Looking for a CPA firm to perform an audit for your Public Housing Authority? As part of the request for proposal process, you can request a copy of a CPA firm’s most recent peer review report. It’s important to know how to read these reports so that you can be sure you’re hiring the best firm for the job. Here are the basics.

About Peer Reviews

The AICPA (American Institute of CPAs) requires every member CPA firm that performs audits, reviews, or compilations to undergo a peer review every three years. A peer review is an independent, external review of a CPA firm’s accounting and auditing practice that assesses a firm’s quality control system and adherence to professional standards.

Firms can receive one of three ratings: (1) pass, (2) pass with deficiencies, or (3) fail. Any firm that receives a rating other than “pass” is required to undergo a process called remediation, a point-by-point plan to correct any deficiencies identified during the review.

There are two types of peer reviews: system reviews and engagement reviews.

System reviews: A reviewer evaluates all elements of the CPA firm’s quality control system for performing accounting and auditing work, including a sample of the firm’s engagements. System reviews are required for member firms that perform audits, Yellow Book work (Generally Accepted Government Auditing Standards), or attestation services.

Engagement reviews: A reviewer evaluates a sample of the firm’s accounting work. Engagement reviews are conducted for firms that do not perform audits, but perform other accounting work, such as reviews and compilations.

Why are Peer Reviews Necessary?

Since financial statements are often used to make important management decisions, audits and accounting work must adhere to strict professional standards. Peer reviews ensure that CPA firms are operating within these professional standards. If deficiencies are identified, the remediation process holds CPA firms responsible for correcting these deficiencies. Peer reviews also increase public transparency, with many peer review reports publicly accessible on the AICPA’s Peer Review Public File Search.

How to Read a Peer Review Report

Any firm you are considering hiring for an audit should have a system review report. As mentioned above, a firm can receive one of three ratings on its peer review: “pass”, “pass with deficiencies,” or “fail.” Here’s what those results mean.

Pass: A rating of “pass” indicates that the firm’s quality control system is appropriately designed and compliant with professional standards.

Pass with Deficiencies: A rating of “pass with deficiencies” signifies that, except for the specific deficiencies described, the firm’s quality control system is appropriately designed and compliant with professional standards.

Fail: When a system review report receives a rating of “fail,” the reviewer has determined that as a result of significant deficiencies, the firm’s quality control system was not suitably designed or compliant with professional standards.

What to Look for in a Peer Review Report

1. Verify that the report is recent (within the last three years).
2. Make sure the auditor has experience in GAS and/or single audits. This information can be found under the “Required Selections and Considerations” section of the report.
3. Ideally, you want your auditor’s peer review report to have a rating of “pass.”
4. If the rating is “pass with deficiencies” or “fail,” are the deficiencies related to GAS or single audits? If the answer is yes, you’ll want to go with another auditor.

Choosing an Auditor You Can Trust

When it comes to hiring a CPA firm, reputation matters. Peer reviews are important not only for monitoring the quality of service and compliance of accounting firms, but also for protecting the public interest. RBT CPAs has participated in the peer review program for over 30 years, only ever receiving “pass” reports. When you work with RBT, you can be confident you are working with highly experienced accounting professionals, with a reputation for integrity and excellence. Give us a call today to learn more about our accounting, tax, audit, and advisory services—and find out how we can be Remarkably Better Together.

The budget reconciliation bill, known as the One Big Beautiful Bill Act (OBBBA), after being passed by the Senate and House, was signed into law by the president on July 4. This expansive piece of legislation introduces significant changes to existing tax and spending policies, impacting a wide range of government departments and funding sources. This article addresses some of the changes under the OBBBA relevant to the affordable housing space, as well as some policies that remain unchanged for now.

GRRP Funds Rescinded

The OBBBA rescinds all unobligated funding appropriated to the Green and Resilient Retrofit Program (GRRP). The GRRP is a program administered by HUD and funded by the Inflation Reduction Act (IRA), designed to improve the energy efficiency, water efficiency, and climate resilience of HUD-assisted multifamily properties. The program provided funding to owners of HUD-assisted multifamily housing for investments in green technologies, climate resilience strategies, and energy-efficient projects. The elimination of the GRRP may disrupt previously planned projects and may add strain to PHA budgets due to potentially higher energy costs.

Expansion of Low-Income Housing Tax Credit (LIHTC)

The OBBBA permanently increases allocations for 9% LIHTC by 12%, and also permanently reduces the private activity bond financing requirement for 4% LIHTC from 50% to 25%. These changes will become effective January 1, 2026. This expansion will encourage investment in the Low-Income Housing Tax Credit program and is expected to increase the affordable rental housing supply.

