| ID | Status | Date | Public/Private | Industry | AHACPA Contact |
|---|---|---|---|---|---|
| #8122 | Closed | public | Multifamily | Les Sparks |
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We have a management agent inquiring about receiving an “asset management fee” in addition to their regular HUD approved management fee. My understanding as it relates to for profit projects is that the amount is restricted to surplus cash at the end of the year. Do the same requirements apply to a nonprofit project? If so, how would a residual receipt requirement play into this? |
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From Les Sparks: The same rules apply. However, since the project has to put all surplus cash into residual receipts, no one is sure how to record the amounts paid for items that require surplus cash. There are two choices. First, place all surplus cash into the residual receipts account and then request payment for the items. Of course, no on really likes this as they believe HUD would never approve the payment. WHO CAN BLAME THEM? The second way requires a little effort. First you DO NOT include any amounts to be paid from surplus cash as liabilities in the actual calculation. That never works as HUD deducts all payments of surplus cash from the actual cash calculated without taking into consideration items reserved for. So calculated surplus cash and then just pay the items int he next year. IN the ext audit just indicate that certain items were paid from surplus cash with the remainder deposited to residual receipts. It may be flagged, but if it is footnoted, it should pass through REAC okay. Those are the only choices. |