HCV NRA Balance and Proper Use of HCV Funding

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Year End Financial Reporting For The Housing
Choice Voucher Program

• HCV NRA Balance and Proper Use of HCV Funding

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Overview

• The following topics will be covered
• How is NRA balance defined?
• How are PHAs financial statements and FDS used
  to calculate and report the NRA balance?
• How does income statement reporting directly
  impact the NRA balance?
• How to review your initially reported NRA balance
  for accuracy?
• What are the eligible uses of HAP and
  administrative fees?

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HCV NRA Balance
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HCV NRA Balance

• Restricted balance
• Reflects the difference between HAP funding and
  HAP expenses
• Starts from January 1st, 2005
• Calculated as of December 31st and as of the PHA
  fiscal year end

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HCV NRA Balance

• Methods of Calculation
• Calcualted by HUD through the use of its data
  systems
• As reported in the PHAs financial statements
• Hybrid approach

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HCV NRA Balance

• Reported as equity in the PHAs financial
  statements
• Restricted Net Assets (full accrual)
• Fund Balance Reserved (modified accrual)
• Calculated as of the financial statement date

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HCV NRA Balance

• Partial Statement of Net Assets (full accrual)

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HCV NRA Balance
Partial FDS (full accrual)
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HCV NRA Balance

• Partial Balance Sheet (modified accrual)

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HCV NRA Balance
Partial FDS (modified accrual)
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Equity Accounts and FDS Reporting
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Equity Accounts and FDS Reporting

• Since calendar year 2005, HUD no longer maintains
  an ACC Reserve account for the HCV program
• As of January 1st, 2005 PHAs were required to
  establish and maintain their own HAP NRA account
  for any HAP funds that were not used
• The FDS was updated to properly track this
  requirement starting with 9/30/2006 submissions

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Equity Accounts and FDS Reporting

• NRA Balance / HAP Equity
• Full accrual
• 511.1 Restricted net assets
• 11180 HAP (NRA) equity memo account
• Modified accrual
• 509.2 Fund balance reserved
• 11180 HAP (NRA) equity memo account

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Equity Accounts and FDS Reporting

• Administrative Fee Equity
• Full accrual
• 508.1 Invested in capital assets, net of related
  debt plus 512.1 unrestricted net assets
• 11170 Administrative fee equity
• Modified accrual
• 511.2 Unreserved, designated fund balance plus
  512.2 unreserved, undesignated fund balance
• 11170 Administrative fee equity

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Equity Accounts and FDS Reporting

• HCV memo equity accounts are used to
  differentiate between HAP (NRA) and
  administrative fee balances
• Information in these accounts are generated
  through the income statement activity
• Shows the detail FDS line items
• Initial beginning balances were PHA reported.
• Beginning balance should be the same as the PHAs
  ending equity balance of the previous year

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Equity Accounts and FDS Reporting

• Proper reporting of HAP (NRA) Equity
• Beginning balance
• Add HAP revenues
• Subtract HAP expenses
• Equals ending HAP (NRA) equity
• Take into account any prior period
  adjustments/corrections
• This is also known as a roll-forward of equity

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Income Statement Activity and the NRA Balance
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HCV Related Programs
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FDS Line Items for HUD HCV Revenue
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HCV Income Statement Other Activity

• FDS was modified in 2006 to break out the sources
  of revenue between HAP and administrative fee
  activity
• HCV Activity
• Investment Income
• Fraud Recovery
• Family Self-Sufficiency
• Portability

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Cash and Investments

• PHAs are allowed to use one bank account and pool
  their cash for investment purposes
• Cash should be reported in the program that has
  claim to that cash
• Investment income should be split based on the
  source of the deposits

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Reporting of Pooled Cash and Investments

• Reported Incorrectly

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Reporting of Pooled Cash and Investments

• Reported Correctly

Does not mean that all Interprogram due to/from
should be removed
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Investment Income

• Unrestricted (FDS Line 71100) and Restricted (FDS
  Line 72000)
• General Depository Agreement requires cash and
  investments to be credited in an interest bearing
  account
• Interest Income is reported based on
• Fund type (restricted and unrestricted)
• Fund source (HAP and Administrative Fee)

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Investment Income
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Fraud Recovery

• Governing Regulations
• 24 CFR 792 Public Housing Agency Section 8 Fraud
  Recoveries
• PIH Notice 2006-03 (HA)
• 50/50 Split
• - OR -
• Direct Expenses

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Fraud Recovery
Total Repayment Agreement Amounts
Split 50/50
HAP Revenue 71400-010
Administrative Revenue 71400-020
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Fraud Recovery
Total Repayment Agreement Amounts
Direct Administrative Expenses Related to
Collecting Fraud
HAP Revenue 71400-010
-

Administrative Revenue 71400-020
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Fraud Recovery
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Family Self Sufficiency

• Family Self Sufficiency (FSS) Defined
• Governing Regulations
• 24 CFR 984.305
• FSS Coordinator
• FSS Program Expense
• Escrow Activity

