|Missouri Housing Development Commission|
Program Compliance Accounting
> Annual Financial Statements
Q: New When are financial statements required to be submitted to MHDC? (1/29/10)
A: Financial Statements are due 90 days after fiscal year-end. 2009 financial statements are required to be submitted online to MHDC by Wednesday March 31, 2010.
Q: New Have new accounts been added to the MHDC Chart of Accounts for the 2009 year-end? (1/29/10)
A: No. 2008 was the last time additions were made to the required chart of accounts.
Q: New Are there any new financial statement requirements planned for 2009 year-end?
legislative staff has requested that MHDC collect more detailed information
on the allocation of Low Income Housing Tax Credits. Properties with 13+
units must submit a
Schedule of Eligible and Allocated Federal and State Tax Credits
as part of the annual
audited, reviewed, or compiled financial statements.
Properties with 1-12 units
must mail the current signed Forms 8609 and Missouri Eligibility Statements
for each building as prepared by the certified public accountant to MHDC's
St. Louis office - 4625 Lindell Blvd, St. Louis, MO 63108. For reporting
year 2009, signed 8609 forms and eligibility statements must also be
submitted for all previous years of the tax credit period to provide the
entire tax credit history to-date.
Q: New What if we do not have our tax return prepared yet to determine the amount of tax credits earned to report on the Schedule of Eligible and Allocated Federal and State Tax Credits? (1/29/10)
A: MHDC realizes that not all properties will have their tax returns finalized by the time of audit submission, but MHDC needs to know the amount of credits earned for the period covered under the financial statement.
Q: New On the Schedule of Eligible and Allocated Federal and State Tax Credits, do I need to provide projected credits for each subsequent year? (1/29/10)
A: No, MHDC does not want properties to report the projected eligible credits for future years. The idea of the table is to fill in the eligible credits for the year covered by the financial statement, and since we are just beginning to use this form, we are also asking for previous history. Future years should be left blank in the eligible column.
Q: New Can I incorporate this information within the footnotes of the financial statement, or do I have to prepare it as a supplemental schedule? (1/29/10)
A: MHDC’s preference is to include this information as a supplemental schedule. MHDC believes this approach would be easiest for both the CPA’s preparing the statements and MHDC staff reviewing the information.
Q: New Do I need to provide total columns on the Schedule of Eligible and Allocated Federal and State Tax Credits? (1/29/10)
A: No, total columns are not necessary.
Q: New Have new accounts been added to the Chart of Account in 2008? (1/30/08)
A: Yes. MHDC has added the following accounts in 2008:
MHDC has updated its Chart of Accounts and Balance Sheet and Income Statement with Account Numbers template to reflect the new changes.
Q: New When are financial statements required to be submitted to MHDC? (1//30/08)A: Financial Statements are due 90 days after fiscal year-end. 2007 financial statements are required to be submitted on-line to MHDC by Monday March 31, 2008.
Q: How do I determine if I need to submit my financial statement on-line or mail a financial statement hard copy to MHDC? (1/16/07)
A: All financial statements must be filed on-line at amrs.mhdc.com unless the project files their financial statement with HUD under the REAC system. In this case, a copy of the property’s financial statement needs to be mailed to the MHDC – STL office: 4625 Lindell Blvd. St. Louis, MO 63108. MHDC does not require HUD submitted properties to file electronically with MHDC. Of course if the property wanted to file on-line, arrangements can be made by contacting the MHDC St. Louis Office at 314-877-1350. MHDC does require a copy of the financial statement to be uploaded in the electronic submission for MHDC to review.
Q: How is Gross Potential Rent Determined? (1/16/07)
A: This account includes MHDC approved rents charged at 100% occupancy. The amount can be calculated by taking the total of the approved rent charges per each unit times the number of months in the approved rent increase period. Approved rents can be found in the property’s Regulatory Agreement, Land Use Restriction Agreement, HUD Rent Schedule Low Rent Housing Form HUD-92458, or MHDC’s Schedule II if a rent increase has been approved since the property’s inception. Rents should NOT be netted!
Gross Potential Rents should be reported as follows:
* Defined as the gross potential rents lost through vacancy of an apartment unit.
# Defined as the amount provided for rental concessions (i.e. free rent, discounts) in connection with the execution of the tenant's lease.
^ Defined as Gross Potential Rents lost due to the timing of tenant's current lease. (i.e. - rent increase effective date 1/1/x; tenant lease expiration date 4/1/x = 3 months of rents lost to lease).
