Frequently Asked Questions
Lender Assessment Subsystem (LASS) Release 5.0.0.0 - Policy

Q1. Who is required to submit financial statements using the Lender Assessment Subsystem (LASS)?

A1. HUD-approved Title I and Title II nonsupervised lenders, nonsupervised mortgages, and nonsupervised loan correspondents (collectively referred to as "lenders") with fiscal years ending on or after September 30, 2002.

Q2. When is the submission due?

A2. The electronic submission of the financial statements must be submitted to HUD annually no later than 90 days after the end of the lender's fiscal year.

Q3. How are extension requests submitted?

A3. For each reporting period (i.e., annually), lenders are permitted to request one 30-day extension. The request must be received no earlier than 45 days prior to the submission due date and no later than 15 days prior to the submission due date. All extension requests are submitted through LASS. The "Request Extension" link is accessible by logging into LASS via the FHA Connection. (https://entp.hud.gov/clas/index.cfm)

Per Mortgagee Letter 95-6, a lender's extension request will be granted only for catastrophic events. Lenders are notified through the LASS system whether the extension request was granted or denied.

Q4. What happens if the submission is not filed on time?

A4. The lender is notified via certified mail that they are subject to administrative action if an acceptable submission is not received within 30 days of receipt of the letter. If the submission is deemed deficient by HUD and cannot be cured within the 30 day time period, the lender is subject to withdrawal.

Please note that lenders who received a notice of violation due to late filing of their submission will NOT receive an additional notice of violation if their submission is deemed deficient or rejected. Lenders should monitor their status by checking their LASS inbox periodically. If the status is "Rejected", "Deficient" or "Insufficient Cure", the lender needs to address the deficiencies identified by HUD. Lenders can review their deficiencies by accessing "Reports" and clicking on "Lender Deficiency Report". If the status is "Audit Accepted", HUD has accepted the reporting package and no further action is required for the financial statement portion of the recertification process. See Question 9 in the FAQs LASS System for a definition of each possible status.

Q5. How do I change my fiscal year end (FYE)?

A5. HUD will accept the lender's audited financial and compliance data under the lender's new fiscal year end (FYE) date as long as the lender's prior year financial and compliance data was received and approved by HUD within the past 18 months. Otherwise, the lender should submit their audited financial and compliance data under the lender's original FYE. All FYE change requests should be made before the end of the current fiscal year. Requests for change should be emailed to LASS@hud.gov.

Q6. Are hardcopy financial statements required to be mailed to HUD in addition to the electronic submission?

A6. No, hardcopy financial statements are NOT required to be mailed and will not be accepted by HUD. All audited financial statements must be submitted electronically through LASS.

If a Title II mortgagee is also a Ginnie Mae Issuer, a separate paper copy of the audited financial statements must also be submitted to Ginnie Mae for review. Please contact Ginnie Mae for guidance.

Q7. Does LASS require a special format for reporting the electronic submission of the audited financial statements?

A7. Financial data is reported on the Financial Data Template (FDT). The FDT follows the traditional format of basic financial statements. The FDT consists of the Balance Sheet, Statement of Operations and Equity, and the Statement of Cash Flow. In addition to the basic financial statements, LASS also contains a Computation of Adjusted Net Worth and Computation of Liquidity (if applicable).

An updated Line Item Definition Guide, which defines each line in LASS, is available at: http://www.hud.gov/offices/hsg/sfh/lass/lass_doc.cfm.

Q8. How is the financial and compliance data submitted via LASS evaluated?

A8. HUD personnel review the data for compliance in accordance with Title 24 Code of Federal Regulations (CFR) Part 202, the HUD Consolidated Audit Guide 2000.4, Mortgagee Handbooks 4700.1 & 4060.1, Mortgagee Letters and other guidance as established and disseminated by HUD.

Q9. What basis of accounting is acceptable for the preparation of the financial statements?

A9. The financial statements must be prepared in accordance with generally accepted accounting principles (GAAP).

Q10. What auditing standards are used to conduct the audit?

A10. The audits of all FHA approved lenders must be conducted in accordance with the generally accepted government auditing standards (GAGAS).

Q11. How are the financial data and the compliance information etc., reported via LASS?

A11. The submission consists of the Financial Data Template (FDT) and the Data Collection Form (DCF). The FDT collects financial data and consists of the Balance Sheet, Statement of Operations and Equity, and the Statement of Cash Flow. The DCF collects information on the lender, auditor and the audited financial statements. The General Information tab of the DCF collects the contact information for both the lender and auditor. The Financial Statement tab of the DCF collects information about the audited financial statements.

An updated Line Item Definition Guide, which defines each line in LASS, is available at: http://www.hud.gov/offices/hsg/sfh/lass/lass_doc.cfm.

Q12. Are any of the auditor's reports required to be electronically submitted via LASS?

A12. Yes. Questions G3000-090, G30000-100, and G3000-110 on the Data Collection Form (DCF) provide detail links where hand signed copies of the Independent Auditor's Report on Financial Statements and Supplemental Information, Independent Auditor's Report on Internal Controls and Independent Auditor's Report on Compliance with Specific Requirements Applicable to Non-Major/Major HUD Programs are to be attached, respectively. The reports must be hand signed, on the auditor's letterhead and saved as PDF files. Acceptable formats of a hand signature: a) scanned copy of original document with hand signature; or, b) image file containing legal hand signature inserted onto document.

Q13. Are all lenders required to submit an Independent Auditor's Report on Internal Controls and an Independent Auditor's Report on Compliance with Specific Requirements Applicable to Non-Major/Major HUD Programs?

