CPA Firms That Specialize in HUD 232 and Residential Care Facility Audits

A HUD Section 232 audit sits at the intersection of federal housing finance and healthcare regulation. No single one of those fields prepares a CPA for what the engagement actually asks. HUD's Office of Residential Care Facilities administers Section 232 insurance across nursing homes, intermediate care facilities, board and care homes, and assisted living facilities, a pool that covers more than 3,600 insured loans. Every one of those properties involves two separate filing parties, the real property entity that owns the building and the operator that runs it, each carrying its own compliance obligation rather than one shared filing.

That split matters because the paperwork doesn't stop at ordinary financial reporting. Annual statements have to be prepared under GAAP, then audited under the HUD Consolidated Audit Guide, under Generally Accepted Auditing Standards, and under Government Auditing Standards, commonly known as the Yellow Book, all within 90 calendar days of the fiscal year's end. Layered on top of that is a compliance audit, a distinct opinion on whether the entity follows laws and regulations that could materially affect a major HUD-assisted program. That's a healthcare regulatory opinion sitting inside what looks, at first glance, like a real estate audit.

Even a technically sound audit can fail at the finish line. Submissions route through REAC and FASS, HUD's electronic systems, and they have to match a specific format. File the right numbers through the wrong template or the wrong system, and the result is a compliance finding regardless of how clean the underlying work was. A firm that only knows commercial real estate accounting, or only knows healthcare cost reporting, will have half the map. Section 232 requires both halves plus the government-auditing layer that neither field trains for on its own.

The January 2026 handbook update and ORCF staffing cuts changed the compliance environment

Two things shifted the ground under this work at roughly the same time: a rewritten handbook and a thinner review staff at ORCF. Together they mean a clean, self-explanatory submission moves through the queue faster, while one with errors or ambiguities is more likely to stall in review. Between October 2024 and May 2025, ORCF's staffing dropped sharply, leaving fewer reviewers to handle the same volume of insured properties.

The consequence follows directly: a submission that's clean and self-explanatory moves through the queue. One that raises a question, a mismatched schedule, an ambiguous compliance note, a formatting slip, lands in a backlog that a smaller staff has to work through at the same pace as before. That backlog isn't abstract to the borrower. That backlog delays financing timelines and affects how HUD views the account's standing.

This is where the CPA firm's role changes shape. Producing a submission-ready audit isn't just about delivering assurance to the borrower; it's about managing a bottleneck the borrower has no way to resolve independently. Borrowers don't control ORCF's staffing levels or its review queue. What they control is the quality of what lands on a reviewer's desk, and that control runs entirely through the CPA firm doing the work.

HUD OIG's active review pattern and borrower enforcement risk

Enforcement risk under Section 232 isn't theoretical, and it isn't reserved for the largest or most troubled properties. HUD OIG's active review calendar shows regulatory agreement compliance gets tested at the individual property level, and that no facility is too small to draw scrutiny.

One case makes the point concretely. HUD OIG opened a review of a New York City residential care facility under Report Number BO 26 0008, with work starting June 12, 2026. The subject is a not-for-profit operator running a skilled nursing facility, carrying a reported unpaid principal mortgage balance of more than $7 million as of December 31, 2025. The stated objective is to assess whether the facility operated in accordance with its regulatory agreement and HUD requirements.

A $7 million balance is nowhere near the top of the Section 232 portfolio, and OIG opened the file anyway. The message for borrowers is that the review objective, compliance with the regulatory agreement and HUD requirements, is precisely the ground a Section 232 CPA engagement is built to cover. A well-executed annual audit becomes the borrower's first line of evidence if OIG comes calling. No findings have been reported from this review, and none should be assumed. The review exists, targets a facility well below the portfolio's high end, and its objective maps directly onto what the annual audit is supposed to demonstrate.

The state-level audit mandates expanding who needs a Section 232-caliber CPA

Federal HUD borrowers aren't the only ones who need this skill set anymore. State legislatures have started layering their own skilled nursing facility audit requirements on top of federal rules, and that's pulling facilities that never had a HUD-specific audit into a comparable compliance environment.

Florida offers the clearest example. House Bill 539, signed into law in April 2022, requires audited financial reports from skilled nursing facilities statewide, bringing nearly 700 licensed facilities into an audit obligation, many of them for the first time. A facility with no prior HUD filing history suddenly needs a CPA who understands long-term care operations, Medicaid and Medicare cost reporting, and regulatory compliance. Those are the same core competencies a Section 232 engagement demands, even where the filing mechanics differ.

One might ask why this matters beyond Florida's borders. The answer sits in demographics as much as legislation: the population relying on nursing facilities, alternative residential care, and home care services is projected to grow substantially over coming decades. That number isn't one to build next quarter's staffing plan around, but it gives a specialized CPA practice a long horizon to become a durable line of business rather than a niche that fades once a handbook update settles down.

The HUD Consolidated Audit Guide's requirements generalists miss

The HUD Consolidated Audit Guide doesn't just add paperwork to a standard audit methodology. It imposes schedules, calculations, and testing procedures that have no equivalent in a standard commercial engagement, so a general audit firm cannot simply apply its existing methodology.

