CAPER Development 2017 NCDA Conference Miami Florida June

CAPER Development 2017 NCDA Conference Miami, Florida June 15, 2017 10: 40 -12: 10 Maria F. Eisenhart, CPA

Financial Information PR 26 IDIS Report: PR 26 CDBG Financial Summary Report: This report is the original report. It documents a grantee’s compliance with the low to moderate income benefit requirement, the amount obligated and expended for public services, and the amount for planning and administration for selected program year. PR 26 -Activity Summary by Selected Grant: This report became available on July 25, 2016. It documents the grantee’s compliance with the amount of CDBG funds expended for planning and administration. This is a new requirement under § 570. 200(g)(1) as a result of grant based accounting being implemented. This report is designed to provide information for 2015 origin year grants and onward.

CDBG Regulations Associated with the PR 26 Report 24 CFR 570. 200(a)(3) states that the primary objective of the HCDA is to ensure that, over a period of time specified in the grantee’s certification not to exceed three years, not less than 70 percent of the aggregate of CDBG fund expenditures shall be for activities benefiting low and moderate-income persons. 24 CFR 570. 201(e)(1) states that the amount of CDBG funds used for public services shall not exceed 15 percent of each grant, plus 15 percent of program income, as defined in § 570. 500 (a). For entitlement grantees, compliance is based on limiting the amount of CDBG funds obligated for public service activities in each program year to an amount no greater than 15 percent of the entitlement grant made for that program year plus 15 percent of the program income received during the grantee’s immediately preceding program year.

CDBG Regulations Associated with Planning and Administration 24 CFR 570. 200(g) contains two tests. Paragraph (g)(1) states that no more than 20 percent of any origin year grant shall be expended for planning and program administrative costs, as defined in § 570. 205 and § 570. 206, respectively for origin year 2015 grants and subsequent grants. Expenditures of program income for planning and program administrative costs are excluded from this calculation. Paragraph (g)(2) states that the amount of CDBG funds obligated during each program year plus administrative costs, as defined in § 570. 205 and § 570. 206, respectively, shall be limited to an amount no greater than 20 percent of the sum of the grant made for that program year (if any) plus the program income received by the recipient and its subrecipients (if any) during that program year. Funds from a grant of any origin year may be used to pay planning and program administrative costs associated with any grant of any origin year.

How Grant-Based Accounting interim rule impacts the PR 26 Report The grant based accounting interim rule implements two distinct compliance tests under § 570. 200(g) for planning and administration funds: the existing obligation test and a new origin year expenditure test. The grantee must pass both tests to meet compliance Program year obligation test (§ 570. 200(g)(2)) This test has always occurred, and continues to be located in Part V of the PR 26 CDBG Financial Summary report. The amount of CDBG funds obligated during each program year for planning plus administrative costs, as defined in § 570. 205 and § 570. 206, respectively, must be limited to an amount no greater than 20 percent of the sum of the grant made for that program year plus the program income received by the recipient and its subrecipients (if any) during that program year.

How Grant-Based Accounting interim rule impacts the PR 26 Report (Con’t) Origin year grant expenditure test: (§ 570. 200(g)(1)) This is a new test and required for 2015 CDBG origin year grants and subsequent origin year grants. No more than 20 percent of any origin year grant shall be expended for planning and program administrative costs, as defined in § 570. 205 and § 570. 206, respectively. Program income expenditures for planning and program administrative costs are excluded from this calculation. Funds from a grant of any origin year may be used to pay planning and program administrative costs associated with any grant of any origin year. HUD has developed a new IDIS report, “PR 26 - Activity Summary by Selected Grant” to determine compliance for the origin year expenditure test.

Best Practices PR 26 Con’t Should be printed at least once a month and reviewed as part of the month end closing. Review transactions and new activities added. Verify that percentages are within the limits at least quarterly. Year-end- Calculate accruals for Planning and Administration if any. Reconcile to the Financial System Subsequent to year end make sure all draws indicate the year of the expenditure.

IDIS Reports Needed to Review PR 26 PR 03 -CDBG Activity Summary Report PR 07 - Drawdown Report by Voucher Number PR 09 – Program Income Detail Report by Program Year and Program PR 26 – CDBG Financial Summary Report (Prior Year)

Corrections Update IDIS and run the report again- One day delay Manually enter adjustments in the report: Corrections and adjustments may made be manually on any line labeled “Adjustments” in each section of the report. Manual correction on this report require a narrative explanation for each adjustment by activity and amount. Grantees must maintain documentation to support all adjustments made on the PR 26 report.

Questions? Maria F. Eisenhart, CPA Department of Community and Economic Development meisenhart@miamigov. com City of Miami Resources: https: //www. hudexchange. info/resources/documents/Updated-Instructions-Completing. CDBG-Financial-Summary-Report-Pr 26. pdf