A13. Yes, all FHA approved lenders are required to submit both the Independent Auditor's Report on Internal Controls and the Independent Auditor's Report on Compliance with Specific Requirements Applicable to Non-Major/Major HUD Programs. Please note, per Mortgagee Approval Handbook 4060 http://www.hud.gov/offices/hsg/sfh/lender/mtgeekit.cfm, major program mortgagees are subject to an audit of their compliance with HUD major programs. Non-major program mortgagees are subject to a review of their compliance with HUD non-major programs. Major program means an individual assistance program or a group of programs in a category of Federal financial assistance, which exceeds $300,000 during the applicable year. A project, which has an outstanding HUD-insured or guaranteed loan balance exceeding $300,000 as of the reporting date, shall be considered a major program. A mortgagee or loan correspondent, which originates and/or services an aggregate of FHA-insured loans exceeding $300,000 during the period under audit, is considered a major program.

Q14. Are the footnotes required to be submitted via LASS?

A14. Yes, the footnotes are required to be submitted via LASS. They are attached to the "Footnotes" tab under the "Notes & Findings" header. The footnotes must be saved as a PDF file in order to be uploaded.

Q15. Are audit finding(s) and corrective action plan(s) required to be submitted via LASS?

A15. Yes, if applicable, audit findings and corrective action plans are required to be uploaded and submitted via LASS. They are attached, respectively, to the "Audit Finding" and "Action Plan" tabs under the "Notes & Findings" header. The audit findings and corrective action plans must saved as PDF files in order to be uploaded.

If either question G3000-040 or G3000-090 on the Data Collection form was answered "Yes", it is required to upload an attachment to both the audit finding and action plan tabs.

And/or:

If an attachment is uploaded to the "Audit Finding" tab, an attachment must be uploaded to the "Action Plan" tab. The inverse is also true, if an attachment is uploaded to the "Action Plan" tab, an attachment must be uploaded to the "Audit Finding" tab.

Q16. What does the SAS 29 Opinion refer to on the Data Collection Form, Financial Statement tab, Question G3000-012?

A16. The SAS 29 Opinion refers to the American Institute of Certified Public Accountants Statement on Auditing Standards Number 29. This SAS addresses the auditor's opinion on required supplementary information (RSI) that is not part of the basic financial statements. Currently, the RSI for both the Title I and Title II programs is the Net Worth Calculation, as stipulated in the HUD Consolidated HUD Audit Guide http://www.hud.gov/offices/oig/reports/auditguides.cfm. Auditors should include the computation of adjusted net worth and the SAS 29 opinion on it in the hardcopy financial statements.

Q17. Is the SAS 29 Opinion on the Net Worth Calculation required for non-profit FHA approved lenders subject to an A-133 audit?

A17. No, it is not required at this time under an A-133 audit.

Q18. What is the liquidity requirement?

A18. Title 24 Code of Federal Regulations (CFR) Part 202 requires all FHA approved lenders to maintain 20% of their adjusted net worth, calculated for HUD purposes, in liquidity, up to $100,000.

Q19. If there is a reportable condition, material weakness or non-compliance issue noted during the audit, does it need to be corrected prior to submitting via LASS?

A19. No, although it may need corrected prior to being recertified. If a reportable condition, material weakness or compliance issue has not been corrected prior to the due date, the lender should still submit. If the LASS team concludes more information on the reportable condition, material weakness or compliance issue is required in order to make a recommendation for recertification, the lender will be required to submit additional information prior to being recertified.

If the reportable condition, material weakness or compliance issue has been corrected and guidance is required on what should be submitted, please call the accounting/auditing helpline at (202) 755-7400 ext. 100 or email LASS@hud.gov.

Q20. Is the latest version of the HUD Consolidated Audit Guide available?

A20. The latest version of the HUD Consolidated Audit Guide for Audits of HUD Programs is available at the HUD Office of Inspector General Website. Please note the minimum required net worth for nonsupervised loan correspondents is $63,000 per 24 CFR Part 202. The HUD Consolidated Audit Guide is in the process of being updated to reflect this change.

Q21. Where can I find the definitions for each line in the Financial Data Template (FDT) and Data Collection Form (DCF)?

A21. The Line Item Definition Guide defines each line of the Financial Data Template (FDT) and Data Collection Form (DCF). There is also an icon on each LASS page of the FDT and DCF titled "Line Item Definitions" that allows the user to search for line item definitions by line number.

Q22. What guidance is available to users of LASS?

A22. For technical guidance, the LASS User Manual provides detailed step-by-step instruction on how to obtain a user ID, how to access the system, how to create a submission, the auditor procedures and how to respond to rejected/deficient submission.

For accounting guidance, the Line Item Definition Guide is available. This guide provides a definition of the type of information that should be entered on each line of the Financial Data Template (FDT) and Data Collection Form (DCF).

In addition, the users should understand the accounting principles and transactions applicable to their business case. For accounting principles and information on the proper accounting for certain transactions, users should reference generally accepted accounting principles (GAAP) and/or Financial Accounting Standards Board (FASB) publications. The user should first contact the auditor who performed the audit if they have difficulties in determining the proper data input into LASS. If additional assistance is needed, please call the LASS accounting/auditing helpdesk at (202) 755-7400 ext. 100. Users can also refer to the generally accepted auditing standards (GAAS) or Government Auditing Standards (GAGAS) to aid in the completion or understanding the DCF.

Q23. Who do I contact with questions that are not answered by the user guide, FDT Line Item Definition Guide, or my auditor?

A23. Contact the Office of Lender Activities and Program Compliance at (202) 755-7400 ext. 163 for LASS technical assistance; accounting/auditing questions, call (202) 755-7400 ext. 100.

You can also email any technical or accounting questions to LASS@hud.gov.