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.
• 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
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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/all
ocationadjustment (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 Statement
Description
Monthly Totals
Year to Date Totals
INCOME:
HUD Operating Fund
6,000
24,000
Tenant Rents
3,000
12,000
400
1,200
9,400
37,200
Administrative
5,000
20,000
Utilities
1,000
3,000
Maintenance
6,000
24,000
General
2,000
6,000
Operating Expenses
14,000
53,000
Operating Profit (Loss)
(4,600)
(15,800)
Other Revenues
Operating Income
EXPENSES:
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 Assets
Description
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 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.