107–107, December 28, 2001, 115 Stat 

1242; 5 U.S.C. 8347(a) and 8461(g) and 

section 1043(b) of Pub. L. 104–106, Div. A, 

Title X, Feb. 10, 1996, 110 Stat. 434. Subpart 

B also issued under 5 U.S.C. 8347(q) and 

8461(n). 

Subpart A—General Provisions 

■ 27. Amend § 847.103(b) to revise the 

definition of ‘‘actuarial present value’’ 

and to add the definition of ‘‘present 

value factor’’ in alphabetical order as 

follows: 

§ 847.103 Definitions. 

* * * * * 

(b) * * * 

Actuarial present value means the 

amount of monthly annuity at time of 

retirement multiplied by the applicable 

present value factor. 

* * * 

Present value factor has the same 

meaning in this part as defined in 

§ 842.602. 

* * * * * 

Subpart F—Additional Employee Costs 

Under the Retroactive Provisions 

§ 847.602 [Removed and Reserved] 

■ 28. Remove and reserve § 847.602. 

[FR Doc. 2017–23141 Filed 10–24–17; 8:45 am] 

BILLING CODE 6325–38–P 

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. 

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, MultiFamily 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. 


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Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Rules and Regulations 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 

AIAN@usda.gov 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: program.intake@usda.gov. 

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 


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49284 Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Rules and Regulations 

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: 

• The outstanding beginning 

principal balance of a USDA Mortgage, 

a mortgage insured by the Federal 

Housing Administration (FHA) or HUDheld mortgages or loans (including 

flexible subsidy loans); 

• Any RHS Rental Assistance or 

Project-based Section 8 assistance 

received during the fiscal year; 

• Interest reduction payments 

received during the year (interest 

subsidy) and/or; 

• 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 

§ 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, § 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 

§ 3560.302(b)(1) and § 3560.308, RHS 

has revised § 3560.302(b)(1) to indicate 

that the accrual accounting method is 

required. The Agency will revise 

§ 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 § 3560.308(a)(2) Annual 

Financial Reports 

Five comments were received 

regarding the requirements of ‘‘ownercertified 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 § 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 ownercertified 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 § 3.5 M. 2. E of the 

Audit Guide), the auditor can make a 

reasonable determination that the 


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Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Rules and Regulations 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 agreedupon-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 forprofit 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 moderateincome 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 

■ 1. The authority citation for Part 3560 

continues to read as follows: 

Authority: 42 U.S.C. 1480. 

Subpart A—General Provisions and 

Definitions 

§ 3560.11 [Amended] 

■ 2. Amend § 3560.11 by removing the 

definition of ‘‘Engagement’’. 

Subpart G—Financial Management 

■ 3. Section 3560.301 is revised to read 

as follows: 

§ 3560.301 General. 

This subpart contains requirements 

for the financial management of Agencyfinanced 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. 

■ 4. Amend § 3560.302 by revising 

paragraphs (a), (b)(1) and (2), and (e)(1) 

to read as follows: 


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49286 Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Rules and Regulations 

1 81 FR 94932 (Dec. 27, 2016). 

2Public Law 114–185, 130 Stat. 538 (enacted June 

30, 2016). 

§ 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 § 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). 

* * * * * 

■ 5. Amend § 3560.303 by revising 

paragraph (b)(1)(vi)(Q)to read as follows: 

§ 3560.303 Housing project budgets. 

* * * * * 

(b) * * * 

(1) * * * 

(vi) * * * 

(Q) Professional service contracts 

(audits, owner-certified submissions in 

accordance with § 3560.308(a)(2), tax 

returns, energy audits, utility 

allowances, architectural, construction, 

rehabilitation and inspection contracts, 

etc.) 

* * * * * 

■ 6. Amend § 3560.308 by: 

■ a. Revising paragraph (a). 

■ b. Removing paragraph (b). 

■ c. Redesignating paragraphs (c) and 

(d) as (b) and (c) respectively. 

■ d. Revising the newly redesignated 

paragraph (b) introductory text. 

■ e. Adding paragraphs (b)(8),(b)(9), and 

(b)(10). 

■ f. Revising the newly redesignated 

paragraph (c)(1). 

The revisions and additions read as 

follows: 

§ 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 

FEDERAL RESERVE SYSTEM 

12 CFR Part 261 

[Docket No. R–1556] 

RIN 7100–AE65 

Rules Regarding Availability of 

Information 

AGENCY: Board of Governors of the 

Federal Reserve System (‘‘Board’’). 

ACTION: Final rule. 

SUMMARY: The Board is finalizing its 

interim final rule amending its 

regulations for processing requests 

under the Freedom of Information Act 

(‘‘FOIA’’) pursuant to the FOIA 

Improvement Act of 2016 (the ‘‘Act’’). 

The amendments clarify and update 

procedures for requesting information 

from the Board, extend the deadline for 

administrative appeals, and add 

information on dispute resolution 

services. The interim final rule became 

effective on December 27, 2016. This 

rulemaking finalizes the interim rule 

with minor edits. 

DATES: This final rule is effective on 

November 24, 2017. 

FOR FURTHER INFORMATION CONTACT: 

Katherine Wheatley, Associate General 

Counsel, (202) 452–3779, or Misty 

Mirpuri, Counsel, (202) 452–2597, 

Board of Governors of the Federal 

Reserve System, 20th and C Streets 

NW., Washington, DC 20551. Users of 

telecommunications device for the 

hearing impaired, please call (202) 263– 

4869. 

SUPPLEMENTARY INFORMATION: 

I. Overview of Final Rule 

On December 27, 2016, the Board 

published an interim final rule 1

amending its existing Rules found at 12 

CFR part 261, in order to comply with 

the statutory changes required by the 

FOIA Improvement Act of 2016 

(‘‘Improvement Act’’).2 Amendments to 

the Rules adopted statutory exemptions 

and exceptions as required by the 

Improvement Act. The interim final rule 

became effective on December 27, 2016, 

and the Board accepted comments 

through February 27, 2017. The Board is 

finalizing the interim rule with minor 


nlaroche on DSK9F9SC42PROD with RULES