LIST OF SUBSTANTIVE CHANGES AND ADDITIONS. PPC s Guide to HUD Audits. Twenty-first Edition (August 2014)

Tax & Accounting P.O. Box 966

Fort Worth, TX 76101-0966

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LIST OF SUBSTANTIVE CHANGES AND ADDITIONS

PPC’s Guide to HUD Audits

Twenty-first Edition (August 2014)

General Update Features. The following are some of the features of the 2014 Edition of PPC’s Guide to HUD Audits.

¯ Current Developments Affecting HUD Audits. Through HUD housing letters and changes in the electronic submission process, HUD continues to issue new guidance that affects your HUD audits and your clients’ reporting responsibilities. YourGuide helps you stay current with practical guidance and audit programs,

checklists, letters, and report examples that are tailored to help you perform your HUD audits effectively and efficiently.

¯ Updated Guidance on Single Audits. If you perform Single Audits of HUD nonprofit entities, you know how complex the auditing requirements are and that they change every year. YourGuide provides up-to-date

guidance and practice aids for performing and reporting on Single Audits of HUD entities, including changes in the 2014 Compliance Supplement and the Data Collection Form. We also keep you informed of big changes on the horizon for the Single Audit process.

¯ New Report Examples and Practice Aids. Your Guide includes new report examples that illustrate an adverse opinion on compliance and a new, optional, practice aid to provide an alternative way to document the performance of a walkthrough. The new practice aid, “Walkthrough Documentation Memo,” assists you in documenting a walkthrough in a memo format that can be used in place of the existing “Walkthrough Documentation Table.” YourGuide also includes a new letter that can be used to request a service auditor’s

report.

¯ Guidance for FHA-approved Title I and Title II Lenders. HUD implemented the new Lender Electronic Assessment Portal (LEAP) for lender recertification and electronic submission of the annual financial reporting package and issued an update of Chapter 7 of the HUD audit guide in May 2014 to reflect the changes. Your Guide discusses the new submission process and the latest developments in HUD

requirements for FHA-approved lenders and mortgagees.

¯ Revision of the AICPA Ethics Code. The AICPA’s new revised Code of Professional Conduct is effective for members on December 15, 2014. YourGuide continues to provide you with up-to-date coverage of

certain AICPA ethics requirements and has been updated for the revised code.

¯ Updated COSO Framework. To help entities design and implement internal control, in May 2013 COSO issued its new Internal Control—Integrated Framework (2013 Framework). The 2013 Framework builds on the previous version and clarifies a number of concepts to make it easier to use and apply. YourGuide,

including the practice aids, has been revised for changes in the 2013 Framework.

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imposed significant new requirements for audits of group financial statements involving the use of component auditors. YourGuide includes new audit procedures for determining if those auditing standards

are applicable and for applying them.

¯ Specialized Disclosure Checklists. The FASB has issued several new ASUs in the past year. Several new ASUs have been issued by the FASB in the past year. YourGuide provides separate disclosure checklists

tailored for for-profit and nonprofit entities that have been updated for the recently-issued standards. Your Guide also includes a checklist for common HUD-specific disclosures and another disclosure checklist for the Schedule of Expenditures of Federal Awards (SEFA) – used in Single Audits.

Chapter Substantive Changes and Additions Reference

Chapter 1

Overview 1. Updated the footnote about the AICPA’s plan to retain theAU-C identifier for the clarified auditing standards. Paragraph 104.4 2. Streamlined the discussion of Government Auditing

Standards—2011 Revision. Paragraphs104.9–.18 3. Added a footnote about HUD Housing Notice H 2013-23,

“Change in Annual Financial Statement (AFS) Submis-sion Requirements for Some Multifamily Housing Projects.”

Paragraph 104.27

4. Updated for issuance of a revision of Chapter 7 of the HUD audit guide as Handbook 2000.04 REV-2, CHG 18 in May 2014.

Paragraphs 104.38, 104.42

5. Updated for new issuances of HUD handbooks. Exhibit 1-1 6. Added a discussion of recent changes to Single Audit

requirements for nonprofit audits in theUniform Adminis-trative Requirements, Cost Principles, and Audit Require-ments for Federal Awards (Uniform Guidance).

Paragraph 104.49

7. Expanded the discussion about the scope of theGuide. Paragraphs 107.2, 107.4, 107.6 8. Updated the list of items in PPC’sGovernment

Docu-ments Library to include the Uniform Guidance. Appendix 1B

Chapter 2

HUD Multifamily Housing Programs

1. Updated the HUD program descriptions with current

funding data. Throughout thechapter.

2. Updated the discussion about the HUD regulatory

agreement for issuance of revisions to HUD Form 92466. Paragraphs 206.2–.3 3. Updated the discussion of the surplus cash calculation

for changes to the HUD-prescribed chart of accounts in the Industry User Guide for the Financial Assessment System—Multifamily Housing (the FASSUB User Guide).

Paragraph 206.14

4. Updated for issuance of HUD Handbook 4350.3 REV-1,

CHG-4. Paragraphs 207.6–.7

5. Updated forms for recent issuances from HUD and updated the note alerting auditors about the expiration of some HUD forms reproduced in the appendix.

Appendix 2B

6. Updated the definition of the glossary term, “surplus

Chapter 3 Accounting

Considerations and Financial Statement Presentation

1. Expanded the discussion about consolidated

submis-sions through FASSUB. Paragraphs300.10–.12

2. Clarified the discussion of other-than-temporary

impair-ment of securities. Paragraphs302.15–.17 3. Added a footnote about ASU 2014-03, Accounting for

Certain Receive-Variable, Pay-Fixed Interest Rate Swaps-Simplified Hedge Accounting Approach.

Paragraph 302.26

4. Added a paragraph about the general source of guid-ance for revenue recognition, including a footnote about the issuance of ASU 2014-09,Revenue from Contracts with Customers.

Paragraph 303.1

5. Updated the discussion about amortization of goodwill for the issuance of ASU 2014-02,Intangibles—Goodwill and Other.

Paragraphs 304.9–.10 6. Added a footnote about issuance of a new standard HUD

regulatory agreement. Paragraph 306.7

7. Added a note about HUD’s new standard regulatory agreement and the effect on the calculation of surplus cash.

Exhibit 3-6 8. Revised the discussion of the financial statements

submitted through FASSUB for clarity. Paragraphs 311.5–.6 9. Updated for revisions in the FASSUB User Guide. Paragraphs 311.7–.9 10. Added a discussion about updates to the FASSUB

system. Paragraph 311.14

Chapter 4

Pre-engagement Considerations and Audit Planning

1. Updated for issuance of the AICPA’s revised Code of

Professional Conduct. Paragraphs 400.6,400.10–.12, 401.6–.24, 402.19, 404.17, 404.19 2. Updated for issuance of the new Uniform Guidance. Paragraphs 400.6,

400.13–.14 3. Updated the discussion of other HUD documents that

should be considered in pre-engagement and planning activities.

Paragraph 400.16

4. Updated the discussion of considerations for nonaudit

services. Paragraph 401.55

5. Added a discussion of professional judgment based on

guidance from the GAS/A-133 AICPA Audit Guide. Paragraphs401.61–.62 6. Expanded the discussion of competency and continuing

education. Paragraphs 401.66,401.69

7. Added a footnote about the instructions to the AICPA’s supplemental peer review checklist for audits of HUD-assisted entities.

8. Added a footnote about HUD Notice H 2013-23. Paragraphs 401.92, 406.28

9. Added a discussion about the preconditions for an audit. Paragraph 402.4 10. Added a discussion about considerations for updating

the understanding of the client. Paragraph 405.33 11. Expanded the discussion of the nature of the entity to

include consideration of the entity’s structure and associated risks.

Paragraph 406.18 12. Added a discussion about the auditor’s consideration of

different aspects of internal control. Paragraph 407.4 13. Added a discussion of the new COSO internal control

framework released in 2013. Paragraphs 407.6–.7 14. Expanded the discussion of considering control

objec-tives/principles. Paragraphs407.16–.17

15. Added a discussion of understanding the effect of IT on

internal control. Paragraph 407.21

16. Added a discussion of COSO principles that incorporate

the control environment elements. Paragraph 407.37 17. Revised the discussion of the risk assessment process

for clarity. Paragraph 407.44

18. Expanded the discussion of considerations when the

client uses a service organization. Paragraphs 407.94,407.96 19. Expanded the discussion of evaluating projected

mis-statements from a sample to include management’s involvement in identifying and correcting misstatements in the class of transactions.

Paragraph 409.19

20. Added a discussion of documentation deficiencies noted in recent AICPA peer reviews and in AICPA audit publications.

Paragraphs 410.48–.50 21. Revised the discussion about loss of client records or

audit documentation to include guidance from AICPA technical practice aids.

Paragraph 410.56

22. Updated the discussion of component materiality to

include guidance from an AICPA technical practice aid. Paragraph 412.44 23. Revised the discussion of group audits for clarity. Paragraphs 412.3–.5 24. Added a discussion of guidance for group audits

provided in an AICPA technical practice aid. Paragraphs 412.6,412.44, 412.57 Chapter 6

Concluding the Audit

1. Updated for issuance of the new Uniform Guidance. Paragraph 600.7 2. Updated to include discussion of the ABA’s preference

for the format of the legal representation letter. Paragraph 601.11 3. Added a footnote about common audit findings

4. Updated the list of subsequent events review procedures

to include the evaluation of evidence about estimates. Paragraph 603.8 5. Added a footnote about the FASB’s project to issue new

accounting standards for disclosing going concern uncertainties.

Paragraphs 605.7, 613.43

6. Added a discussion about the requirements of the AICPA independence requirements related to the preparation of financial statements based on the AICPA’s revised Code of Professional Conduct.

Paragraphs 611.2–.5

7. Added a discussion about Yellow Book requirements for

documenting independence considerations. Paragraph 611.8 8. Added a discussion of internal control considerations

when the auditor provides financial statement prepara-tion assistance.

Paragraph 611.9

9. Updated the discussion about the professional require-ments when considering independence issues; also updated for issuance of the AICPA’s revised Code of Professional Conduct. Paragraphs 613.10–.15 Chapter 7 Compliance Auditing

1. Expanded the discussion about the changed reporting requirements in the 2013 revision of Chapter 2 of the HUD audit guide for considerations related to the fair housing and non-discrimination compliance requirement.

Paragraphs 700.5, 707.4, 707.24

2. Added a discussion of HUD Notice H 2013-23. Paragraphs 700.8, 700.50

3. Added a discussion or a footnote about the new Uniform

Guidance that affects Single Audits of nonprofit entities. Paragraphs 700.20,700.51–.53, 714.4–.6 4. Added a discussion of weaknesses in audit

documenta-tion found during quality control reviews. Paragraph 700.44 5. Expanded the discussion about performing additional

procedures when abuse is detected. Paragraph 702.9 6. Updated for issuance of Change 4 to HUD Handbook

4350.3 REV-1. Paragraphs703.9–.10

Chapter 8

Auditor’s Reports and Other Communications

1. Added a discussion or footnote about HUD Notice H

2013-23. Paragraphs 800.2,811.2

2. Added a discussion or a footnote about the new Uniform

Guidance that affects Single Audits of nonprofit entities. Paragraphs 800.6 3. Expanded the discussion about the effect of audit

findings on the auditor’s reports. Paragraph 801.11 4. Expanded the discussion of modification of the auditor’s

5. Added a discussion of circumstances that might result in

a scope limitation in a HUD audit. Paragraph 801.25 6. Added a discussion of circumstances that might result in

a going concern uncertainty in a HUD audit. Paragraph 801.32 7. Added a footnote to mention auditors may voluntarily

choose to perform an audit in accordance with the Yellow Book.

Paragraph 803.1

8. Added a discussion about reporting solely in accordance

with the Yellow Book. Paragraph 803.21

9. Updated to include new report examples of an adverse

opinion on compliance. Paragraphs804.15–.16 10. Updated for the new requirement in Single Audits for

referencing audit findings. Paragraphs 805.6,805.21, Exhibit 8-6, Exhibit 8-8, Exhibit 8-10

11. Expanded the discussion of information about sampling

and noncompliance. Paragraph 805.15

12. Revised the exhibit for clarity. Exhibit 8-5, Exhibit 8-7, Exhibit 8-9 13. Broadened the discussion about interim communication

of possible deficiencies in internal control over compli-ance.

Paragraph 809.10

14. Added guidance about notifying agencies when a

submission will be late. Paragraph 811.19

15. Added a discussion about automatic extensions. Paragraph 811.20 16. Updated for changes in the data collection form. Paragraphs

811.23–.29

17. Expanded the discussion about cost certification audits. Paragraphs 812.1–.2 18. Added a note about when multiple locations are

identi-fied on a firm’s letterhead and added other notes that cite the authoritative guidance for the contents and format of the report.

Appendix 8A-1, Appendix 8E

19. Modified the paragraph that describes the reason for the

qualified opinion. Appendix 8B-1

20. Revised the paragraph describing the going concern matter and added a note about the effect on reporting on supplementary information.

Appendix 8B-2

21. Added a note about how to modify the report in a Yellow

Book-only engagement. Appendix 8C-2,Appendix 8C-3 22. Added a new report example illustrating the auditor

expressing an adverse opinion on compliance for a major program.

Appendix 8D-3, Appendix 8G-3

Chapter 9

Compliance Audits of FHA-Approved Lenders

1. Updated throughout for applicable changes in the revision of Chapter 7 of the HUD audit guide released in May 2014 as HUD Handbook 2000.04 REV-2, CHG-18.

Throughout the chapter

2. Added a discussion about the May 2014 revision of

Chapter 7 of the HUD audit guide. Paragraph 900.1 3. Added a discussion of Mortgagee Letter 2014-09. Paragraph 900.19 4. Updated the discussion about electronic submissions for

changes to the requirements of HUD’s Lender Electronic Assessment Portal (LEAP).

Paragraphs 900.21–.25 Chapter 10

Low-income Housing Tax Credit Projects

1. Added a discussion of temporary disaster relief guidance

issued by the IRS in August 2014. Paragraph 1000.3

2. Added a discussion about the characterization of bond

issuance costs. Paragraph 1000.4

3. Updated to add a reference to IRS guidance about bond

issuance costs. Paragraph 1004.2

4. Streamlined and clarified the paragraph in the auditor’s

report that discusses other matters. Appendix 10A

Practice Aid Reference

AUDIT PROGRAMS (HUD-AP) Audit Program for

General Planning Procedures

1. Updated the notice about revisions to the HUD audit

guide for current developments. HUD-AP-1

2. Added a new audit program step to consider whether the entity being audited includes financial information of more than one component and the requirements of AU-C 600 apply.

HUD-AP-1

3. Added practical considerations about the new Uniform

Guidance that affects Single Audits of nonprofit entities. HUD-AP-1 4. Added a practical consideration noting that theGuide

has been updated for COSO’s 2013 Framework. HUD-AP-1 5. Added practical considerations about extensions for

filing deadlines granted by the Federal Audit Clearing-house that affect Single Audits.

HUD-AP-1 6. Expanded a practical consideration about the Yellow

Book competency requirements. HUD-AP-1

7. Added a practical consideration about the issuance of SAS No. 128 noting that since the use of internal auditors in HUD audits is rare, thisGuide does not discuss the

requirements of the new auditing standard.

8. Revised the audit program to provide separate audit program steps when all component auditors are mem-bers of the group engagement team and when not all

component auditors are members of the group engage-ment. Revised the procedures for recent developments.

HUD-AP-1, Other Audit Procedures

9. Added audit program steps for the “Involvement of

Another Office, Correspondent, or Affiliate.” HUD-AP-1, OtherAudit Procedures 10. Revised and expanded the audit program steps for “Use

of Service Organizations.” HUD-AP-1, OtherAudit Procedures Audit Program for

General Auditing and Completion Procedures

1. Revised the objectives to explicitly state that determining the auditor’s report is appropriate in the circumstances should include any supplementary information. Updated the notice about revisions to the HUD audit guide for current developments.

HUD-AP-2

2. Modified the steps for determining independence in

accordance withGovernment Auditing Standards. HUD-AP-2

3. Added a practical consideration about the new Uniform

Guidance that affects Single Audits of nonprofit entities. HUD-AP-2 4. Added a practical consideration about documentation

deficiencies found in quality control reviews. HUD-AP-2 5. Revised and expanded the step with procedures when

possible material abuse exists. HUD-AP-2

6. Expanded the practical consideration about the Yellow Book requirements for reporting on internal control. 7. Added a step to determine whether events occurring up

to the date of the auditor’s report provide audit evidence about accounting estimates.

HUD-AP-2 8. Added practical considerations about the format for

referencing audit findings. HUD-AP-2

9. Expanded the step for obtaining management

represen-tations. HUD-AP-2

Audit Program for

Cash 10. Added a new step with audit procedures for testinginterbank transfers. HUD-AP-4, ExtendedProcedures Audit Program for

Investments and Derivatives

11. Added subheadings and reordered some steps to distinguish audit procedures that relate only to for-profit entities from those that relate only to nonprofit entities.

HUD-AP-5

Audit Program for Prepaids, Deferred Charges,

Intangibles, and Other Assets

12. Added new audit program steps for testing goodwill when the provisions of ASU 2014-02, Accounting for Goodwill, have been adopted

HUD-AP-6, Other Audit Procedures

Audit Program for Accounts Payable, Accrued Liabilities, and Other Liabilities

13. Added new audit program steps for “Joint and Several

14. Added a practical consideration noting that if manage-ment refuses to allow external confirmations, procedures to be performed are provided in HUD-AP-7.

HUD-AP-9, Extended Procedures

15. Revised the step about additional procedures in response to the fraud risk assessment to include requesting a statement from the vendor.

HUD-AP-9, Extended Procedures

Audit Program for

Equity 16. Added and modified audit program steps related to testsof net assets and classification of net assets of nonprofit entities.

HUD-AP-12 17. Modified the steps for testing rights and restrictions on

equity accounts. HUD-AP-12, OtherAudit Procedures For-profit Audit Program— Compliance Requirements for For-profit HUD Multifamily Housing Programs

18. Modified the practical considerations to the steps for testing the residual receipts deposits and surplus cash computation in the “Residual Receipts” compliance area.

HUD-AP-14

19. Updated the step for testing tenant security deposits for issuance of Handbook 4350.3 REV-1, CHG-4 in the “Tenant Security Deposits” compliance area.

HUD-AP-14 For-profit Audit Program— Compliance Requirements for FHA-approved Lenders

20. Updated the instructions and the program steps for issuance of the May 2014 revision of Chapter 7 of the HUD audit guide.

HUD-AP-15

Nonprofit Audit Program—Complia nce Requirements for Section 202 and Section 811

Programs

21. Updated the instructions and the audit program for issuance of the 2014 OMB Circular A-133 Compliance Supplement, and updated the instructions with current information about the new Uniform Guidance.

HUD-AP-16 Nonprofit Audit Program— Compliance Requirements for Section 8 Project-based Cluster Programs

22. Updated the instructions and the audit program for issuance of the 2014 OMB Circular A-133 Compliance Supplement, and updated the instructions with current information about the new Uniform Guidance.

HUD-AP-17

Nonprofit Audit Program—Federal Award Programs Not Included in the Compliance Supplement

23. Updated the instructions and the audit program for issuance of the 2014 OMB Circular A-133 Compliance Supplement, and updated the instructions with current information about the new Uniform Guidance.

Nonprofit Audit Program—Schedul e of Expenditures of Federal Awards

24. Updated the instructions and the audit program for issuance of the 2014 OMB Circular A-133 Compliance Supplement, updated the instructions with current infor-mation about the new Uniform Guidance, and revised and updated the audit program for changes in AICPA technical guidance.

HUD-AP-19

CHECKLISTS AND PRACTICE AIDS (HUD-CX)

1. Where applicable, updated the checklists to reflect requirements of the revised AICPACode of Professional Conduct and to provide dual references to the

previ-ously-effective code. Throughout the section Application of Practice Aids to Engagements

2. Updated for changes made to the practice aids.

Engagement Acceptance and Continuance Form

3. Added a practical consideration with items to consider

during the acceptance or continuance process. HUD-CX-1.1 Nonattest Services

Documentation Form

4. Added a practical consideration about PEEC guidance that considers financial statement preparation, cash-to-accrual conversions, and reconciliations to be nonattest services. HUD-CX-1.2 Evaluating Independence— Government Auditing Standards, 2011 Revision

5. Added a discussion about reevaluating possible threats to independence when circumstances in the audit change. HUD-CX-1.3 For-profit Entity Compliance Audit Determination and Planning Worksheet

6. Updated the instructions for issuance of HUD Notice H

2013-23. HUD-CX-1.5

Nonprofit Single Audit and Major Program Determination Worksheet

7. Updated the instructions and the form for issuance of the 2014 OMB Circular A-133 Compliance Supplement, updated the instructions with current information about the new Uniform Guidance, and provided information about filing extensions granted by the Federal Audit Clearinghouse HUD-CX-1.6 Nonprofit Low-risk Federal Program Determination Worksheet

8. Updated the instructions and the form for issuance of the 2014 OMB Circular A-133 Compliance Supplement, and updated the instructions with current information about the new Uniform Guidance.

HUD-CX-1.7

Nonprofit High-risk Federal Program Determination Worksheet

9. Updated the instructions and the form for issuance of the 2014 OMB Circular A-133 Compliance Supplement, and updated the instructions with current information about the new Uniform Guidance.

HUD-CX-1.8

Understanding the Entity and Identifying Risks

10. Added a practical consideration with current information about the new Uniform Guidance, expanded the item about prior year findings to include consideration of internal control weaknesses, and revised the conclusion on the form.

Engagement Team

Discussion 11. Added a practical consideration about persons excludedfrom the engagement team and expanded the items that could be discussed.

HUD-CX-3.2 Fraud Risk Inquiries

Form 12. Expanded the instructions the form with additionalconsiderations that could be pertinent in a HUD audit. HUD-CX-3.3 Audit Inquiries Form 13. Revised for changes in inquiries made in other forms. HUD-CX-3.4 Understanding the

Design and Implementation of Internal Control

14. Updated the form to include principles adapted from

COSO’s updated internal control framework. HUD-CX-4.1 Financial Reporting

System

Documentation Form

15. Expanded the instructions to included documenting

risks on the appropriate risk assessment form. HUD-CX-4.2 Financial Reporting Documentation Form—Financial Close and Reporting, Significant Transaction Classes

16. Modified the form to emphasize consideration of the process to reconcile material account balances to the underlying detail records. Modified the practical consid-erations to indicate that when understanding and docu-menting control activities, the auditor would consider how the entity has responded to IT risks.

