The following news items should be of interest to auditors that perform HUD audits.
NEW HUD Extends Filing Deadlines and Other News for Lenders and Multifamily Housing Properties
HUD Announces May 9th Go-Live Date for Lender Electronic Assessment Portal (LEAP) and Related June 9th Submission Extension.
In a HUD webinar held on March 26, 2014, HUD announced that LEAP would go-live on May 9, 2014. As further described in GAQC Alert #243
, HUD Mortgagee Letter (ML) 2013-42
indicates that the deadline for the annual recertification for Title I and Title II lenders and mortgagees with a December 31, 2013, fiscal year-end would be extended 30 days after the go-live date. Therefore, in the recent HUD webinar, HUD announced that an automatic extension to June 9, 2014, would be provided for December 31, 2013, year-end submissions. Because the go-live date will also occur after the annual recertification deadline for lenders with January 31, 2014 and February 28, 2014, year-ends, HUD also announced it will grant individual extensions to June 9, 2014, for those lenders. Note that for lenders with a March 31, 2014, year-end, recertification deadlines will revert back to the normal 90-day submission deadline (i.e., June 30, 2014). To learn more about the updated LEAP system and annual recertification process view the March 26, 2014 HUD webinar
titled, FHA Lender System Update, Recertification Process and Timeline Changes, Title I and Title II Consolidation
. Access the webinar materials
. Access archived recordings of other recently held HUD lender webinars
HUD Issues Guidance on Audit Report Due Date for Lenders with December 2013, January 2014, or February 2014 Year-Ends.
On March 27, 2014, HUD issued a memorandum titled, Clarification on Recertification Filing Extension and Audit Report Date
. The memorandum addresses a confusing point raised during the HUD webinar around the required date of the auditor's reports. As noted in GAQC Alert #243
, HUD staff had previously stated that the due-date extension discussed in Mortgagee Letter (ML) 2013-42
related only to the electronic filing through LEAP, and that the audit(s) should be completed within 90 days of fiscal year-end (i.e., HUD had expected audits to be complete and all reports, other than the LEAP submission agreed-upon procedures report, to be dated no later than March 31, 2014). The new memorandum provides more flexibility by stating that lenders with December, January, or February year-ends should plan ahead in order to complete all applicable recertification steps (certification, fee payment, submission of financial information) by June 9, 2014. Importantly, it also states that there are no interim due dates for the individual steps and that lenders will not be subject to penalties or enforcement actions based on the audit report date.
HUD Issues LEAP Agreed-Upon Procedures Report Preview.
In late February, HUD issued a preview of the Agreed-Upon Procedures (AUP) Report
, on its "LEAP information" page
. This report will be incorporated into LEAP and used by auditors in the agreed-upon procedures engagement associated with the LEAP electronic submission. As noted in GAQC Alert #243
, previous to issuing this illustrative report, HUD also released Excel versions of the LEAP Audit Related Questions (ARQ) and the Financial Data Template (FDT). Access the ARQ and the FDT on the "LEAP Information" page
Housing News - HUD Extends Submission Deadline.
HUD posted an extension notice on their Real Estate Assessment Center (REAC) Financial Assessment of Multifamily Housing Web page
relating to multifamily housing properties insured and/or subsidized by HUD with a fiscal year ended December 31, 2013. The notice provides a global 30-day extension with a new due date of April 30, 2014
. The notice reads as follows:
"The Office of Housing has authorized a global 30-day extension to all owners with fiscal years ended 12/31/13. This extension is being offered to allow owners and auditors additional time to adapt to the requirements of Housing Notice H 2013-23
, and the FASSUB system release on December 6, 2013, that implemented revisions to the HUD Consolidated Audit Guide, Handbook 2000.04
. Submissions with fiscal years ended 12/31/13 will now be due on April 30, 2014
HUD Issues LEAP Audit Related Questions (ARQ) and Financial Data Template (FDT)
As noted in previous GAQC communications, HUD Federal Housing Administration (FHA) is in the process of replacing the Lender Assessment Subsystem (LASS) with a new Lender Electronic Assessment Portal (LEAP). As a result, HUD extended the deadline for the filing of the annual recertification package (including submission of financial information) for lenders with a December 31, 2013, year end past the normal due date of March 31st (see Mortgagee Letter (ML) 2013-42: Extension of Annual Recertification Filing Deadline for Title I and Title II Lenders and Mortgagees with a December 31, 2013 Fiscal Year End
.) During a recent HUD LEAP update webinar
, HUD indicated that the go live date for LEAP is expected to be in April 2014. ML-2013-42 states that the submission deadline will be extended 30 days after HUD's new LEAP system is deployed and functioning.
