USDA Rural Development Issues Final Rule…
by Brittany Worley, CPA (Greensboro Office)
On October 25, 2017, USDA Rural Development (RD) published a final rule for Multi-Family Housing Program Requirements to Reduce Financial Reporting Requirements in the Federal Register. In this publication, RD made its intention known to align its reporting requirements with those of the U.S. Department of Housing and Urban Development, which will now utilize a risk based threshold of reporting.
High risk properties are defined as those with combined federal assistance above $750,000 for non-profit entities and $500,000 for for-profit entities. For non-profit entities receiving federal assistance greater than $750,000, RD will accept an audit in accordance with Uniform Guidance standards. For non-profit entities receiving less than $750,000 in federal funds and for-profit entities receiving less than $500,000, the owner must submit owner certified prescribed forms on the accrual basis in accordance with Statements on Standards for Accounting and Review Services. In addition, RD removed the requirements for agreed upon procedures based on the requirements by RD as part of its annual financial reporting package. RD has also added three required certifications for each entity: certification of no changes in project ownership other than those approved by the agency and identified in the certification, real estate taxes paid in accordance with state and/or local requirements and are current, and replacement reserve accounts used only for authorized purposes.
The goal for RD is to reduce the burden on the borrower to produce multiple financial reports, focus on high risk properties, and reduce the financial cost of reporting on properties. The rule was effective as of November 24, 2017. The rule changes will be optional in fiscal year 2018, as proposed budgets have been submitted, but will be mandatory starting in fiscal year 2019.