IN DECEMBER 1973, HUD ISSUED FORM 2001K, WHICH WAS TO BE COMPLETED BY THE INDEPENDENT PUBLIC ACCOUNTANT (IPA) AND SUBMITTED WITH THE MORTGAGEE'S ANNUAL CERTIFIED FINANCIAL STATEMENTS. A TASK FORCE OF THE MORTGAGE BANKERS ASSOCIATION (MBA), ALONG WITH THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) VOICED OBJECTIONS OF FORM 2001K, ARGUING THAT MANY OF THE GUIDELINES ON NONACCEPTABLE ASSESTS FOR MEASURING NET WORTH WERE NOT IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. SUBSEQUENT ATTEMPTS TO REVISE ASSET GUIDELINES HAVE ALSO PROVED UNACCEPTABLE TO MBA AND THE AICPA, ALTHOUGH HUD'S MOST RECENT GUIDE (JANUARY 1977) REMAINS IN EFFECT; IT COVERS ALL AUDITS OF NONSUPERVISED MORTGAGEES HAVING FISCAL YEARS SUBSEQUENT TO APRIL 30, 1977. A NONSUPERVISED MORTGAGEE CAN BE APPROVED BY HUD ONLY AFTER MEETING CERTAIN REQUIREMENTS RELATING TO MAINTENANCE OF A MINIMUM NET WORTH AND THE SUBMISSION OF AUDITED FINANCIAL STATEMENTS. THE AUDIT GUIDE DEFINES THE PROCEDURES AND STANDARDS FOR MEETING THESE REQUIREMENTS THROUGH THE SERVICES OF AN IPA. THE GUIDE STATES THAT THE IPA SHOULD EXPRESS AN OPINION ABOUT THE MORTGAGEE'S FINANCIAL STATEMENTS, DETERMINE WHETHER THE MORTGAGEE HAS COMPLIED WITH THE TERMS AND CONDITIONS OF THE HUD APPROVAL AGREEMENT FOR NONSUPERVISED MORTGAGEES, AND REPORT THE MORTGAGEE'S NET WORTH, CALCULATED IN ACCORDANCE WITH THE PROVISIONS IN THE GUIDE. ADVICE IS OFFERED ON HOW TO PREPARE FOR THE AUDIT. (RCB)