Q: How does MHDC
calculate management fees, and why am I required to repay excess management
Reimbursement of management fees will be required when management fees are not paid in accordance with the PROJECT OWNER’S/MANAGEMENT AGENT’S CERTIFICATION Form. Management Fees can be paid one of two ways – “per occupied unit” or “% of collected rental income.” Forms that contain the language “per occupied unit” will not be eligible for the maximum management fee unless there was 100% occupancy during the year.
MHDC calculates “per occupied unit” management fees as follows:
MHDC calculates “% of collected rental income” management fees as follows:
Q: How does MHDC
determine if interest should be accrued for at year-end, and How does MHDC
determine accrued interest? (1/16/07)
A: Interest should be accrued for if January’s
mortgage payment is paid in January instead of December. This amount should
be booked regardless of materiality because of potential surplus cash
implications. The interest portion of January’s payment is for interest
earned from December 1 to December 31st. MHDC uses MHDC’s
internal payment posting date to determine if interest should or should not
be accrued for. The amount to be accrued for is determined based on the
property’s amortization schedule and monthly billing statement (i.e.
January’s Mortgage Statement would show how January’s payment was to be
allocated between principal and interest.) Billing statements are usually
received 10 days prior to the payment becoming due.
When will Owner’s Equity calculations be sent out?
A: MHDC will mail Owner’s Equity calculations by January 31, 2008.
Q: Is there a preferred
format that MHDC requires Financial Statements to be submitted in?
Yes, MHDC prefers that all properties prepare their financial statements
using the chart of accounts provided under the On-line Budget System. This
format is essential for MHDC to begin creating its benchmarking database,
and it will allow MHDC to review the financial statements compared to the
annual budget more effectively. Click
Balance Sheet & Income Statement Format with Account Numbers for a
sample of a balance sheet and Income statement under this format.
Q: How do I know if I am required to file a
Financial statement submission depends on the number of units your
development has. Development’s with 24 or more units must file audited
financial statements that follow Generally Accepted Auditing Standards and
Government Auditing Standards (only if HUD or RD assistance is received).
Development’s with 13 – 23 units may file reviewed or compiled financial
statements that follow the Statement on Standards for Accounting and Review
Services. Development’s with 12 or less units do not need to file financial
Q: What types of audits
require the Schedule of Audit Findings, Compliance and Internal Control
Comments, and Prior Audit Findings Resolution Comments to be performed?
Any property that is required to file a financial statement to HUD, Rural
Development, and/or receives MHDC Home funds in excess of $500,000 must
prepare its audit under the Government Auditing Standards. Government
Auditing Standards require the auditor to report on Internal Control, submit
a Schedule of Questioned Costs, and report on prior year findings.
Properties that do not receive federal funds may prepare their financial
statements under normal Generally Accepted Auditing Standards.
What schedules are required under Reviewed
or Compiled Financial Statements?
A: The same statements required for an audit are required for a review or compilation. The biggest difference to note is the auditor’s level of responsibility. The following schedules are required under the scope of reviewed or compiled financial statements: Accountant’s Report, Balance Sheet, Statement of Income and Expense, Statement of Retained Earnings /Owner’s Equity, Statement of Cash Flows, Notes to the Financial Statements (including Notes Payable and Change in Fixed Assets), Schedule of Funds, Mortgage Escrow Deposits, Schedule of Reserve Funds, Surplus Cash Distribution, Residual Receipts Calculation, Equity Distribution Calculation, Mortgagor's Certification, and Managing Agent’s Certification. Please note the Surplus Cash Distribution, Residual Receipts Calculation, and Equity Distribution Calculations are not required for Tax Credit Only properties.
Compiled Financial Statements are less in scope of an audit and review. The
CPA has done no testing or analysis of the financials, but having the firm
involved enhances internal controls. In a Compiled Financial, your monthly
bank account reconciliation will be read. The transactions will be assembled
using generally accepted accounting standards, although they are not tested.
Compiled statements are often sufficient to meet your needs, since the cost
of a compilation is very low in comparison to that of an audited or reviewed
Q: What will happen if I do not file my financial
statement within 90 days of my fiscal year-end?
A: Failure to
submit annual financial statements will result in your property being placed
on MHDC’s Non-Compliance list. MHDC will not process any future requests
(replacement reserve withdrawal, rent increases, Surplus Cash, etc.) from
this development until the issue is resolved.