Qualified Opportunity Zones and New Markets Tax Credit Made Permanent

The OBBBA makes the Opportunity Zones (OZ) tax incentive permanent, with several modifications, including a narrower definition of “low-income community” and expanded reporting requirements. Every ten years, state governors will propose new opportunity zones. The bill also includes additional incentives for rural opportunity zones. The OBBBA also makes the Sec. 45D New Markets Tax Credit (NMTC) permanent. These provisions will encourage investment and construction in economically distressed communities and rural areas.

Changes to Medicaid and SNAP

The stricter eligibility requirements and funding cuts to Medicaid and SNAP programs imposed by the OBBBA will likely impact tenants of PHAs. Reduced access to government-funded benefits will require tenants to allocate more of their income towards food and medical costs, which may make it difficult for some to afford rent. As a result, housing authorities may face heightened rent collection challenges, including increased instances of arrears, evictions, and lease violations.

What the OBBBA Has Not Changed

1. The OBBBA does not make any cuts or structural changes to Section 8, public housing, or HUD rental assistance. While the proposed FY26 budget includes potential significant cuts to HUD, funding for these programs remains unchanged for now as the FY26 budget is yet to be finalized.
2. The OBBBA does not impose work requirements or two-year limits on rental assistance recipients, two proposals that have been put forward in recent months.

Conclusion

While HUD programs themselves may not be significantly impacted by the passage of the One Big Beautiful Bill Act, some provisions of the new legislation will affect tenants of PHAs, as well as the wider affordable housing space. For more information about the recent tax law changes, please don’t hesitate to reach out to our experts at RBT CPAs. And as always, RBT CPAs is here to support all of your PHA’s accounting, audit, tax, and advisory needs. Contact us today to find out how we can be Remarkably Better Together.

Single audits—required for all non-federal entities expending over $750,000 in federal assistance during the fiscal year—examine an organization’s financial statements and compliance with federal award requirements. Single audits look at an entity’s financial records, policies, documentation, and internal controls, as well as how the organization spends its financial awards. These audits are a key element of oversight of federal funds, helping to detect mismanagement of funds, noncompliance, fraud, and waste. Below are five common findings in HUD single audits, as well as best practices PHAs can follow to avoid these findings.

1. Lack of Controls Over Eligibility

PHAs are required to maintain internal controls to provide reasonable assurance of compliance with grant/program requirements, including controls over program eligibility. During an audit, the PHA’s internal controls are documented and tested. Common control weaknesses found include (1) no formal checklist or process to ensure all HUD-required documentation is collected, and (2) no supervisory review of tenant files before completion.

 Best Practice: Lacking internal controls over eligibility can lead to improper payments, admission of ineligible individuals, and repeat audit findings. PHAs can avoid these findings by maintaining a checklist for housing representatives to use during the admission and/or recertification process for each potential tenant to ensure all compliance requirements are met. The checklist should be signed or initialed by the housing representative performing the admission/recertification, reviewed and signed by a supervisor, and maintained in the tenant’s file to serve as documentation that all compliance requirements were verified.

2. Noncompliance with Federal Procurement Standards

PHAs are required to follow procurement standards including: maintaining a written procurement policy that complies with federal, state, and local regulations, using procurement methods by various procurement thresholds approved by HUD, conducting procurements in a manner that provides full and open competition, avoiding conflicts of interest, and ensuring contractors are not debarred or suspended. Common compliance findings include (1) no written procurement policy or outdated procurement policies that do not align with Uniform Guidance, (2) failure to follow procurement methods based on size of purchase, (3) failure to maintain proper records documenting procurement details, and (4) failure to verify that selected contractors were not suspended or debarred.

Best Practice: PHAs can avoid these findings by periodically reviewing and updating their procurement policies to ensure they are current and in line with appropriate laws and regulations. PHAs should also implement internal controls to ensure that proper procurement methods are used, document procurements thoroughly and maintain documentation in a secure location, and establish a process for verifying that vendors are not debarred or suspended before contracting with them.

3. Reporting Errors

PHAs are required to follow various reporting requirements depending on the programs they administer which can include Voucher Management System (“VMS”), Section 8 Management Assessment Program (“SEMAP”), form HUD-50058, and Financial Data Schedule (“FDS”). These reports are reviewed during the audit process. Common issues found during review include (1) mismatched financial data between the accounting system and reports being submitted to HUD, (2) failure to submit data, (3) failure to submit reports in a timely manner, and (4) missing forms.

