Donovan CPAs prides itself in expanding our services, especially with those that serve people who work in the affordable housing industry. With strict regulations, numerous compliance measures, and the earliest deadlines in the industry, we know the pressure Low-Income Housing Tax Credit (LIHTC) properties are under, and we can help relieve it.
We perform audits, reviews, and compilations for LIHTC properties funded through Section 42 of the Internal Revenue Code.
Because no two properties have the same financial needs, we’ll work with your team to customize your services.
We know that tax and partnership deadlines come quickly after the end of the year, so we put our LIHTC audits at the top of our priority list. Our team will work with syndicators, management companies, owners, and any other stakeholders to ensure everyone is on the same page. We’re always prepared to serve you.
Not always. Depending on the management company and auditing firm’s operations, your work can be completed remotely. Donovan CPAs are equipped to work off-site and perform many LIHTC audits from our office.
Yes. We watch many key dates in the life cycle of LIHTC properties as we complete audits, including development fee due dates, 10- and 15-year compliance items, and partner tax basis for yearly returns.
We perform audits, reviews, and compilations for both non-profit and for-profit HUD properties across the country.
Every engagement is unique, so we’ll work with your team to complete the projects and compliance measures you need. These include:
- Tax forms associated with the property and owners (K-1s, state returns, etc.)
- Financial Assessment Subsystem (FASSUB) filing
- SF-SAC filing (not-for-profits only)
- Single Audits (formerly A-133), if applicable
And since we know you don’t want to deal with the consequences of missing the government’s due date, which includes a $27,500 fine, we complete all services by HUD’s 90-day deadline every year.
Your first steps should include determining if you need an audit for the current year, choosing an auditor to perform it, and making sure your property management company knows how to handle HUD compliance measures for your new loan.
HUD requires properties (also called projects) to submit audited financial statements to them within 90 days of their year-end date. If they don’t receive this information, the project may be fined $27,500 and certain accounts may be frozen. The project owner will receive a letter from HUD’s Department of Enforcement (DEC), and if no action is taken, the project could lose the loan and/or rental assistance.
For-profit organizations that receive HUD funding to run their property are allowed to take distributions twice a year — once at year end and once halfway through the year. Not-for-profit properties cannot take distributions, and their surplus cash is deposited into the residual receipts account.
In the past few years, USDA Rural Development (RD) has made deep changes to the financial reporting guidelines that affect properties all over the country. As part of crafting these guidelines, our team was asked to help with the terms and explanations for these changes and even published a template of our financial statements as an illustration.
We produce audited, reviewed, or compiled financial statements for properties who receive funding from USDA-RD. We’re happy to answer any questions you may have about the audit process, and also provide the following services:
- Preparation of forms 3560-07 (Project Budget) and 3560-10 (Balance Sheet)
- Property classification under RD’s new rules for financial reporting
- Feedback and communication with RD agents
Not-for-profit properties with less than $750,000 of government assistance do not need to file an audit. For-profit properties with less than $500,000 also do not need to file an audit. However, to ensure you calculate this amount correctly, contact us for a full analysis (free of charge).
Overall, this change reduces the number of submitted financial statements and focuses on those properties that the government has given the most amount of money to. In the end, RD is tracking their risk better, and fewer properties need audits.
They are similar but not exactly the same. For example, HUD requires tenant file testing, but RD does not. RD requires certain reports about the replacement reserve account, whereas HUD tests this area differently.
We don’t file extensions if we don’t have to. This means you get your financial statements on time, every year.
No more paying for conversations about your audit. We keep in touch with our clients all year long, free of charge.
Tired of playing host to auditors for weeks on end? We can work remotely or in-house, whichever you prefer.
“David Lemler and team offer great suggestions and helpful hints. We actually look forward to their annual visits.”
– Richard, President of HUD Properties
“I deal with a lot of auditors due to my various clients and you by far have been the most respectful, polite and easy to work with.”
– Tracy, Senior Accounting Manager of HUD Properties
“With David Lemler and team, I have confidence the work is done on time. No follow-up needed.”