HUD-CX-4.2.1

Walkthrough Documentation Forms

17. Added instructions for performing walkthroughs and

documenting procedures. HUD-CX-4.3

Walkthrough Documentation Memo

18. Added a new, optional practice aid to provide an alternative way to document the performance of a walkthrough. The new practice aid assists in document-ing a walkthrough in a memo format and can be used in place of the existing form at HUD-CX-4.3.2.

HUD-CX-4.3.1

Activity and Entity-level

Control Forms 19. Updated the instructions and modified the entity-levelcontrol forms to incorporate principles adapted from COSO’s internal control framework. Recategorized the controls by principle on the entity-level control forms at HUD-CX-5.1 through HUD-CX-5.4.

HUD-CX-5.1 through HUD-CX-5.16

Entity Risk Factors 20. Added control reference numbers to each control that can be used as a quick way to identify the control or as a cross-reference to it from other workpapers.

HUD-CX-5

21. Expanded the risk factors to consider. HUD-CX-6.1 Risk of Material

Noncompliance Assessment Form— Federal Award Programs

22. Updated with current information about the new Uniform

Guidance. HUD-CX-7.3 Inherent Risk of Noncompliance Assessment Form—Federal Award Programs

23. Updated with current information about the new Uniform

Tests of

Compliance—For-pr ofit Sampling Planning and Evaluation Form

24. Modified the last question on the form to include

additional considerations. HUD-CX-8.5

Tests of

Compliance—Nonp rofit Sampling Planning and Evaluation Form

25. Expanded the form to include additional factors and modified the last question on the form to include additional considerations. HUD-CX-8.7 Tests of Compliance Controls—Sampling Planning and Evaluation Form

26. Expanded the instructions about dual-purpose

sam-pling. HUD-CX-10.4 Disclosure Requirements for Financial statements of Nonpublic Businesses

27. Updated the checklist for disclosure requirements of

recently issued accounting standards. HUD-CX-13.1

Nonprofit Organization

Disclosure Checklist 28. Updated the checklist for disclosure requirements ofrecently issued accounting standards. HUD-CX-13.2 Audit Finding

Development Worksheet— Federal Award Programs

29. Updated to provide guidance about the format for

referencing audit findings. HUD-CX-15.3

Going Concern

Checklist 30. Updated the practical considerations to note the August2014 issuance of ASU 2014-15,Disclosure of Uncertain-ties about an Entity’s Ability to Continue as a Going Concern.

HUD-CX-16.1

Confirmation and Correspondence Control

31. Updated for changes to the practice aids. HUD-CX-17.4 CONFIRMATION AND

CORRESPONDENC E LETTERS

(HUD-CL)

1. Where applicable, updated the letters to reflect require-ments of the revised AICPA Code of Professional Conduct and to provide dual references to the

previ-ously-effective code.

Throughout the section

Audit Engagement

Letters 2. Updated the letters and the practical guidance in thenotes to— • Conform more closely to example language in the

auditing standards.

• Clarify the requirements for reporting on supple-mentary information.

• Provide additional considerations in group audits. • Provide guidance about client’s failure to provide

the agreed level of assistance and client’s potential discussion of employment with members of the engagement team.

Note the issuance of SAS 128 on the use of internal audit.

HUD-CL-1.1 and HUD-CL-1.2

Legal Representation

Letters 3. Noted that the lawyer’s response concerning amountsdue for services may be reconciled with accounts payable analyses. HUD-CL-2.1 and HUD-CL-2.2 Management Representation Letters

4. Updated the letters and the practical guidance in the notes to —

• Provide additional representations the auditor may obtain in an audit of group financial statements. • Clarify when representations may be limited to

matters considered individually or collectively mate-rial.

• Add a specific representation about the minutes provided to the auditor.

HUD-CL-3.1 and HUD-CL-3.2

Communication with Those Charged with Governance during Planning

5. Added a practical consideration about the issuance of

SAS 128 on the use of internal audit. HUD-CL-5.1 Related Party

Confirmation 6. Added a new question in the related party questionnaire. HUD-CL-12.4 Request for Service