However, the audited financial statements for the next recertification reporting period must cover the period from the date after the ending date of its audited financial statements submitted for approval to the end of its current fiscal year. The period covered by the renewal audit cannot exceed 18 months.
At the close of the first, full fiscal year following receipt of FHA approval, the Mortgagee must submit audited financial statements, attested to by an Independent Auditor, covering the period from the ending date of the financial statements used to obtain initial approval, and ending at the close of the Mortgagee’s most recent fiscal year. Mortgagees may not submit financial statements that cover a period of more than 18 months.
Audited Financial Statements
Changes made to the Office of Inspector General (OIG) Audit Guide (Handbook 2000.04, Rev 2, Chg-22) will impact all FHA-approved Mortgagees and Entities applying for FHA approval. This is effective immediately for Entities applying for FHA approval. All FHA-approved Mortgagees must be in compliance by December 31, 2021.
Changes to the OIG Audit Guide include:
- Ensuring that a schedule of “other assets” prepared by the lender or issuer is attested to by an Independent Auditor per Generally Accepted Auditing Standards (GAAS) guidelines;
- Excluding real property, including all land and any buildings attached to it, other than the home office registered with HUD from the computation of adjusted net worth; and
- Excluding any asset designated to offset future expenses, such as prepaid expenses and deferred tax, from the computation of adjusted net worth.
Chapter 7 of the OIG Audit Guide discloses a list of unacceptable assets to exclude in the calculation of the computation of adjusted net worth.
For additional information see:
- Handbook 4000.1 I.A.8.a.iii at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh
- Handbook 2000.04, Rev 2, CHG-22 at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/oigh/2000.4
- Mortgagee Letter 2021-25 at: https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee