frequently asked questions and answers
public housing agencies

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8. My housing authority has several different programs with different year-ends. What period should my financial statements cover?

While it is true that programs can have different reporting requirements based on different year-ends, the housing authority itself has only one fiscal year end. The financial statements should be based on the fiscal year end of the housing authority.

The AICPA Audit and Accounting Guide "Audits of State and Local Governmental Units" addresses this issue specifically in the Statement of Position 98-3 (SOP 98-3). SOP 98-3 states that an audit performed in accordance with Circular A-133 should cover the auditee's financial transactions for its fiscal year, which is not necessarily the same period of some of the programs being funded. Thus, the audit might include only a part of the transactions of a federal award, because some transactions may not occur within the period of the audit.

Component units of the housing authority might be the only exception to the rule. Both GAAP Flyer 3 and GASB 14 address this issue.

9. My housing authority is a separate stand-alone entity. Do I need to file my audit results electronically to REAC?

All housing authorities, which have expenditures of federal awards of $500,000 or more in its fiscal year or has received operating subsidy to cover the cost of the audit according to 24 CFR 990.108, need to submit the audit results to REAC.

Auditor's Role

1. What is the proper role of the auditor when an audited submission is sent to PHA-Finance?

The auditor's role basically encompasses two items.

First, the auditor needs to provide the PHA the following word files in "rtf" format:

a) Notes to the Financial Statements;
b) the required A-133 or non-A133 reports;
c) top-level financial statements;
d) Schedule of Expenditures of Federal Awards;
e) Schedule of Findings and Questioned Costs; and
f) Action Plan.

Second, the auditor has to perform the attestation, comparing the hard copy audit report to the electronic information in the draft submission. The auditor should not be the individual creating the submission for the PHA. The PHA is the entity that should create the submission, attach the "rtf" files and transmit it to REAC.

2. Describe the process that the auditor must go through to verify an audited financial statement submitted electronically to REAC on behalf of a PHA?

A PHA gets a hard copy of the audit from the auditor. Either the PHA or its designate inputs the audited information into the FASS system. Once submitted, the auditor reviews the information and performs agreed - upon procedures relative to the electronic submission via the audit certification screen in FASS. The auditor can do one of two things:

a) Transmit the audited data back to the PHA for corrections; or
b) Verify the data's accuracy and transmit it back to the PHA so that the PHA can forward its audited data to the REAC via FASS.

Debts (Current & Long-Term)

1. How should a PHA handle long term debt in terms of writing it off?

Accounting treatment of HUD Guaranteed and Direct Debt" are discussed in "GAAP Flyer #4". HUD guaranteed or direct debt gets written off to Contributed Capital (FDS Line Item No. 503).

2. Will compensated absences that create a deficit, have a negative impact on a PHA's FASS score?

The recording of compensated absences (current portion) will lower the PHA's FASS Score for sub-indicators one and two (i.e., Current Ratio & No. of Months Expendable Fund Balance) of the Financial Indicator to the extent that they are not in line with PHAs of the same size. As a current liability, it reduces both the Current Ratio and the Number of Months Expendable Fund Balance computations. Please see GASB 16 for estimating compensated absences into current or long-term debt.

3. How are PHAs expected to classify long-term debt as this relates to the Expendable Fund Balance?

Pursuant to the Financial Indicators Methodology and Analysis Guide, expendable fund balance is reduced by long term debt for operating borrowings. However, it is not reduced for long term debt related to capital projects.

CIAP & Comprehensive Grant

1. Do closed CIAP/Comp grants have to be reported as part of the PHA's annual financial statement information?

If CIAP/Comp grant was closed at the end of the year, the financial statement of this program will still have be reported to reflect it's current year program activities. In the following year, the fixed assets account is transferred to Low Rent program through an equity transfer reported on FDS line item #1104.

2. How do you classify materials related to the Comprehensive Grant Program?

It is unusual for materials to be purchased from funds received under the Comp. Grant Program. Under HUD's basis of accounting, if monies were expended out of Comp. Grant funds for this purpose, the materials would be expensed from account #4590 and revenue would be credited to account #3401. However, using the GAAP conversion method, the PHA would either expense or capitalize these based on the PHA's capitalization policy and the item(s) that was purchased.

3. When should a PHA begin to depreciate assets purchased under the Comprehensive Grant Program?

Once an asset is placed in service, a PHA should begin to depreciate it.

