Cost Certifications Owners are required to submit one or two detailed cost certifications at the end of each project. These reports provide information on actual development cost breakdown and operating costs. The reports are HUD-92330, Mortgagor’s Certificate of Actual Costs (OMB No. 2502-0112) and HUD-92330-A, Contractor’s Certificate of Actual Costs (OMB No. 2502-0044). The is only required when there is an identity of interest between the mortgagor and the general contractor and when a cost-plus contract is required in nonprofit contracts. Source of Governing Requirements This program is authorized under Section 202 of the Housing Act of 1959, as amended, (12 USC 1701q). Program regulations are in 24 CFR part 891. Availability of Other Program Information Additional information about the Section 202 program, can be found in Supportive Housing for the Elderly (HUD Handbook 4571.3), Supportive Housing for the Elderly—Conditional Commitment—Final (HUD Handbook 4571.5), HUD Notice H96-102, and HUD Notice Updated Processing Guidance for the Section 202 Supportive Housing for the Elderly and Section 811 Supportive Housing for Persons with Disabilities Programs. These are available at () or from the HUD Multifamily Clearinghouse at 1-800-685-8470. III. COMPLIANCE REQUIREMENTS In developing the audit procedures to test compliance with the requirements for a federal program, the auditor should first look to Part 2, Matrix of Compliance requirements, to identify which of the 12 types of compliance requirements described in Part 3 are applicable and then look to Parts 3 and 4 for the details of the requirements. A. Activities Allowed or Unallowed 1. The project shall provide the necessary services for the occupants, which may include, but not limited to, health, education, welfare, informational, recreational, homemaking, meals, counseling, and referral services (12 USC 1701q; 24 CFR sections 891.225 and 891.500). 2. PRAC project funds may be used only for expenses that are reasonable and necessary to the operation of the project as provided for in the Regulatory Agreement between HUD and the project owner. 3. Project facilities may not include infirmaries, nursing stations, or spaces for overnight care (24 CFR section 891.220). 18, HUD-
4. Training. 5. Computer equipment/systems. 6. Administrative costs/network management. 7. Mortgage modification scam identification and reporting. 8. Education in such areas as fair housing and renters rights. J. Program Income The auditor should be alert to the fact that, in the performance of the award, the recipient may be reimbursed directly or indirectly from other sources for services provided. This reimbursement generally should be treated as program income using the deduction method. Recipients may include in their vouchers only that portion of its services for which it does not receive reimbursement from any other funding source. L. Reporting 1. Financial Reporting a. SF-270, Request for Advance or Reimbursement – Not Applicable b. SF-271, Outlay Report and Request for Reimbursement for Construction Programs – Not Applicable c. SF-425, Federal Financial Report – Applicable 2. Performance Reporting – Not Applicable 3. Special Reporting – Not Applicable
Suggested Audit Procedures a. Examine the procedures used to establish and annually review utility allowances, handle adjustment requests, and notify tenants of utility allowance adjustments. b. Select a sample of units with tenant utility allowances and their related tenant files for review. c. Test owner requests, PHA determinations, and supporting documentation for utility determinations. d. Verify that the allowances were applied to tenants correctly. 3. Housing Quality Standards Compliance Requirement – The PHA or owner must provide housing that is decent, safe, and sanitary. To achieve this end, the PHA must perform housing quality inspections at the time of initial occupancy and at least annually thereafter to assure that the units are decent, safe, and sanitary (24 CFR sections 880.612, 881.601, 882.516, 882.808(n), 883.701, 884.217, 886.123, and 886.323). Audit Objective – Determine whether the PHA or owner performs the required inspections to assure that units meet housing quality standards. Suggested Audit Procedures a. Examine the procedures used by the PHA or owner to identify those units on which housing quality inspections are due. b. Select a sample of units on which HAP contracts were executed and examine inspection reports. c. Examine records and ascertain that the PHA or owner assures that the inspections and any needed repairs are completed timely. d. Verify that the PHA reviewed the evidence of completion submitted by the owner on newly constructed or rehabilitated units accepted for occupancy. 4. Vacant Units Compliance Requirements – The PHA or owner must reduce claims for assistance on vacant units under certain circumstances. However, there are instances where special claims are allowed for vacancy losses, unpaid rent, and tenant damages on eligible units (24 CFR sections 880.611, 881.601, 882.411, 882.808(f), 883.701, 884.106, 886.109, and 886.309). Audit Objective – Determine whether payments to owners are reduced for vacant units and whether payments for special claims are proper.
H. Period of Performance NSP2 grantees are required to expend 50 percent of NSP2 funds in 2 years after HUD signs the grant agreement and expend 100 percent of NSP2 funds within 3 years after HUD signs the grant agreement (ARRA, 123 Stat. 217). L. Reporting 1. Financial Reporting a. SF-270, Request for Advance or Reimbursement – Not Applicable b. SF-271, Outlay Report and Request for Reimbursement for Construction Programs – Not Applicable c. SF-425, Federal Financial Report – Not Applicable d. Disaster Recovery Grant Reporting System (DRGR), (OMB No. Key Line Items – The following line items contain critical information: (1) Obligation Amount (2) Drawdown Amount 2. Performance Reporting HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-Income Persons, (OMB No. 2529-0043) – Each recipient that administers Federal program funding in excess of $200,000 in a program year that involves housing rehabilitation, housing construction, or other public construction, must submit Form HUD 60002 information outlined on using the Section 3 Summary Reporting System (24 CFR sections 135.3(a) and 135.90). Submission of HUD 60002 information has been automated using the Section 3 Summary Reporting System. The system was launched December 2013 but was taken offline in January 2014 to address technical difficulties. HUD has suspended submission of this information until the system is operational. The status of the system is available at Section 3 Reporting System status area at . Key Line Items – The following line items contain critical information: a. 3. Dollar Amount of Award b. 8. Program Code c. Part I, Column C – Total Number of New Hires that are Sec. 3 Residents
d. Select tenants from the public housing waiting list (see III.N.1, “Special Tests and Provisions – Public Housing Waiting List”) (24 CFR sections 960.206 and 960.208). e. Reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary using the documentation from third-party verification (24 CFR sections 960.253, 960.257, and 960.259). 2. Eligibility for Group of Individuals or Area of Service Delivery – Not Applicable 3. Eligibility for Subrecipients – Not Applicable J. Program Income For PHAs required to convert to asset management, any internal fees that the PHA charges to projects or programs (property management fees, asset management fees, etc.) are not considered program income for purposes of 24 CFR part 85, OMB Circular A-87, and 2 CFR part 200, provided that the fees charged are reasonable under the criteria established by HUD; however, other State and local restrictions still may apply. Consequently, any reasonable fees earned by the PHA/COCC will be treated as local revenue subject only to the controls and limitations imposed by the PHA’s management, Board, or other authorized governing body (24 CFR section 85.25, 2 CFR section 200.80; Section 7.2 in the Supplement to HUD Handbook 7475.1). L. Reporting 1. Financial Reporting a. SF-270, Request for Advance or Reimbursement – Not Applicable b. SF-271, Outlay Report and Request for Reimbursement for Construction Programs – Not Applicable c. SF-425, Federal Financial Report – Not Applicable 2. Performance Reporting HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-Income Persons (OMB No. 2529-0043) – Each recipient that administers covered public and Indian housing assistance, regardless of the amount expended, and each recipient that administers covered housing and community development assistance in excess of $200,000 in a program year, must submit HUD 60002 information using the Section 3 Summary Reporting System (24 CFR sections 135.3(a)(1) and 135.90).
(2) Line Items (a) FDS Line 125 – (Accounts Receivable – Misc) (b) FDS Line 144 – (Inter-Program – Due From) (c) FDS Line 171 – (Notes, Loans, & Mortgages Receivable – Non-current) (d) FDS Line 172 – (Notes, Loans, & Mortgages Receivable – Non-current – Past Due) (e) FDS Line 174 – (Other Assets) (f) FDS Line 176 – (Investment in Joint Ventures) (g) FDS Line 347 – (Inter-Program – Due To) (h) FDS Line 348 – (Loan Liability – Current) (i) FDS Line 355 – (Loan Liability – Non-Current) (j) FDS Line 10010 – (Operating Transfer In) (k) FDS Line 10020 – (Operating Transfer Out) (l) FDS Line 10030 – (Operating Transfers From/To Primary Government) (m) FDS Line 10093 – (Transfers Between Programs and Projects – In) (n) FDS Line 10094 – (Transfers Between Programs and Projects – Out) Performance Reporting HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-Income Persons (OMB No. 2529-0043) – For each public and Indian housing grant that involves development, operating, or modernization assistance, the prime recipient must submit Form HUD 60002 (24 CFR sections 135.3(a) and 135.90). Key Line Items – The following line items contain critical information: a. 3. Dollar Amount of Award b. 8. Program Code