Best Practice: PHAs can avoid these findings by implementing proper controls over each reporting requirement. For VMS reporting, PHAs should create a monthly reconciliation checklist and compare VMS entries against the accounting system. For HUD-50058, PHAs should submit these forms promptly (within 60 days of any tenant action), review error reports, automate data quality checks, and have a supervisor review the work of lower-level employees. For the SEMAP reporting, PHAs should implement a control to ensure this is submitted timely. SEMAP indicators should be tracked throughout the year to ensure timeliness. To ensure the FDS is submitted to the REAC FASS system timely and accurately, PHAs should establish clear controls and responsibilities amongst staff and third-party accountants. Accounts should be reconciled routinely to ensure there are no reporting delays at year-end. Documentation should be maintained for all reporting requirements.

4. Housing Quality Standards and Enforcement

PHAs are required to meet minimum physical standards which requires the PHA to have initial and routine unit inspections performed. Any failed inspection must be remedied in a timely manner. Common audit findings include (1) lack of evidence of inspection performed, (2) failure to correct deficiencies in a timely manner, and (3) failure to abate rent on units where deficiencies are not corrected in a timely manner.

Best Practice: To avoid audit findings related to housing quality standards and enforcement, PHAs should use inspection tracking software, maintain a listing of all inspections performed including any failures and dates of reinspections, maintain copies of unit inspections in the tenant’s files, and ensure rent is abated for any units where deficiencies are not remedied timely.

5. Recording of Declarations of Trust

A current Declaration of Trust, in a form acceptable by HUD, must be recorded against all public housing property owned by PHAs that have been acquired, developed, maintained, or assisted with funds from the U.S. Housing Act of 1937. During testing, common audit findings related to Declarations of Trust include the inability to locate the required documents for properties of the PHA.

Best Practice: To avoid audit findings, PHAs should complete and maintain a Declaration of Trust for all properties of the PHA and establish controls over these forms to ensure they are completed, current, and maintained in a secure location.

Further Guidance

For additional guidance on single audit preparation, please don’t hesitate to reach out to RBT CPAs. Connect with our experts today and find out how we can be Remarkably Better Together.

By October 1, 2025, HUD-assisted properties must implement the NSPIRE standards, a new set of standards for physical inspections of HUD properties. HUD property owners and landlords should familiarize themselves with the new standards and implement the required changes to inspection procedures prior to the October 1 compliance date.

NSPIRE Overview

The NSPIRE Standards, replacing the Uniform Physical Condition Standards (UPCS) and the Housing Quality Standards (HQS), provide a new inspection model for HUD-assisted properties. NSPIRE, standing for the National Standards for the Physical Inspection of Real Estate, aims to improve the quality of HUD housing by focusing on the health, safety, and functionality of HUD properties. To allow HUD programs sufficient time to prepare for NSPIRE implementation, the compliance date for many programs was extended from October 1, 2023 to October 1, 2025. Properties wishing to implement NSPIRE before the compliance date are encouraged to do so, but must notify HUD of their planned transition date.

NSPIRE defines three different inspectable areas of HUD properties: “unit,” “inside,” and “outside.” The “unit” refers to the interior components of a building such as bathrooms, kitchens, carbon monoxide and smoke detectors, ceilings, floors, HVAC units, and lighting. “Inside” refers to common areas within the interior of the building such as basements, community rooms, utility rooms, laundry rooms, halls, stairs, offices, and shared kitchens. Also included under the “inside” category are building systems providing electricity, water, emergency power, etc. “Outside” refers to all building systems and components located outside of the building such as grounds, fences, mailboxes, lighting, parking lots, play areas, roads, walkways, storm drainage, balconies, fire escapes, and roofs. For a complete list of inspectable components, see page 1 of the NSPIRE Standards.

The standards use the terms “life-threatening,” “severe,” “moderate,” and “low” to describe the risk level of deficiencies identified during inspection. NSPIRE specifies the deficiency criteria, health and safety determination, rationale, and correction timeframes for each inspectable component. Life-threatening deficiencies must be addressed within 24 hours, while all other deficiencies must be corrected within 30 days (or a reasonable longer period determined by the PHA).

NSPIRE introduces several new protocols and requirements for property inspections. These include: new requirements for smoke and carbon monoxide alarms, new inspection processes and repair timeframes for infestations, new repair guidelines and timeframes for handrails and guardrails, and new processes and equipment for detecting mold-like substances.

How to Prepare for NSPIRE

According to HUD’s website and the NSPIRE Toolkit Cheat Sheet, landlords and owners of HUD properties can prepare for the upcoming compliance date in the following ways:

• Carefully review the NSPIRE Standards (HUD provides this guide for reading the standards).
• Refer to HUD’s notice on NSPIRE administrative procedures for details on inspection timeframes, preparation, and protocols.
• Review the “Preparing for an NSPIRE Inspection” guide for landlords.
• Train staff on new protocols and requirements.
• Ensure that property profiles and contact information are correct (more details can be found on page 7 of HUD’s notice under “Property Verification and Document Collection”).
• Perform regular preventative maintenance to identify and correct potential issues and hazards.
• Consider resident feedback and respond promptly to resident concerns.
• Utilize HUD’s NSPIRE Toolkit for additional resources, guidance, and training videos.

While you’re busy preparing for the upcoming NSPIRE compliance date, please know that RBT CPAs is here to support all of your accounting, tax, audit, and advisory needs. Reach out to us today and find out how we can be Remarkably Better Together.

Public Housing Authorities (PHAs) can become vulnerable to fraud and corruption—by both external and internal parties— if proper precautions are not taken to safeguard these agencies against such risks. This article will discuss the measures Public Housing Authorities can take to prevent and detect potential fraud risks.

Types of Fraud

The Office of the Inspector General lists several of the most common fraud schemes that occur in Public Housing Authorities and other organizations that receive Housing and Urban Development funds. Some examples of common schemes are:

• Embezzlement and theft
• Contracting and procurement fraud
• Bribery and kickbacks
• Conflicts of interest
• Identity theft
• Disaster recovery grant fraud
• False billing
• Tenant/applicant fraud

Establishing a Formal Fraud Policy

The most important means of fraud prevention is a formal fraud policy. A formal fraud policy should be comprehensive, outlining the procedures for preventing and responding to fraud. The policy should be accessible and easily understood by tenants and employees. According to the Office of the Inspector General, a formal fraud policy should accomplish the following: declare the organization’s commitment to preventing fraud, lay out the activities that constitute fraud, ensure confidentiality in reporting, identify officials with authority to investigate suspected fraud, state the consequences and penalties for fraud, assure due process, and provide instructions for reporting suspected fraud. PHAs should consult with legal counsel to review their fraud policies and ensure compliance with tenant-landlord laws, as well as alignment with HUD policies.

Educating Relevant Parties

Awareness of a PHA’s fraud policy and procedures is key in fraud prevention. PHAs should make their fraud policies accessible to management, tenants, employees, contractors, and other relevant parties by distributing printed copies, hanging posters in common areas, and/or making the policy available online. Employees and stakeholders should be trained to recognize and report suspicious activity. Awareness of a strong anti-fraud policy can also help to deter potential fraudsters.

Maintaining Strong Preventative Procedures and Internal Controls

To safeguard against fraud, PHAs must have board-approved operational and financial procedures in place. These procedures should include systems for verifying tenant eligibility, policies for vetting vendors and third-party service providers, and regular risk assessments to determine the likelihood of various fraud scenarios. PHAs should conduct regular reviews and audits of processes and controls to ensure compliance and effectiveness. In addition to periodic audits, PHA staff should monitor data and transactions on a daily basis. Data analytics and AI technology can be utilized to improve the accuracy and efficiency of monitoring processes.

Establishing a Whistleblower System

PHAs must ensure that the systems in place for reporting fraudulent activity are clear, accessible, and confidential for those reporting. Whistleblowers who report suspected fraud, waste, or abuse are protected by the law from retaliation.

How Can an Accounting Firm Help Mitigate Fraud Risk?

It is critical that the proper policies and procedures are in place to prevent and detect fraud threats—from both inside and outside of the organization. A reliable accounting firm can help carry out these crucial procedures.

RBT CPAs provides a variety of services that help prevent fraud within Public Housing Authorities and other organizations. These include:

1. Internal control assessments: review controls to ensure proper checks and balances are in place to prevent fraud (segregation of duties, approval processes, etc.).
2. Fraud risk assessments: identify areas within the Authority’s operations with greater potential for fraud.
3. Agreed-Upon Procedures: perform specific tasks requested by an Authority, such as reviewing selected financial information.
4. Annual financial and compliance audits: conduct independent audits to ensure accuracy and compliance with accounting standards and regulatory requirements.
5. Consulting/Advisory services: provide insight and advice on various topics, such as strategies to mitigate financial, operational, and compliance risks; assist with the development of policies and procedures.
6. Bookkeeping/Fee Accounting services: maintain accurate financial records and assist the Authority in maintaining compliance.
7. Forensic audits: examine the Authority’s financial records for evidence of suspected fraud.

Protecting Public Housing Authorities from fraudulent activity is crucial for maintaining the operational integrity and reputation of these agencies. RBT CPAs’ accounting, tax, audit, and advisory experts are here to help safeguard your organization from fraud. Call us today and find out how we can be Remarkably Better Together.