HUD Responds to Criticism of New Year-End Reporting Scheme

Real Estate Committee Suggests Later Deadline

By James L. Craig, Jr., CPA

The U.S. Department of Housing and Urban Development (HUD) recently agreed to a 120-day filing deadline for the first year of its changes in year-end reporting for multi-family residential projects, as a result of criticism to the initial proposal from the accounting profession, including comments from the NYSSCPA and AICPA. Both groups continue to press HUD to make the 120-day deadline permanent.

The changes revise the chart of accounts and require that projects file calendar year-end audited financial statements electronically over the Internet.

When NYSSCPA members Abraham Haspel and Elliot A. Lesser, chair of the Society's Real Estate Committee, first became aware of the proposed changes, they expressed concern about the readiness of both the HUD projects and HUD itself to handle such significant changes within the current 60-day year-end reporting deadline. Haspel, whose firm audits a number of these projects, also spoke to HUD officials and learned that systems to handle the new reporting were not complete.

"The 60-day reporting deadline, even before such drastic changes, was a real pressure cooker," said Haspel. "Since most projects are on a calendar year, the work had to be done in the middle of busy season when other commercial clients' demands are at their peak."

In a letter to HUD Secretary Andrew Cuomo, the Society requested a one-year delay in the implementation of the proposals; a permanent change in the filing deadline from 60 to 120 days; and recognition that the new process, although designed to make HUD more efficient, will result in a cost increase to the projects. The AICPA's comment letter to HUD requested a one-year delay in the electronic filing's implementation, and a permanent change to a 90-day year-end deadline.

The NYSSCPA mailed copies of its letter to New York legislators, including Congressman Rick Lazio, chair of the house subcommittee that oversees HUD reporting, and the Society also enlisted the aid of its members to follow up with legislators.

Haspel cautions CPAs that other changes are not fully finalized.

"The new chart of accounts is complete, but the user manual and systems design is not yet ready, he said. "Practitioners should also realize that the new requirements call for GAAP statements. OCBOA is out."