In advance of the LEAP launch, HUD FHA recently released Excel versions of the LEAP ARQ document and the FDT to enable lenders to create a hard copy of the completed ARQ and FDT prior to the lender's data entry to LEAP. Access the ARQ and the FDT at www.hud.gov/lenders
. (Look for the "LEAP Information" link in the Lender Approval and Recertification section.) The ARQ includes various questions about the entity, the audit opinion, and findings. It has separate tabs for supervised large lenders, supervised small lenders, unsupervised lenders, investing lenders, and government lenders (as defined in chapter 7 of the HUD Consolidated Audit Guide (HUD Guide)). However, the tabs for supervised small lenders and government lenders indicate there is no ARQ requirement for those entities. The FDT, which the auditor reports on in-relation-to the financial statements, also includes tabs for the various types of lenders. Each tab includes the various financial statement amounts required to be entered for each type of entity. However, the tab for government lenders indicates there is no FDT requirement for these entities.
Even though HUD has indicated that the LEAP submission deadline has been extended, HUD staff has stated that the due-date extension relates to the electronic filing through LEAP only, and the audit(s) should be completed within 90 days of fiscal year-end. Therefore, auditors are expected to complete the audit(s) and date all reports, other than the LEAP submission agreed-upon procedures report, no later than March 31, 2014. The excel version of the FDT, referred to above, will allow auditors to complete the necessary "in-relation-to" procedures on the supplementary schedule and date the related "in-relation-to" reporting by March 31, 2014. See AU-C 725, Supplementary information in Relation to the Financial Statements as a Whole
. The LEAP agreed-upon procedures cannot be completed and related report dated until after LEAP is available.
HUD Extends Annual Recertification Filing Deadline for Certain Title I and Title II Lenders
On November 27, 2013, the U.S. Department of Housing and Urban Development (HUD) issued Mortgagee Letter 2013-42
: Extension of Annual Recertification Filing Deadline for Title I and Title II Lenders and Mortgagees with a December 31, 2013 Fiscal Year End
. ML 2013-42 informs Title I and Title II lenders and mortgagees with a December 31, 2013 fiscal year end that effective immediately, the deadline for filing their annual recertification package (including submission of financial information) has been extended. This ML was necessary due to the expected timing of HUD's release of a new Lender Electronic Assessment Portal (LEAP) which will replace the Lender Assessment Subsytem (LASS). LEAP will be launched after the March 31st HUD submission deadline for entities with a December 31st year-end. Therefore, ML-2013-42 states that the submission deadline will be extended 30 days after HUD's new LEAP system is implemented. It goes on to state that lenders and mortgagees with a fiscal year end of December 31, 2013 should be prepared to complete the recertification process, including the submission of financial information and fee payments, not later than May 31, 2014.
NEW Archive of February 2014, HUD LEAP Webinar Now Available
In early February 2014, HUD held a Web event titled, FHA's Lender Electronic Assessment Portal (LEAP) Update, which provides information about the new LEAP system and how it improves business functionality. It also provides more information about recertification process changes and insight into Title I & II consolidation. Access course materials. Access registration and archived version.
HUD Lender Electronic Assessment Portal (LEAP) Webinar
indicated it did not include report illustrations. Instead, HUD asked the AICPA to provide it with updated “clarified” illustrations. With the issuance of
, the GAQC released drafts of the updated clarified reports that were sent to HUD for approval and issuance. Late last week, HUD issued the final clarified reports and incorporated them into the version of Chapter 2 on its Web site.
For the most part, there were no substantive changes made by HUD to the reports that were provided by the GAQC. However, during the clearance process, HUD removed a footnote that had been included in the draft illustrative HUD major program compliance and internal control over compliance report. The footnote stated the following: “Note that for entities subject to an audit in accordance with Chapter 7 of this Guide, staff from the HUD Recertification Branch have indicated that when such entities have been approved as both a Title I and a Title II lender, HUD considers the lender to have one major HUD program. Therefore, the auditor’s testing and related reporting should result in an opinion on the one major HUD program.” In speaking with the HUD Recertification Branch Chief about the reason for the footnote deletion, he stated that the deletion was made due to feedback received from other areas of HUD during the report clearance process. He also offered assurance that his office does not expect auditors that followed the guidance in the footnote to take any follow-up action and that there was no plan to reject reports or take any other action towards auditors that followed the guidance in the footnote for their completed 12/31/12 year-end audits or those that are near completion. With regard to audits of year-ends after 12/31/12, the Recertification Branch will work to develop guidance that further explains the impact of the footnote deletion on major program identification and testing. The GAQC will closely monitor this situation and communicate any guidance issued by the Recertification Branch in the future.