FDS Submission Issues. Objectives REVISED FDS CROSSWALK GUIDE. Revised FDS Crosswalk Guide Common FDS errors. Potential Red Flags

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1 FDS Submission Issues Presented by Urlaub & Co., PLLC, Certified Public Accountants Ronald Urlaub, Managing Partner (580) Objectives Revised FDS Crosswalk Guide Common FDS errors PHA-Wide Reporting Low Rent Housing Program (including the Capital Fund Program) HCV Housing program Audit Requirements Potential Red Flags 2 REVISED FDS CROSSWALK GUIDE 3 1

2 Financial Data Schedule The FDS is used to accumulate financial information from the PHA that is used to: Score the PHA under the Interim PHAS rule Provide HUD financial information that can be used to determine equity balances including the equity balances of the HCV Program and operating reserve calculations for the Public Housing Program. 4 Financial Data Schedule Line Definition Guide The FDS Line Definition Guide was updated and released in May of The purpose of the guide was to: Provide for the reporting of GASB-54 fund balances required for modified accrual, and; Clarify certain FDS line definitions. 5 Restricted Cash Balances FDS Line 112 Cash Restricted for modernization and development should be used to include the following: Proceeds from disposal of property approved by Special Application Center (SAC) Unspent insurance proceeds to be used to cover future costs of repairs CFP draws that have not been spent 6 2

3 Restricted Cash Balances FDS Line 113 Cash other restricted should be used to account for FSS escrow accounts and homeownership proceeds approved by HUD. FDS Line 114 Cash tenant security deposits should be used to reflect the cash balances retained for the refund of tenant security deposits (and may not be used to fund operations). 7 Accounts Receivable - Tenants This FDS line represents the cumulative total of all tenant charges due, owed and outstanding, such as dwelling rent, maintenance charges, late fees, excess utility charges, and other charges owed to the PHA. This line includes the gross amount due from tenants excluding amounts owed due to participants that committed fraud or misrepresentation and now owe additional rent for periods or retroactive rent. Tenant prepayments of rents should be reported on FDS line Inter-program due from This balance represents inter-program transactions resulting in a decrease of expendable resources of the transferring PHA program and funds that are expected to be repaid with a reasonable time. Reasonable time is a matter of professional judgment, but typically should not exceed the annual operating cycle of the PHA. 9 3

4 Inter-program due from, cont. PHAs are cautioned that funds are normally not fungible between different federal programs regardless of the nature of the transfer or receivable. Inappropriate use of funds, even as a temporary loan, are ineligible costs resulting in non-compliance. 10 Extraordinary Maintenance This FDS line represents all maintenance costs that are typically for unforeseen events and highly unusual in nature, where the work required is clearly not part of routine maintenance and would not be subject to capitalization under GAAP. 11 COMMON FDS ERRORS 12 4

5 Asset Management Type The PHA selects the wrong asset management type. 13 Elimination Entries Elimination entries are not reported. Elimination entries are needed to remove: Inter-program account balances Operating Transfers Asset Management Management/Bookkeeping Fees Centralized Fee-For-Service Functions 14 Other Reporting Issues All programs encompassing a PHA are not reported in the FDS Inter-program account balances are not reconciled Operating transfers in and out don t reconcile 15 5

6 HCV Program Reporting Issues Accounts balances reported do not match the amounts reported in the Voucher Management System: Units leased NRA/UNA balances Cash/investment balances HAP costs by program type Fraud revenue (cash basis vs. accrual basis) 16 Portability Transactions Port-in PHAs are not recording the landlord payments as an expense on the FDS. The costs are being netted either in accounts receivable or the expense account with the related deposit. GASB Statement #24 requires the recognition of the total revenue (HAP + admin. fee from the initial PHA) and expenses (landlord payment) of an entity. 17 Reconciliation of Account Balances 18 6

7 Reporting of Restricted Cash HAP equity balances should typically be supported by a restricted cash balance. If cash balances are not adequate to support the HAP equity, a comment should be included explaining the shortage. 19 Reporting of Post-2003 and Pre Administrative Fee Reserves PHA fails to report account balances as a comment. Amounts do not match FDS Line 512, Unrestricted net assets (PIH Notice ). 20 Interest Earned on HAP Funds Interest income earned on HAP funds should be accounted for on FDS Line 331 Accounts payable HUD PHA programs. 21 7

8 Low Rent Housing Program Equity accounts do not match up with the corresponding balance sheet accounts. Investment in capital assets, net of related debt (FDS line 508.1) Unrestricted net assets (FDS 512.1) 22 Capital Fund Program Reporting Capital grant portion of the grant (FDS 70610) does not match memorandum accounts (FDS lines ) HUD PHA operating grants (CFP, FDS line 70600) does not reconcile with the operating expenses (FDS line 96900) plus operating transfer out (FDS line 10020) 23 Audit Issues Financial statements do not conform to the recently mandated reporting requirements of GASB Statement #63. GASB Statement #63 introduced additional reporting of financial elements as well as changing of equity accounts. 24 8

9 Audit Issues-Cont. Audit opinions have not been updated for supplementary information mandated by SAS #119. The amounts reported in the Data Collection Form (DCF) of the FDS do not match the amounts reported in the Schedule of Expenditures of Federal Awards (SEFA). 25 Red Flags Use of inter-program account balances Interest income not reported Negative equity balances in certain programs 26 Questions???? 27 9