2. 2014 MAHRO Annual Conference August 14, 2014 Presented by: David Land Lindsey & Company Searcy, Arkansas

3. What are “the financials?”  “Financials” refer to monthly reports compiled in-house and/or by your fee accountant. The FDS is part of your financials and is an annual report.  Financial can be unaudited or audited.  Generally, HA financials are comprised of: −Balance sheet (assets and liabilities & equity) −Statement of revenues/expenses −Other statements (detailing grant status, etc.)

4. Who Is Responsible? Management  For basic financial statements & related information −You provide the data, you own the reports. Your Fee Accountant is a great assistant, but the report contents belong to you.  For fair presentation of financial statements −Is the data accurate? Does it reflect the financial state of your Housing Authority?  For making sure financial information is reliable −Can the public depend on it?

5. Understanding The Basics The Balance Sheet  Snap shot of an Authority’s financial position at a certain point in time – how do the assets compare to the liabilities?  Assets: short term & long term  Liabilities: short term & long term  Equity: Assets less liabilities (EFB)

6. Use of Balance Sheet Shows the financial condition of the Authority  Assets: What you own (Current and Fixed) −Is Authority in positive financial position?  What is Cash Position? −Do you have enough cash to meet obligations?  What are the Receivables of the Authority? −How much does the Tenants owe the Authority?  Other Assets – Fixed – Buildings, Equipment, etc.

7. Use of Balance Sheet Shows the financial condition of the Authority  Liabilities: What you owe others −How much do your owe tenants? −Do you have vendor payables? How much? −Are your payroll deductions, taxes, insurance, retirement, etc. being pad on a current basis? −How much do you owe for PILOT? −Do you have any long term debt?  Equity: What you own less what you owe −Restricted −Unrestricted

8. The Income Statement This report reflects revenues and expenses…a periodic snapshot of how your business is doing.  Revenues: Income to the Authority −Is your income greater than your expenses?  What is the trend of your income and expenses?  Do you have reserves to cover any shortfalls in income?

9. General Ledger This report shows all activity of all accounts in account number order.  Each Program: (i.e. Public Housing, Section 8, etc.) should have its own General Ledger.  Usually the GL is arranged in an asset-liability- revenues-expenses order.  The GL is an excellent tool for researching the activities of the Authority. −For Example: If you look at a year-to-date GL for administrative salaries, the GL will show all admin salaries that have been charged to the program.

10. Accounting at Fiscal Year End  Your fee accountant or in-house accountant prepares a draft year end financials for review, (FDS)  Management carefully reviews the financials.  Any changes or corrections are made.  Management reviews the changes. −Remember Management is Responsible!  Unaudited data is entered into the FDS and sent to REAC.  REAC either accepts or rejects the FDS.  If REAC accepts the FDS, it is now time for an audit.

11. Things to Check at Year End  Accounts Payable  Accrued Payrolls  Investments  PILOT  Tenant Account Receivables by type  Other Receivables (between programs) ****  Reconciliation of Fixed Assets  Materials Inventory  Outstanding Checks  Reconciliation of Security Deposits  Calculations of Compensation Absences  Verification of Grant Cost  Number of Units Leased  Have you pulled down all available funds?

12. FDS and Your Financials How does the data from your financials get into the Financial Data Schedule (FDS)?  At fiscal year end, the accountant enters the “unaudited” information (you’ve reviewed and approved) into the FDS.  HUD will either accept or reject the submission. If rejected must be re-submitted within 15 days.  Your auditor accesses this information and uses it as the basis for your audit  The auditor may make changes in the final “audited” FDS submitted to HUD (AJE’s)

13. Financial Reporting Requirements  Financial information must be submitted according to generally accepted accounting principles (GAAP).  Using the Financial Data Schedule (FDS) format, financial information must submit to REAC.  Unaudited financial information must be submitted within two months after the fiscal year end.  Audited financial statements must be submitted within nine months of the fiscal year end.  Individual project scores will be combined using a weighted average calculation to arrive at an overall score.

14. Penalty Points − Unaudited Submission  Past due unaudited submissions will be assessed a one point penalty for each 15 day period past the due date.  If unaudited information is not received within three months of the PHAs year end, the PHA will receive “0” points.

15. Penalty Points − Audited Submission  The audited FDS must be submitted within nine months after the close of your fiscal year.  If the audited submission is not received by HUD within nine months, the PHA will receive a score of “0” and will be labeled financially troubled.

16. The Buck Stops With the Board!

17. Thanks, and have a safe trip!