Multifamily Housing- Guidance & Compliance Requirements

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What new compliance checks and reporting requirements are there for project auditors?

The basic audit compliance checks required in IG2000.04 and the OMB Circular No. A-133 Compliance Supplement is still required. However, auditors will now be required to provide a compliance finding code associated with any compliance finding, to enable the FASS system to interpret the type of finding. Both the code and the full text of the finding are required to be submitted via FASS. The codes and the code descriptions related to required compliance review areas are as follows:

Code	Code Description
(A)	Unauthorized withdrawals from replacement reserve account
(B)	Failure to make required residual receipt deposits
(C)	Unauthorized withdrawals from residual receipts account
(D)	Commingling of funds
(E)	Unauthorized change in ownership
(F)	Acquisition of liabilities (encumbering project assets)
(G)	Unauthorized loans from project funds
(H)	Unauthorized distribution of project assets
(I)	Failure to maintain the property or to cure deficiencies noted in physical inspection
(J)	Unauthorized Management Fees
(M)	Security Deposit
(N)	Reserve for Replacements Deposits
(O)	Investment of Reserve for Replacements
(P)	Investment of Residual Receipts
(Q)	Failure to Make Mortgage Payments
(R)	Section 8 Program Administration
(S)	Segregation of Duties
(T)	Disposal of Assets
(U)	Overpayment of Incentive Performance Fee (M2M)
(V)	Underpayment of Mortgage Restructuring Note (M2M) Second Mortgage
(Z)	Other - While FASS has indicator boxes to provide the various types of audit opinions expressed in the audit report, the system does not capture the narrative associated with the audit opinions, therefore, any opinions other than unqualified will need to be described in a separate finding write-up to describethe nature of any qualifications. The text of all findings is to be input to HUD via FASS.

Will HUD be providing any guidance or training on the FASS-MFH and the new electronic submission requirements?

Yes, an Industry User Guide is available on REAC's web site.

Does the new rule on Uniform Financial Reporting Standards for HUD Housing Programs have any effect on the definition of the reporting entity defined in the November 18, 1997 Federal Register notice, for purposes of complying with the requirements of OMB Circular A-133?

For FASS reporting purposes, the reporting entity remains the "owning entity." In most cases, HUD-assisted multifamily projects are legally established as single asset owning entities. In those cases where an owning entity has been allowed to own more than one project, the supplemental financial data that must be reported through the FASS is still required at the individual project level.