Covered entities include both the real property entity, the borrower/owner, and the operator as separate filing parties, creating two distinct compliance obligations per property. A HUD 232 engagement requires two distinct audit opinions, a financial statement audit and a compliance audit, with the compliance audit opining specifically on adherence to laws and regulations with a direct and material effect on a major HUD-assisted program. Then there's the surplus-cash calculation, a specific HUD schedule rather than a general accounting concept, that determines what an owner is actually allowed to distribute. Get that calculation wrong, and the error doesn't just sit on a working paper. It creates a finding and can restrict the cash the owner is able to pull out of the property.

Compliance testing runs across tenant eligibility, rent calculations, occupancy, reserves, capital expenditures, surplus cash, and management certifications, and each of those carries a HUD-specific definition that departs from how a standard lease or real estate audit would treat the same term. For not-for-profit operators, the complexity compounds further: the engagement frequently triggers OMB Uniform Guidance Single Audit requirements, adding the schedule of expenditures of federal awards and its own compliance testing on top of everything already listed.

Even after all of that is done correctly, the submission itself can still go sideways. Electronic filing through REAC and FASS has to match HUD's templates exactly, and a formatting error that a private-sector client would shrug off can cause a rejection that delays the borrower's standing with HUD. GAGAS, the Yellow Book standard, runs alongside GAAS and governs the audit as well. A firm whose audit staff isn't current on Yellow Book requirements isn't qualified for this work, no matter how strong its general audit practice is otherwise.

CPA firms that have documented Section 232 and residential care facility audit practices

Few firms publish enough detail about their Section 232 and residential care practices to actually be evaluated against the requirements laid out above. The ones that do, Pease Bell, a Cleveland-based CPA and advisory firm whose audit practice is built specifically around HUD 232 engagements for skilled nursing and healthcare facility operators rather than carried as a secondary line alongside general commercial work, is one example, and the specificity with which they do it, offer a useful signal of real specialization rather than a service line added to a website for search visibility.

Mauldin & Jenkins prepares and audits financial statements under GAAS, with documentation addressing the full range of HUD-required disclosures and accounting treatments. The firm's published compliance testing covers tenant eligibility, rent calculations, occupancy, reserves, capital expenditures, surplus cash, and management certifications, matching the Consolidated Audit Guide's scope point for point. Its practice also documents not-for-profit and Single Audit expertise for providers carrying dual regulatory mandates, along with pre-audit readiness support covering tenant files and REAC submission documentation. Ross Cannon, Partner, is named as a healthcare practice leader.

Gross Mendelsohn has built its practice around the skilled nursing sub-sector specifically. Its documented services run from financial statement audits, reviews, and compilations through Medicaid and Medicare cost report preparation, cost report review and analysis, Medicaid reimbursement consulting, and EHR software support. The framing centers the operational and regulatory complexity of running a skilled nursing facility along with the mechanics of a HUD filing.

Haynie & Company, located in Littleton, Colorado, near Denver, has a practice focused on HUD and LIHTC audits for Denver and surrounding areas. Its documented service list is unusually broad: year-end financial reporting including audits, reviews, and compilations; HUD financial reporting and disclosures including REAC submissions; cost certifications for mortgagors and contractors; LIHTC cost certifications; multi-year LIHTC projections; carryover allocation agreed-upon procedure reports; eligible-versus-non-eligible basis analysis; and income tax return preparation for general and limited partnerships and nonprofits.

The firm cites active membership in the Affordable Housing Association of Certified Public Accountants and in the BKR Affordable Housing practice group as evidence of staying current on the regulatory landscape. Its technology infrastructure is described as cloud-based and built to match HUD reporting requirements, positioned to cut down on REAC rejections and documentation headaches. The firm's stated client base spans HUD-assisted housing projects run by non-profit and for-profit entities, public housing owners and management agencies, and lenders and mortgage providers financing these deals.

Keiter, based in Virginia, frames its work around the combined burden facility leaders carry: labor costs, occupancy targets, capital investment, regulatory compliance, and cybersecurity risk, all sitting alongside the demands of actual care delivery. Its practice extends into nursing home and long-term care work paired with SOC examination capabilities.

AAFCPAs rounds out the group with a practice that reaches into nursing home and long-term care alongside advanced assurance work. Leadership at the firm serves on AICPA cybersecurity and SOC reporting task forces and leads SOC special interest groups for PrimeGlobal and a select group of top-tier firms.

Evaluating a firm's HUD 232 specialization claims

A weak Section 232 engagement doesn't just produce a mediocre audit. Its consequences run straight into financing standing and OIG exposure. The questions a borrower asks before signing an engagement letter carry nearly as much weight as the audit itself.

Ask whether the firm has updated its HUD 232 practice, or whether its methodology still reflects the prior framework. A firm that can't answer specifically, that gives a vague assurance instead of naming what changed in its testing procedures, is telling a borrower something important about how closely it tracks HUD's rulemaking.

Ask whether the audit team has current Yellow Book training and how recently staff completed it. GAGAS competency isn't a one-time credential. Ask for a sample surplus-cash schedule from a prior engagement to see whether the calculation follows HUD's specific format rather than a generic cash-flow presentation. Ask how many REAC submissions the firm has filed in the past year and whether any were rejected for formatting, and if so, what changed afterward. For not-for-profit operators, ask directly whether the firm's Single Audit experience covers the schedule of expenditures of federal awards in a HUD context specifically, rather than in a different federal grant program.

None of these questions have a single right answer that fits every borrower. What they share is a demand for specificity. A firm that specializes in this work will answer with names, numbers, and procedures. A firm that merely lists the service will answer with reassurance instead.