BROADCAST EMAIL – Regulatory Update

Rural Development’s (RD) Office of Multifamily Housing has issued the following reminder regarding annual financial reporting requirements for Multifamily borrowers:

The Agency requires annual financial reports be submitted by each borrower to ensure the project is in sound financial condition and is complying with the program financial management requirements.

Complete year-end report documents are due no later than 90 days following the close of the project fiscal year; with the exception of the audit report for non-profit organizations which must be submitted the earlier of 30 days after receipt of the auditor’s report, or 9 months after the end of the audit period.

Refer to Handbook 2-3560 (HB 2), Chapter 4, Section 5 and 7 CFR 3560.308 for guidance on the requirements of annual financial reporting (RD Handbook and Regulations). All reports must be completed utilizing the accrual method of accounting.

All annual financial reports shall include the following items:

  1. Form RD 3560-7 and Form RD 3560-10 completed per the Forms Manual Insert or instructions (RD Forms). For projects with eight units or more, these forms must be submitted through MINC.
  2. Attachment 4-F, “Performance Standards Borrower Self-Certification Letter,” including status of ownership.
  3. Any project audits independently obtained by the borrower must be submitted to the Agency.
  4. Written narrative shall be submitted to address any findings or weaknesses noted on the current audit report, deficiencies noted on Attachment 4-F, all expenses or income noted as “other” or “miscellaneous”, and explanation of project expenses or cash sources that differ by 10% or more from the proposed budget amount.
  5. Any additional documentation or comments that may assist the Agency in its review of the year-end reports.

In addition to the above, the following audit reports are required:

  • For-profit or limited profit borrowers – receiving $500,000 or more in combined federal financial assistance must submit an independent auditor’s report performed by a Certified Public Accountant (CPA). Borrower’s s will utilize HUD’s Office of Inspector General’s (OIG) Consolidated Audit Guide in developing the audit. The audit will not utilize HUD’s Chart of Accounts, nor will the report require the CPA to review any tenant files.
  • Non-profit organizations, State and local governments, and Indian tribes – receiving $750,000 or more in combined federal financial assistance must submit a single audit report in accordance with 2 CFR 200, Part F, and the Office of Management and Budget’s (OMB) Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards.

The above auditor reports are dependent on the combined Federal financial assistance received by a borrower entity (tax identification number). HB 2, Attachment 4-G is available to assist with determining the borrower’s combined federal financial assistance threshold.

Rural Development thanks you for your continued cooperation in completing the required reports and submitting them in a timely manner. If you have questions, please contact the servicing Specialist assigned to the project. A listing of assigned servicing Specialist can be found on RD’s website at MFH Property Assignments by Region.