Accounting for Mutual Funds

Q I know a mutual fund is an asset, but should I treat it the way I treat a current savings account or the way I treat a checking account, using a six-month average balance?

A This topic is covered in Chapter 5 (Exhibit 5-2) of Handbook 4350.3. With a mutual fund, you would probably want to get the most recent quarterly statement to calculate its current net cash value. Third-party verification is required. Treat interest or dividends earned in the mutual fund as income from assets even when the earnings are reinvested in the mutual fund. HUD does not specify whether to use a current balance or an average six-month balance.