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FSS Program Expenses

• Report FSS Program Expenses in Tenant Services
  line items (92000 Series)
• Line 92100 Tenant Services Salaries
• Line 92300 Employee Benefit Contributions Tenant
  Services
• Line 92400 Tenant Services Other

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FSS Escrow Activity
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FSS Journal Entry
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FSS Journal Entry
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FSS Journal Entry
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Portability

• Portability Defined
• Governing Regulations
• 24 CFR 982.355
• PIH Notice 2004-12 (HA) Extended to 2006-25(HA)
• Terminology
• Initial PHA and Receiving PHA
• Port In and Port Out

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Portability

• 97350 HAP Port-in impacts the way portability is
  reported on the FDS

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Portability Journal Entry
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Portability Journal Entry
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Portability Journal Entry
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Portability Journal Entry
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Portability Journal Entry
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FDS Line 11170 AFE Detail 
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FDS Line 11170 AFE Detail 
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FDS Line 11170 AFE Detail 
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FDS Line 11180 HAP Equity Detail 
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FDS Line 11180 HAP Equity Detail
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FDS Line 11180 HAP Equity Detail
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Review of Initial NRA Balance
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Review of Initial NRA Balance

• HAP (NRA) Equity
• HAP accounts were reconciled (swept) for period
  ending 12/31/2004
• As of January 1st, 2005 PHAs were required to
  establish and maintain their own HAP NRA account
  for any HAP funds that were not used
• Beginning balance Zero (01/01/2005)

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Review of Initial NRA Balance

• Administrative Fee Equity
• Admin Fee Accounts were not swept
• Beginning balance prior year ending balance
• The FDS was updated to properly track this HAP
  (NRA) and administrative fee equity starting with
  9/30/2006 submissions

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Review of Initial NRA Balance

• Step 1 Gather reports
• Financial Data Schedules
• Financial Statements
• VMS Reports
• Funding Letters
• PHA Financial System Reports
• Reporting Information Needed
• 12/31/04 through 12/31/06
• 03/31/05 through 03/31/07
• 06/30/05 through 06/30/07
• 09/30/05 through 09/30/06

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Review of Initial NRA Balance

• Step 2 Using FDS from when system was updated,
  review
• Ending equity
• HAP memo equity accounts (both ending and
  beginning balance)
• Administrative fee memo equity accounts (both
  ending and beginning balance)

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Review of Initial NRA Balance

• Step 3 Using other reports (VMS data, PHA
  financial reports), review to
• Determine if revenue and expenses were properly
  reported
• Determine if FDS detail accounts were properly
  reported

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Review of Initial NRA Balance

• Step 4 Using other reports (VMS data, PHA
  financial reports), review the beginning balances
  for equity and memo equity accounts
• Determine if beginning balances were properly
  reported

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NRA Checklist to Success
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NRA Checklist to Success

• NRA Balance / HAP Equity reported in the correct
  FDS line item
• Full accrual
• 511.1 restricted net assets equals 11180 HAP
  equity
• Modified accrual
• 509.2 fund balance reserved equals 11180 HAP
  equity

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NRA Checklist to Success

• FDS line 513 (Ending equity) equals FDS line
  11180 (HAP equity) plus 11170 (Admin fee equity)
• Beginning equity equals last years ending equity
  
• Beginning HAP and Admin fee memo account equity
  (11170 and 11180) equals last years respective
  ending memo account equity

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NRA Checklist to Success

• Initial NRA balance and HAP equity account were
  properly reported
• Related HAP cash and investments are reported as
  restricted
• Other program activity is not commingled with
  CFDA 14.871 Housing Choice Vouchers

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NRA Checklist to Success

• HAP revenues are properly recognized and reported
  in FDS line 70600-010
• HAP cash and investments balances are deposited
  in interest bearing accounts
• Interest earned is being reported in FDS line
  72000-010 or 71100-010

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NRA Checklist to Success

• Fraud recovery are properly reflected in the
  NRA balance (FDS line 71400010)
• FSS forfeitures in HAP equity are reflected in
  the NRA balance (FDS line 71500 and HAP equity
  memo account 11180-20)

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NRA Checklist to Success

• Other HAP expenses are properly reflected in the
  NRA balance
• Appropriate prior period adjustments
• Reclassification of bad debt expense related to
  fraud recovery
• Subsidy payments to landlord for port-in
  vouchers are not in the NRA balance

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Appropriate Use of HCV Funding
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Appropriate Use of HCV Funding

• Eligible HAP expenses include
• Subsidy payments to owners
• Port-out payments
• Homeownership
• Utility reimbursements to participants
• Deposits to FSS escrow

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Appropriate Use of HCV Funding

• Ineligible HAP expenses include
• Funding of excess vouchers over baseline
• Funding of prior years vouchers
• HCV administrative expenses
• Public Housing or other program costs (including
  loans)

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Appropriate Use of HCV Funding

• FFY 2004 administrative fee equity and subsequent
  periods
• Used to support HCV program
• Related development
• FFY 2003 administrative fee equity and prior
  periods
• Used to support HCV program
• Other housing purposes permitted by state and
  local law

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The End
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