d. Financial Reports (OMB No. 2535-0107) – Financial Assessment system, FASS-PHA. 24 CFR part 902 – Public Housing Assessment System (PHAS) Subpart C-Phase Indicator #2 Financial Condition requires the PHA to provide annual reports on a PHA-wide basis (42 USC 1437d (j)(1)(K). Financial reporting requirements in 24 CFR section 902.33(a)(2) provide that the information be submitted electronically in the format prescribed by HUD using the Financial Data Schedule (FDS). Further 24 CFR section 902.35, “Financial condition scoring and threshold,” establishes the procedures to be observed by the PHA. Key Line Items – The line items under the following headings contain critical information: (1) Headings for HUD Programs and Activities (a) Asset Management Property, or AMP (Low-Rent Public Housing and Capital Fund Programs) (b) Component Units (Non-Profit Entities) (2) Line Items FDS Line 125 – (Accounts Receivable – Misc) FDS Line 144 – (Inter-Program – Due From) FDS Line 171 – (Notes, Loans, & Mortgages Receivable – FDS Line 172 – (Notes, Loans, & Mortgages Receivable – Past Due) FDS Line 174 – (Other Assets) FDS Line 176 – (Investment in Joint Ventures) FDS Line 347 – (Inter-Program – Due To) FDS Line 348 – (Loan Liability – Current) FDS Line 355 – (Loan Liability – Non-Current) FDS Line 10010 – (Operating Transfers – In) FDS Line 10020 – (Operating Transfers – Out) FDS Line 10030 – (Operating Transfers From/To Primary Government)
L. Reporting 1. Financial Reporting a. SF-270, Request for Advance or Reimbursement – Not Applicable b. SF-271, Outlay Report and Request for Reimbursement for Construction Programs – Not Applicable c. SF-425, Federal Financial Report – Applicable 2. Performance Reporting – Native Hawaiian Housing Plan/Annual Performance Report form HUD-50090, dated 02/28/2014. Beginning with DHHL’s program year end June 30, 2015, the Annual Performance Report section of the report must be submitted to HUD within 60 days of the end of the DHHL program year. Prior to program year 2015, DHHL utilized form HUD-50090-APR, dated 04/2002. Key Line Items – The following line items contain critical information: a. Section 3, Line 1.9 – Planned and Actual Outputs for 12-month Program Year. b. Section 5, Line 1 – Sources of Funds – columns G and K. c. Section 5, Line 2 – Uses of Funds – columns O through Q. d. Section 9, Line 1 – Inspections of Units – columns B through F. e. Section 12, Lines 1 and 2 – Jobs Supported by NAHASDA. 3. Special Reporting – Not Applicable N. Special Tests and Provisions 1. Wage Rate Requirements Compliance Requirement - For NHHBG funds, contracts and agreements for assistance, sale, or lease under this part must require prevailing wage rates under the Wage Rate Requirements to be paid to laborers and mechanics employed in the development of affordable housing. When NHHBG assistance is only used to assist homebuyers to acquire single family housing, the Wage Rate Requirements apply to the construction of the housing if there is a written agreement with the owner or developer of the housing that NHHBG assistance will be used to assist homebuyers to buy the housing (25 USC 4225(b); 24 CFR section 1006.345(a)). See Wage Rate Requirements Cross-Cutting Section (page 4-20.001-1).
Key Line Items – The following line items contain critical information: (1) Line 1c – Program (2) Line 2a – Type of action (3) Line 2b – Effective date of action (4) Line 2k – FSS participation now or in the last year (5) Line 3b, 3c – Last name, First name (6) Line 3e – Date of birth (7) Line 3n – Social Security Numbers (8) Line 5a – Unit address (9) Line 5h – Date unit last past HQS inspection (10) Line 5i – Date of last annual HQS Inspection (11) Line 7i – Total annual income (12) Line 13h – Contract rent to owner (13) Line 13k – Tenant Rent (14) Line 13x – Mixed family tenant rent (15) Line 17a – Participation in special programs –Participation in the Family Self Sufficiency (FSS) Program (16) Line 17k(2) – FSS account information – Balance e. Financial Reports (OMB No. 2535-0107) – Financial Assessment FASS-PH. The Uniform Financial Reporting Standards (24 CFR section 5.801) require PHAs to submit timely GAAP-based unaudited and audited financial information electronically to HUD (see Section 13, Moving to Work (MTW) Agencies Reporting to FASS-PH, of Notice PIH-2012-21 (HA) issued May 10, 2012). Key Line Items – The following line items contain critical information: (1) FDS Line 111 – (Cash-unrestricted) (2) FDS Line 114 – (Cash-tenant security deposits)
(3) FDS Line 120 – (Total receivables – net of allowances for doubtful accounts) (4) FDS Line 122 – (Accounts receivable – HUD other projects) (5) FDS Line 131 – (Investments – unrestricted) (6) FDS Line 132 – (Investments – restricted) (7) FDS Line 142 – (Prepaid expenses and other assets) (8) FDS Line 144 – (Inter-program – due from) (9) FDS Line 145 – (Assets held for sale) (10) FDS Line 310 – (Total current liabilities) (11) FDS Line 331 – (Accounts payable – HUD PHA programs) (12) FDS Line 342 – (Deferred revenue) (13) FDS Line 345 – (Other current liabilities) (14) FDS Line 346 – (Accrued liabilities – other) (15) FDS Line 347 – (Inter-program – due to) (16) FDS Line 508.1 – (Invested in capital assets, net of related debt) (17) FDS Line 511.1 – (Restricted Net Assets) (18) FDS Line 512.1 – (Unrestricted net assets) (19) FDS Line 96900 – (Total operating expense) (20) FDS Line 97100 – (Extraordinary maintenance) (21) FDS Line 97200 – (Casualty losses – non-capitalized) (22) FDS Line 97300 – (Housing assistance payments) (23) FDS Line 97350 – (HAP portability – in) (24) FDS Line 97800 – (Dwelling units rent expense) (25) FDS Line 10010 – (Operating transfers in) (26) FDS Line 10020 – (Operating transfers out)