4. If a PHA begins to depreciate as of the purchase date or completion of the physical improvement, where does it show the accumulated depreciation expense on the FDS?

A PHA would show the accumulated depreciation expense on FDS Line Item No. 166 of the program where this asset is recorded. (e.g., Comp. Grant Program, Section 8 Program, Low Rent Program, etc.).

5. What is the difference between hard and soft costs and how are these to be recorded under GAAP?

Hard costs are all costs associated with the construction or purchase of capital assets and any major additions in the form of additional construction and improvements which add value to those assets. Soft costs are expenses that do not meet capital asset criteria and fail to add value to existing buildings. For a more detailed explanation of hard and soft costs, see GAAP Flyer No. 2 (Fixed Assets) on our webpage.

Section 8

1. How does the REAC want the PHA to treat Section 8 funds?

The REAC prefers to treat Section 8 funds as an Enterprise Fund.

2. Are section 8 only entities required to file electronically to REAC?

All section 8 only entities are required to file the unaudited and audited financial information to REAC as required by the Uniform Financial Reporting Standards rule.

3. How is the financial data for section 8 only entities assessed?

Currently, the section 8 only financial submission is not scored by REAC.

Flow through payments should be booked as Revenue with a corresponding HAP expenditure in the Enterprise Fund.

5. How does a PHA set up receivables for Section 8 (i.e., gain contingency)?

A PHA should not set up a receivable for a gain contingency. It should be disclosed in the Notes to the Financial Statements under Commitments and Contingencies.

6. Does FDS line item No. 132 (Investments-restricted) include FSS accounts?

Yes, remember FSS investments are not available for use by a PHA unless the participating family is terminated from the FSS program or forfeits its FSS escrow. Please refer to the FDS Line Item Definition Guide for more details.

Component Unit & Joint Ventures

1. What is a component unit?

Component units are organizations that are legally separate from the primary government but for which the primary government is still financially accountable. Some component units are so intertwined with the primary government that they are, in substance, the same as the primary government.

The criteria for determining whether or not a Housing Authority is a component unit is outlined in GASB 14 and GAAP Flyer #3. If you are unsure about your housing authority's status please discuss this issue with your auditor.

2. What are the reporting requirements for a public housing authority, which is a component unit?

The reporting time frames remain unchanged. Housing authorities are required to submit unaudited data to REAC two months after its fiscal year end. The audited data must be submitted to REAC no later than 9 months after the fiscal year end.

Component Units with Different Fiscal Year Ends

If you are a component unit and your fiscal year end differs from that of the primary government you will need to contact Ben Greenberg at 410-962-2520 X 3302

3. Does a component unit PHA file differently?

Not really, the general process will be the same. The PHA must complete the financial data schedule, the data collection form and the notes and findings tab (for the audited submission). However the audited submission does not require all the notes and finding attachments to what a stand-alone entity is required to submit.

4. How does a PHA file as a component unit without a separate audit?

The PHA only needs to check the Component Unit (no separate financial statements) box on the PHA Info screen. This option will start after FASS-PHA 7.0 release on September 21, 2001 and for FYE 9/30/01.

5. What does the Component Unit check box signify?

By checking the component unit check box, the PHA is affirming that it is a component unit of another government and that it will not have a separate audit. A PHA should not check the box if it plans on having a separate audit engagement although it is a component unit of another government.

6. What audit information needs to be sent electronically to REAC by a component unit PHAs that do not receive their own audit?

Starting with PHAs with FYE 9/30/2001, electronic submission of audited information from component unit PHAs will be required. Prior to 9/30/2001, audited information was not required.

7. For those component unit PHAs that don't have to currently submit audited information electronically, what type of guidance should be followed to ensure that the FDS is properly stated?

On page 8 of PHA Finance's publication "Guidelines on Reporting and Attestation Requirements of Uniform Financial Reporting Standards(UFRS)", there is a matrix that summarizes the appropriate steps to be taken by the auditor and Component unit PHAs that do not receive their own audit. This publication can be found at: http://www.hud.gov/reac/pdf/ufrs_0501.pdf

8. How much of a limited partnership or joint venture does a PHA have to report to HUD?

See GAAP Flyer No. 3 or follow the flowchart referenced in GASB 14. Since circumstances vary, a response to this question could only be given on a case by case basis.

