Don’t Take The FDS Lightly – 5 Tips For a Successful FDS Submission

June 2017

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The Financial Data Schedule (FDS) is a standardized tool created by HUD to submit financial information from PHAs to HUD. The FDS is used to help HUD monitor PHAs’ financial information, assist in calculating operating subsidy for each PHA, generate Financial Assessment Sub-System (FASS) and Management Assessment Sub-System (MASS) scoring, and calculate excess cash and operating reserves. This article will provide guidance and tips to ensure the FDS is submitted correctly to prevent any loss of funding, prevent audit findings, and assist to complete correct calculations of FASS & MASS ratios and operating reserves.

The un-audited FDS is due to HUD two months following the PHA’s year-end. The PHAs also have a 15-day grace period to submit the FDS after the un-audited due date. The FDS is still considered late when the un-audited FDS is submitted during the grace period, but the PHAs are not penalized any points on the FASS. The audited FDS is due nine months following the PHA’s year-end. There is no grace period for audited submissions. 


FDS Submission Schedule 

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1.   FDS Line 115 - Cash Restricted for Payment of Current Liability

This FDS line item represents restricted cash and cash equivalents that are only to be expended for specified restricted purposes, but will be used in the next fiscal year and are supported by a reported current liability / unearned revenue. The restriction on the use of the funds has been imposed by the source of the monies, not the PHA.

This line item should not be used to restrict cash related to common operational liabilities such as account payable and wages payable. Examples of cash-restricted for payment of current liability include such items as:
  • Cash balances associated with advances of grant and subsidy funds not yet earned;
  • Debt service payments;
  • Cash in the PHA’s family self-sufficiency (FSS) escrow account that will be used for payment of contracts due within 12 months of the balance sheet date; and
  • Cash restricted for modernization and development up to the amount of any associated and reported current liability.Utilizing this line would be ideal for the current portion of energy performance contracting debt. This will allow the PHA to maximize the FASS and excess cash ratios without overstating the amount of operating reserves.
 

2.   FDS Line 127 - Notes, Loans and Mortgages Receivable - Current

This FDS line represents unconditional written promises, signed by the maker, to pay a certain sum of money on demand or at a fixed or determinable future time (within 12 months after the fiscal year-end). This line includes amounts due to the PHA as evidenced by all formal instruments of indebtedness, such as loans to local off-site facilities not included in the development cost of the project. Scheduled periodic payments made against the note or mortgage are current and within the terms of the written document. Amounts that are past due and considered uncollectible should be recorded as past due (along with the remaining balance of the associated note or mortgage) on FDS Line 172. FDS Line 127 is typically used as part of the homeownership program to record loan receivables from the participating family.

If the PHA elected to report repayment agreements for public housing tenants on this line and not FDS Line 126, Tenants Accounts Receivable (TAR), it would help increase the TAR sub-indicator of MASS.
 

3.   FDS Lines 144 and 347 - Inter-fund Receivables and Payables

This FDS line represents amounts due from / to other PHA projects, programs, and funds of a temporary nature. This balance represents inter-program transactions resulting in a decrease of unrestricted resources of the transferring PHA program and funds that are expected to be repaid “within a reasonable time” during the operating cycle. The expectation is that the receiving program has the intent and available funds to repay the inter-program balance, but was not able to complete the repayment due to accounting period cut-off. Reasonable time is a matter of professional judgment, however, it is recommended that reconciliation and repayment occur monthly. Reconciliation and repayment should not exceed the annual operating cycle of the PHA. Transactions between funds may be classified as: (1) loans and advances, (2) quasi-external transactions, and (3) reimbursements.

A good point to clarify here is that the inter-fund is temporary in nature and can be repaid in a reasonable time. When a PHA has an inter-fund activity on the general ledger, it should be reported on FDS Line 111 - Cash. If the amount is reported as an inter-fund on FDS Line 144/347, then the Real Estate Assessment Center (REAC) may reject the FDS and notify your field office for further explanation of the inter-fund activity.

 

4.   FDS Line 345 - Other Current Liabilities

This FDS line represents any current liability not specifically listed above. This line represents items such as earnest money, good faith deposits by contractors and bond purchasers, deposits on blue prints, liabilities related to FSS contracts due within 12 months of the balance sheet date, etc. Tenant security deposits are not included since they are posted to FDS Line 341. This line also represents any other current liabilities of the PHA not categorized in any of the lines above. This line item may also include FASB 5 current liabilities.

We recommend capital fund payables be reported on this FDS line and not FDS Line 312 - Accounts Payable. If the PHA reports capital fund payables on FDS Line 312, it will reduce the PHA’s accounts payable sub-indicator and reduce the overall MASS ratio.
 

5.   FDS Line 70300 - Net Tenant Rental Income

This FDS line represents net revenue related to tenants’ dwelling rent. Dwelling rent also includes credit amount for which the participant is entitled to a utility allowance payment. If the rent calculation, after deducting the utility allowance, results in a utility reimbursement due to the tenant, the amount of such utility reimbursement is included as a debit to this account. Rental revenue received as a result of fraud recovery should be reported on FDS Line 71400.

Since HUD will use this FDS line number for public housing operating subsidy purposes, this line should only report dwelling rental income and not other tenant charges. The higher the dwelling rental income the less subsidy a PHA will receive. So the idea is to keep this number as low as possible for subsidy purposes. Other tenant charges should be reported on FDS Line 70400.
 
Part 2 of this article will be in our next alert with more tips to help improve subsidy, prevent FDS rejections, and protect operating reserves.
 
If you have questions regarding matters discussed above, please contact Brian Alten.

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