HUD Audit Requirements
HUD Audits require participants (whether individuals or for-profit entities) to submit financial reports on a yearly basis to the federal government agency. Unlike other financial statement audits, there are specific HUD standards that must be followed when submitting the financial statement. In addition, HUD auditors are not only looking for financial compliance with program standards but are also making sure that participants are following the rules set forth by HUD. However, HUD auditors are not only limited to the scope of financial statement or program compliance–they, similar to federal or state tax auditors, can exercise their own judgment in how the audit is conducted in order to obtain the necessary information. Generally, a HUD audit consists of:
1) Financial Statement Audit: HUD will review your financial documents to review your assets and debts. Owners of multiple projects may choose to submit one consolidated statement, or separate statements, depending on a multitude of factors.
2) Compliance Audit: HUD will make sure that the programs your entity is operating are compliant with program standards.
Because HUD audits require financial statement and compliance standards, it can be difficult to find experts who understand both of these areas. The financial statement audit can also be different from other financial statement audits you may experience as a private business and requires knowledge of government laws, regulations, and standards that are put forth by HUD.
These audits can be complex in nature, and overwhelming to take on without expert advice. At Odoni Partners LLC, we strive to provide the best level of service to entities who are offering HUD services. The nature of these audits can be complicated, and the rules often change depending on where you are operating. Therefore, it is advised to consult an expert when undertaking a HUD project. It is vital to disclose specific information in financial reports submitted to HUD, and failure to do so may result in HUD office action. At Odoni Partners LLC, we specialize specifically in HUD audits and understand the intricacies of the documents and information that must be disclosed to HUD.
HUD Audit Guide
HUD audits are performed with Generally Accepted Audit Standards (GAAS), which is issued by the American Institute of Certified Public Accountants (AIPCA). The results of an audit can result in compliance sanctions, which can seriously affect your entity’s ability to operate. Therefore, it is imperative that you work with experts to make sure that your entity is staying compliant, and its actions will not result in sanctions. Some compliance sanctions can include:
1) Suspensions: Imposed on entities for a temporary amount of time
2) Debarments: Debarments can take place for three years or even an indefinite amount of time depending on the violation
3) Limited Denial of Participation (LDPs): A sanction that is restricted to certain HUD programs, and not on a national level, usually up to 1 year
The results of sanctions can have a serious outcome on your entity but can be avoided with proper record-keeping and compliance with HUD standards.
HUD Audit Report: Facts
A HUD audit can often go beyond the traditional requirements of a financial audit, with multiple supporting documents and information that need to be provided. Beyond providing financial data, as one would with a typical financial audit, HUD also requires that entities submit data that ensures that they are remaining compliant with HUD standards.
In addition, specific documentation regarding compliance with HUD program guidelines will also need to be submitted along with the financial report. These documents will outline that your buildings are meeting program standards, such as building durability. There are many moving pieces in a HUD audit, and it can be easy to overlook one component and submit incomplete information.
There are also questions around tax credits that entities can receive, and these tax credits are contingent upon program length, occupation rates of buildings, and income requirements of tenants in buildings. At Odoni Partners LLC, we can advise you on tax credits, audit compliance, and even help you put internal controls in place to ensure that you are in full compliance with HUD program requirements.
HUD Audited Financial Statements
While HUD audits can appear complicated, we can help make the process run more smoothly through our team of experts. If you are an entity that is issuing federal assistance through grants, loans, subsidies, or another form of assistance through HUD, we have the expertise to guide you through the HUD audit process. In addition, we can prepare you for future HUD audits, and create a strategy for ongoing compliance into the future. Government audits can be manageable through our services.