The annual reports must contain the following basic financial statements:

  • Balance Sheet
  • Statement of Income
  • Statement of Cash Flows
  • Changes in Owner’s Equity

If changes in the owner’s equity account consist only of net profit or loss of the Project during the year, the change may be noted in the Balance Sheet in lieu of including a separate Statement of Changes in Owner’s Equity. If, however, the Owner has made contributions or taken distributions during the year, a separate Statement of Changes in Owner’s Equity should be included in the financial statements.

The basic financial statements should have notes which contain explanatory information relative to owner organization and policy changes affecting the preparation of financial statements and account balances, as well as significant accounting policies that have been followed in the preparation of the financial statements.

Report Due Date: 90 days after the end of the Project’s fiscal year.

Additional Information

General Guidelines

DCHFA requires annual audited financial statements be prepared in accordance with General Accepted Accounting Principals (GAAP), General Accepted Auditing Standards (GAAS), and Government Auditing Standards (GAS). HUD audit guide: IG 2000.4 , Consolidated Audit Guide for Audits of HUD Programs and HUD Handbook 4370.2, Financial Operations and Accounting Procedures for Insured Multifamily Projects shall also be used.

Supplemental Data

The supplemental data provide details for specific accounts shown on the basic financial statements. The supplemental data shall include:

  • Accounts and Notes Receivable (other than tenant accounts receivable);
  • Delinquent Tenant Accounts Receivable;
  • Tenant Security Deposits;
  • Escrow Deposits;
  • Reserves for Replacement;
  • Changes in Fixed Asset Accounts;
  • Accounts Payable;
  • Notes Payable (other than Mortgages);
  • Surplus Cash, Distributions and Residual Receipts;
  • Trail balance and any adjusting journal entries;
  • All mortgage and note confirmations, as well as any other mortgage, accrued interest, and interest expense work papers;
  • Analytical review work papers for the revenue and expense accounts;
  • Bank reconciliations and statements as of 12/31 for all cash operating, security deposit escrow and reserve accounts;
  • Fixed asset additions (only if material);
  • Depreciation and amortization schedules;
  • The audit’s Supplemental Information (this should always be included as part of the audit).

Auditor’s Certification and Opinion

The purpose of an audit is to have an Independent Public Accountant (IPA) to render a professional opinion as an auditor on the reliability of financial statements as an accurate reflection of the project’s condition and performance.

The IPA shall express an opinion or furnish a written report on their understanding of the Project’s internal control structure and assessment of the Project’s ability to control risk.

The IPA shall also prepare a written report on their tests of compliance with applicable laws and regulations. The auditor shall prepare a Schedule of Findings and Questioned Costs and shall identify the condition, criteria, effect, and cause for the questioned issues and costs.

If there are findings from a prior year’s report, the auditor shall provide “Auditor’s Comments on Audit Resolution Matters”, which shall identify whether the owner has taken corrective actions on findings from the prior year’s audit.

Owner and Management Agent’s Certification

The Owner and the Management Agent are required to certify that the financial statements are reviewed and are considered to be true, complete and accurate.

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