Understanding the Personal Property Requirements: PIH Notice 2022-37

PIH Notice 2022-37 provides guidance on compliance requirements, per 2 CFR 200, for two components of Personal Property: Equipment and Supplies. Real property means property other than real property (land), but it may be tangible, having physical existence. This article will provide an understanding of capitalization thresholds to differentiate between equipment and supplies, compliance requirements, disposition of equipment and accounting treatment.


Tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the PHA for financial statement purposes, or $5,000. This is basically a capital asset purchase. This is best defined as:

  • Tangible or intangible assets used in operations having a useful life of more than one year which are capitalized in accordance with GAAP. 
    • Capital assets include: 
      • Land, buildings (facilities)
    • Equipment
    • Intellectual property (including software) whether acquired by purchase, construction, manufacture, exchange, or through a lease accounted for as financed purchase under Government Accounting Standards Board (GASB) standards or a finance lease under Financial Accounting Standards Board (FASB) standards; and 
    • Additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations or alterations to capital assets that materially increase their value or useful life (not ordinary repairs and maintenance). 
  • For purposes of this part of CFR 200.1, capital assets do not include intangible right-to-use assets (GASB 87: Leases) and right-to-use operating lease assets (per FASB ).


All tangible personal property other than those described in the definition of Equipment as noted above. A computing device is a supply if the acquisition cost is less than the lesser of the capitalization level established by the non-Federal entity for financial statement purposes or $5,000, regardless of the length of its useful life. 

When a PHA determines the capitalization threshold (dollar amount), the PHA has the discretion to set the amount at $5,000 or lower. The lower the threshold, the more items the PHA will have to maintain on its depreciation schedule and ultimately create more work for the PHA and increase the inherent risk of errors for depreciation calculations and maintaining property records that could lead to audit findings. There is also the argument that the lower the threshold is, the more operating costs will be incurred and decrease the Months Expendable Net Asset Ratio (MENAR). Based on various PHAs we have worked with, both large and small, the $5,000 threshold had a minimal impact on the MENAR ratio. 

HUD recommends PHAs review their capitalization threshold to see whether it effectively balances Personal Property control with the associated administrative burden imposed by a capitalization level below the upper-dollar limit for Equipment of $5,000.  Should PHAs determine their current capitalization levels are too low or too high, capitalization policies should be amended accordingly, and the associated changes must be carried through to the financial statements.

The requirements for management of the equipment  include the following:

  1. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number (FAIN)), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and 3 condition of the property, and any ultimate disposition data, including the date of disposal and sale price of the property. 
    PHAs are encouraged to utilize the Tangible Personal Property Report – Supplemental Sheet Form SF-428S and that form’s instructions to maintain Equipment property records. Subject to future rulemaking by HUD, the SF-428S may become compulsory for maintaining Equipment property records.
  2. A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years. 
  3. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. 
  4. Adequate maintenance procedures must be developed to keep the property in good condition. 
  5. If the PHA is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return.

When a PHA wants to dispose of equipment, the PHA must dispose of equipment following 2 CFR 200.313. 

  1. Items of Equipment with a current per unit fair market value of $5,000 or less may be retained, sold or otherwise disposed of with no further obligation to HUD. This means the PHA can transfer the proceeds of the disposition of the equipment to a business activity or the COCC because the funds are considered non-federal. This regulation can help small PHAs, that don’t necessarily have an opportunity to generate non-federal funds to obtain some non-federal funds by disposing of equipment.
  2. For those items of Equipment with a current market value of greater than $5,000, PHAs must compensate HUD for its interest in the Equipment. HUD will be due an amount calculated by multiplying the current market value or proceeds from the sale of the Equipment by the Federal awarding agency's percentage of participation in the cost of the original purchase. If the Equipment is sold, HUD may permit the PHA to deduct and retain from HUD’s share $500 or ten percent of the proceeds, whichever is less, for its selling and handling expenses. 
    The address to remit proceeds less administrative expense is
    US Bank 
    HUD FAD Collections – Ft. Worth 
    PO Box 6200-05 
    Portland, OR 97228-6200 
  3. On a case-by-case basis, PHAs that would otherwise be required to compensate HUD may request that HUD grant an exception to the compensation requirement. Any PHA electing to request an exception pursuant to 2 CFR § 200.102(b) must follow the same process outlined in PIH Notice 2018-16 Regulatory Waivers.

Adhering to the guidance for administrative requirements related to equipment is important. Following this Notice, independent auditors are more likely to focus on testing in this area. Working with your consultant or fee accountant can help answer any questions you have in relation to this notice. 

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