Accounting 101for 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.

• Approved submissions were based on data approved in HUD’s FASS system as of October 31, 2011

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.

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

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

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.

Board Operating StatementDescription Monthly Totals Year to Date Totals

INCOME:HUD Operating Fund 6,000 24,000Tenant Rents 3,000 12,000Other Revenues 400 1,200

Operating Income 9,400 37,200

EXPENSES:Administrative 5,000 20,000Utilities 1,000 3,000Maintenance 6,000 24,000General 2,000 6,000

Operating Expenses 14,000 53,000

Operating Profit (Loss) (4,600) (15,800)

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.

Change in Unrestricted Net AssetsDescription Amount

Unrestricted Net Assets 12/31/2010 300,000

Results of Operations (from Rev/Exp. St.) ( 50,000)

Adjustments:

Depreciation (1) 25,000

Capital Grants (2) (60,000)

Other Capital Expenditures (3) (20,000)

Unrestricted Net Assets 12/31/2011 195,000

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.

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)

PHAS Financial Matters to Remember• Tenant Accounts Receivable Make certain you write off any uncollectible debts

prior to the end of the year.

• Accounts PayableIf 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.