Q: What does
“Non-Compliance Status” mean?
Q: Are Fidelity Bond
premiums considered an eligible project operating expense?
Fidelity Bond policies are required for each Management Company to insure
against employee fraud and embezzlement. Effective January 1, 2004,
Fidelity Bond premiums of $500 or less will be allowed as an eligible
operating expense. Premiums in excess of $500 will not be eligible and
should be reported as a non-operating item on the income statement.
Q: What are some
acceptable methods to segregate cash when the operating cash account has
Option 2 – Provide
documentation of the financial institution’s rating. The financial
institution must have a rating consistent at all times with current
minimally acceptable ratings as established and published by Government
National Mortgage Association (GNMA)
MHDC does not endorse any one option over the other.
Q: Can partnership tax
expenses be combined with the annual audit expense, and be charged to
Q: Why do Tax Credit Only properties need to
submit financial statements?
A: MHDC has found that many of our Tax Credit properties are being required by their equity syndicators to submit financial statements.
Section 7(c) of the Land Use Restriction Agreement (LURA) gives MHDC the
authority to request this information as it states “the owner shall submit
any other information, documents, or certifications requested by the
Authority which the Authority shall deem reasonably necessary to
substantiate the owner’s continuing compliance with the provisions of the
Q: Will I receive notification that my property’s
financial statements are reviewed?
A: Yes, all developments will receive a letter from MHDC notifying them that their financial statements have been reviewed. In some instances, MHDC will require additional support to be submitted and accounts to be refunded before the financial review process can be closed.
Frequently Asked Questions
Q: How do I enter my
Annual Financial Statements On-line?
Q: How do I access MHDC’s
Asset Management Reporting System?
A: Access is granted by
entering the project’s user name and password. Projects who submitted a
2007 budget will use the same user name and password. All new projects will
receive a user name from MHDC prior to the submission period. MHDC no
longer issues passwords. The project can obtain a password via e-mail by
using the Forgot Password?
function on the login screen.
Q: How does the system
know where to send a password when one is requested?
A: Passwords are sent to the
primary contact noted in MHDC’s Asset Management System. This can be
either the owner or management company contact depending on the preferred
mailing address selected by the project during the 2007 budget submission.
MHDC requires the contact information screen to be updated at each budget,
financial statement, and monthly occupancy submission. At minimum, all
contact information must include a contact name and e-mail address.
Q: What will I be
required to enter On-Line?
A: The owner, management
company representative, or CPA will be required to answer a series of
informative questions regarding the property, enter balance sheet, income
statement, and key footnote information, and upload a copy of the annual
Q: Does MHDC require
a CPA to enter the annual financial statement data?
A: No. The system is
designed so that an owner or management company representative can enter the
Q: Do I still need to
submit a hard copy of the financial statement to the MHDC St. Louis Office?
A: Only if the project files
their financial statement with HUD under the REAC system. MHDC does not
require HUD submitted properties to file electronically with MHDC. Of
course if the property wanted to file on-line, arrangements can be made by
contacting the MHDC St. Louis Office at 314-877-1350. MHDC does require
a copy of the financial statement to be uploaded in the electronic
submission for MHDC to review.
Q: What is meant by
uploading a financial statement?
A: Uploading a financial
statement means attaching a paper copy version of the financial statement to
your electronic submission preferably in a .pdf format.
Q: Does the uploaded
financial statement still need to include the same supplemental schedules
that have been required by MHDC in previous years?
A: Yes. All requirements
remain the same as previous years. Please visit our website
www.mhdc.com for a listing of schedules required by MHDC. MHDC needs to
be able to access the financial statements to read the footnotes and verify
various account balances.
Q: Does MHDC have a prescribed format for preparing financial statements.
A: Yes. MHDC requires the balance sheet and income statement to be prepared in accordance with MHDC’s chart of accounts. MHDC has suggested formats available on our website www.mhdc.com which can be downloaded. The income statement containing MHDC’s chart of accounts may be submitted as a supplemental schedule.
Q: How long will it take to submit a financial statement on-line?
A: Depending on the financial complexity of the project, submission should take anywhere from 30 minutes to and 1 ½ hrs.
Q: Are there any instructions on how to enter the financial statements on-line?
Written Surplus Cash
distribution requests will only be accepted for properties that are
required to submit financial statement hard copies, and must have their
surplus cash approved by MHDC because the property falls under HUD’s “Old