| ID | Status | Date | Public/Private | Industry | AHACPA Contact |
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| #7391 | Closed | public | Multifamily | Les Sparks |
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We’re auditing a HUD multifamily project that employs it’s own employees. There is no management agent or management fee. This year, the owners changed their accrued compensated absence policy to accrue all unpaid sick and vacation leave to be paid out when an employee leaves. The majority of the accrual resides with one employee and the payout would exceed the amount of available operating cash (should that employee leave). What is HUD’s position on accrued compensated absences in a multifamily project? Is there a “reasonableness” guideline my client should be aware of? |
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From Les Sparks: No such standard exists. All this is required is to attempt to determine how much may be taken in the next year. There certainly is no requirement to get it all into current unless she retires. By the way there should still be a management fee. It would be called self-managed. HUD generally would set the projects monthly amount on Form 9839-A for owner managed projects. They are potentially leaving a lot on the table in terms of being able to get cash out. All that is left is for the entity to decide on if a new policy is required. If the amount is significant, it should be disclosed. |