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Accounting 101 for Executive Directors

Accounting 101 for Executive Directors. Public Housing. Calculation of a PHA’s Operating Reserves. HUD calculated operating reserves based on PHA approved audited FDS submissions with fiscal years ending in 2010 for June 30, September 30 & December 31 PHAs and March 31, 2011 PHAs.

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Accounting 101 for Executive Directors

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  1. Accounting 101for Executive Directors Public Housing

  2. Calculation of a PHA’s Operating Reserves • HUD calculated operating reserves based on PHA approved audited FDS submissions with fiscal years ending in 2010 for June 30, September 30 & December 31 PHAs and March 31, 2011 PHAs. • Approved submissions were based on data approved in HUD’s FASS system as of October 31, 2011

  3. Minimum Operating Reserve Levels • PHAs with 250 or more public housing units, the minimum operating reserve level was established at the greater of: 4 months of formula operating expenses, or$100,000 • PHAs with 249 or less public housing units, the minimum operating reserve level was established at the greater of: 6 months of formula operating expenses, or $100,000 • Operating Expenses were determined by summing the Formula Expenses on form HUD-52723(Part A, Line 17) and the Transition Funding (Part C, Line 2) on all of the PHA’s project calculation of operating subsidy forms.

  4. Calculation of a PHA’s Operating Reserves • ADD: • FDS # 111 Cash-Restricted • FDS # 114 Cash – Tenant Security Deposits • FDS # 120 Total Receivables • FDS # 131 Investments – Unrestricted • FDS # 142 Prepaid Expenses and Other Assets • FDS # 145 Assets Held for Sale • SUBTRACT: • FDS # 310 Total Current Liabilities minus FDS #343 Current Portion of Long Term Debt – Capital Projects

  5. Individual PHA Allocation Adjustment • HUD has posted on its website an Excel Tool which will give each PHA the information on how the allocation adjustment was determined for their PHA • http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/programs/ph/am/of/opfnd2012/allocationadjustment (This website is also found on your obligation letters dated March 2, 2012) • Scroll down to CY2012 Operating Reserves and Allocation Adjustment Tool (then click on it) This brings up an Excel spreadsheet. • Enter your 5 digit HA Code and press enter

  6. HUD Suggested Monthly Board Financial Reports • Summary of Revenue/Expense Statements • Latest Bank Reconciliation • Check Vouchers Issued • Tenant Accounts Receivable The Board and ED should determine the type of reports and frequency. Any reports used should be included in the Board Minutes.

  7. Board Operating Statement

  8. End of Year Financial Statements • Most everyone is familiar with seeing the end of year Statement of Net Assets (Balance Sheet) and the Revenue and Expense financial statements. • However, there is one other financial statement which can be produced by your accountant called Change in Unrestricted Net Assets. • The Change in Unrestricted Net Assets is a reconciliation using the information from the Statement of Net Assets and the Revenue and Expense financial statements which reflects what effect operations had on your Unrestricted Net Assets.

  9. Change in Unrestricted Net Assets

  10. Notes to Change in Unrestricted Net Assets • (1) Depreciation is treated as an expense and reduces the Results of Operations but does not have an impact on Unrestricted Net Assets. • (2) Funding provided for Capital Grants, pursuant to GASB 33, is presented as Revenue, however the revenue is absorbed by the associated capital expenditures and therefore, does not increase Unrestricted Net Assets. • (3) Other Capital Expenditures represent an outflow of Unrestricted Net Assets that is not reflected in the Results of Operations.

  11. Financial Matters to Remember • Be consistent in drawing down your Operating Fund monies (do not skip months) • Large PHAs with a COCC should monthly charge AMPs and other programs (Section 8) the applicable management fee, asset management fee and bookkeeping fee. • Any purchase of a Capitalized Asset (vehicles, equipment, etc.) will reduce your Unrestricted Net Assets (Operating Reserves)

  12. PHAS Financial Matters to Remember • Tenant Accounts Receivable Make certain you write off any uncollectible debts prior to the end of the year. • Accounts Payable If you incur any large bills (more than the norm) during the last month of the fiscal year, make certain you pay these prior to the end of the fiscal year.

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