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CAPITAL FUND FINANCIAL REPORTING

CAPITAL FUND FINANCIAL REPORTING. Pacific Southwest NAHRO Fall Workshop Scottsdale Arizona September 23-25, 2012 presented by Pete Koziol, HUD Financial Analyst, Phoenix Offfice. Cap Fund Reporting: FDS. Financial Data Schedule (FDS) Reporting

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CAPITAL FUND FINANCIAL REPORTING

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  1. CAPITAL FUND FINANCIAL REPORTING Pacific Southwest NAHRO Fall Workshop Scottsdale Arizona September 23-25, 2012 presented by Pete Koziol, HUD Financial Analyst, Phoenix Offfice

  2. Cap Fund Reporting: FDS • Financial Data Schedule (FDS) Reporting • Cap Fund expenditures are reported at the Project level • Each Project has two income statements- one for Low Rent Public Housing and one for Capital Fund. The two income statement are combined for the Project income statement. • There is one balance sheet for each Project that combines the financial activity of both the Low Rent Public Housing and CFP program • Refer to Capital Fund Reporting Accounting Brief #15: http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/reac/products/fass/pha_briefs

  3. EXPENSE OR CAPITALIZE • The general guideline for accounting for expenditures made after acquisition is that if the expenditures provide additional service potential beyond the current period they should be capitalized. An entity may produce future services potential by making current expenditures that: • Extend the useful life of an asset • Increase the quantity of services of an asset • Increase the quality of services provided by an asset • If an expenditure causes one or more of these results, then, according to GAAP the entity should capitalize. • Avoiding the additional record-keeping for fixed asset accounts is not a good reason to expense.

  4. Cap Funds for Capitalized Expenditures • Reported as Revenue in the Cap Fund Income Statement, FDS line item 70610 • Equity transfer from Cap Fund to Low Rent for related amount (FDS line item 11040) • Memo accounts in CFP column (FDS #11610 to 11660) must be completed to match amount in line 70610 • Project Balance Sheet: The amount in 70610 must also be distributed to asset accounts on the Project Balance Sheet. Additions to FDS accounts for Fixed Assets (#161 to 165) and Construction in Progress (#167) should equal the amount in 70610

  5. CAP FUNDS FOR OPERATIONS (BLI 1406) • Large PHA’s (250 +) limited to 20% of Cap Fund Award • Small PHA’s (non-troubled) : 100% of award as long as capital needs are being met • CFP funds used to supplement operations are reported as revenue on the Cap Fund portion of the income statement on FDS line 70600 with a corresponding Operating Transfer Out (#10020) entry • CFP funds for administrative expenses/management fee of CFP are also reported as 70600 (CFP Income Statement) with matching amount under administrative expenses of Cap Fund Income Statement • COCC cannot receive Cap Funds for Operations

  6. CAP FUNDS FOR MANAGEMENT IMPROV. ( BLI 1408) • Cap Funds for Management that are capitalized: • Cap Fund Inc Statement: Revenue listed on FDS line 70610 • Memo accounts on Income Statement to be completed • Equity transfer to Low Rent and amount added to Fixed Assets • Cap Funds for Management that are expensed: • Treated as transfers to operations • Revenue on 70600, Amount transferred to Low Rent • Expensed with other expenses in Low Rent Column • Management Improvements are limited to Project uses

  7. Cap Fund Income Statement • The only operating expenses that should be showing on the Capital Fund Income Statement are administrative expenses such as: • Management Fee Expense (COCC- fee for service PHA) • Admin Salaries and Admin Benefits (non-fee for service PHA) • Audit fee (allocation to Cap Fund)

  8. Force Account Labor • Force Account Labor refers to the use of PHA employees to capital and modernization work on its projects • Capitalized Force Account Labor. Is used to support capital works, the cost of such labor is capitalized and becomes an asset on the balance sheet of the project. From an FDS reporting standpoint, force account labor should be reported in the same way as other hard costs. • Non-Capitalized Force Account Labor. Is used to support capital-type work that does not meet a PHA’s Capitalization threshold. Is treated like Cap Fund transfers to Operations. Because Cap Fund transfers to operations lose their identity these expenses will be included as maintenance expenses in the Low Rent income statement and will lose their distinction as CFP funds or force account labor.

  9. Projects: Dual Income Statements

  10. Income Statement Memo Accounts

  11. Equity Transfer from Cap Fund to Low Rent

  12. INCOME STATEMENT: ACCOUNTS AFFECTED BY CAP FUND

  13. FIXED ASSET ACCOUNTS

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