Scoring

1. What will help a PHA understand the evaluation of the financial data being submitted to HUD?

Please refer to the Financial Indicators Methodology and Analysis Guide. It defines each of the six FASS sub-indicators that make up the Financial Indicator and explains how each of these sub-indicators is computed. This guide can be found at:

http://www.hud.gov/offices/reac/products/fass/fass_pdf/analysisguide091203.pdf (12/05/03)

2. At what point will a PHA know if their submission has been accepted or rejected?

Approximately, 21 days after receipt of the financial submission, REAC will either accept, conditionally accept or reject the financial submission. To avoid a Late Presumptive Failure (LPF) score of zero and a Substandard Financial Public Housing Assessment System (PHAS) designation, REAC encourages Public Housing Agencies to review their Financial Submission In-box on an ongoing basis after submission to REAC in order to correct any Rejection issues in a timely manner. Some LPF scores of zero and PHAS Substandard Financial designations commonly occur as a result of a PHA’s failure to correct Rejection issues by the submission due date. Accordingly, we encourage early submission of financial data in order to solve rejection issues well before the financial submission due date. In fact, PHA’s may submit and resubmit multiple corrected financial submissions as many times as necessary before the submission due date.

Systems

1. Are my User ID and Password case-sensitive?

Yes, the system IDs (assigned by HUD) are comprised of letters and numbers. The letters in the User ID must be entered as capital letters. Similarly, all passwords that are created by the user must contain a letter & number combination of six characters. However, the registrant for access to FASS, determines whether or not his password will be in uppercase or lowercase letters. It is important to remember how the Password is entered during the registration process because this field is case-sensitive.

2. How should I register if I want to be the "Coordinator" for one PHA, but act as a "User" for another?

If a PHA would like for you to serve as its Coordinator, you will need to apply for a Coordinator ID. The Executive Director of that PHA will receive your ID and pass it on to you if you have been designated as its Coordinator. However, if other entities want your ID associated with them as a "User" only, you will need to provide them with your ID number so that their respective Coordinator(s) can provide you access to their data within FASS.

3. Can a person have more than one User/Coordinator ID?

No, you can only have one User/Coordinator ID since each ID is associated with a social security number and a valid PHA taxpayer/Organization identification number. In fact, Secure Connections will reject those attempting to apply for an additional User ID once one has already been established.

4. If I am a "User" that represents more than one PHA, do I need to request an additional User ID for each PHA?

No, the FASS system follows a "One person, One ID" policy. However, you must request access to the system and permission to submit information from each one of the PHA's "Coordinators." The "Coordinator" for each PHA must request additional PHA relationships through the Secure Connections Systems menu. When this request is made, an "activation key" will be mailed to the Executive Director of the PHA for which the additional relationship was requested.

5. What do I do if I forget my password?

If you forget your password, you must contact the REAC Customer Service Center to have it reset. The number is 1-888-245-4860.

6. Who do I contact if I have trouble logging onto the FASS system?

AAll users should contact the REAC Customer Service Center with any questions or problems Monday through Friday 8 a.m. to 8 p.m. by telephone at 1-888-245-4860 or via e-mail at: reac_tac@hud.gov

7. Is the data that I send over the Internet secure?

Yes, all transmissions will be encrypted en route so as to avoid any interceptions. This service is provided by HUD's Secure Connection System.

8. Would I be liable if another authorized user changes the information I have entered?

No, each transaction will be traced by a User ID and a date/time stamp. Thus, REAC will be able to determine exactly who created or updated an item last and pinpoint the date & time associated with a transaction.

9. Can more than one person simultaneously input financial data for the same PHA into the FASS system?

Yes, as long as each person inputs data under different programs administered by that particular PHA.

10. If I register for the FASS System, do I still need to register for all the other assessment systems such as (RASS, MASS, etc.)?

No, once someone receives a User ID to access any one of the assessment subsystems, that person can access all the subsystems if the designated Coordinator for his PHA assigns him rights to the other subsystems.

11. What hardware/software computer capability does a PHA need in order to access FASS?

All PHAs should have access to the Internet! A PHA can choose any Internet Service Provider it wants to use. The electronic submission of Financial Data Schedules and OMB Data Collection Forms using the Financial Assessment Subsystem for PHAs (FASS-PHA) requires computer resources with a word processor and an internet browser.