(a) This Part deals with specific accounting procedures and instructions applicable to the operating period, except with respect to subsidies, which will be separately treated in Part 1648.

(b) The operating period has been defined in Part 1640 as beginning with the date of substantial completion. The significance of the date of substantial completion in the scheme of accounts has been indicated previously. To recapitulate, the date of substantial completion marks the point at which direct costs and carrying charges cease to be capitalized as development costs and commence to be charged to project revenues; it marks the end of the initial operating period and, hence, of the capitalization of the net income or deficit for that period; it marks the point at which the local agency begins to record, formally, vacancies for the project proper and to make provisions for reserves for vacancy and collection losses, painting and decorating, and replacements; it marks the point at which, if bonds have been issued, the local agency begins to make provision for amortization of the bond issue; it marks the point at which periodic subsidies (State and local) begin to accrue. Other accounting features of the operating period stem from the requirement (as contrasted with the development period) to close the books at the end of each fiscal year and the related requirement for the operation of account 2700, Income and Expense Clearance, and account 2710, Prior Years Adjustments.