Many CPA firms across the country face confusion with Rural Development (RD)’s new guidelines for FY 2018 financial reporting. Lemler Group’s recent correspondence with USDA-RD staff members in Washington, DC has clarified which forms are required to be submitted to the agency, and the meanings of key phrases on the Audit Determination Worksheet.

First, if you’re choosing to file under RD’s option 1 (based on type of property and number of units), you will continue to file as normal for FY 2018. However, this is the last year to file with option 1, as option 2 will become mandatory in FY 2019. For those filing with option 2 (amount of federal financial assistance received), your reporting requirements have changed according to the requirements outlined in RD’s Unnumbered Letter (UL) dated February 7, 2019.

For all properties filing under option 2, regardless of your property’s reporting requirements (Single audit, RD Compliance, etc.), you must include a copy of Attachment A: RD Programs Audit Determination Worksheet. This can be found and downloaded from within the UL dated February 7, 2019. You may style it with your firm’s font and letterhead, but it must include all information shown. This is to confirm to RD officials that the property is using option 2 and the associated reporting requirements under the new rule.

Second, Attachment A does not have to be completed by a CPA.

Finally, within Attachment A are a few phrases that have confused many CPA firms and property owners. Specifically, in the current version of the document (as of 3/8/19), step 6 states that properties with no need for any other report must submit a “compilation of prescribed forms. The forms do not have to be in accordance with SSARS by AICPA.” This is a typo. A Finance and Loan Analyst with RD corrected this statement in an email to our firm, saying the following:

This language has been changed in the handbook rewrite, but not in the UL dated February 7, 2019.

This means that for not-for-profit RD properties who have chosen option 2 and who receive less than $750,000 in federal assistance (or for-profit properties with less than $500,000) need only to submit:

  1. Attachment A: RD Programs Audit Determination Worksheet
  2. RD forms 3560-07 and 3560-10
  3. Supporting schedules for the above forms
  4. Borrower’s Certification of Performance Standards

No compilation (as performed by a CPA firm) is required for these properties.

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