| ID | Status | Date | Public/Private | Industry | AHACPA Contact |
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| #11129 | Closed | public | Multifamily |
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Good morning, We audit a multifamily for-profit newly constructed apartment complex insured by HUD. At closing after all expenses were paid and all escrow accounts funded there is $47,297 of the loan funds available. According to mortgage company, this is left over funds and belong to the partnership. The funds have been removed from the project but must be accounted for on the project books to balance the loan. How should these funds be handled on the project’s books? Thanks, Christina Wheeler Towne, CPA
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Christina, the proceeds are generally returnable to the owner. These funds do not have to go through surplus cash. When returned to the owner, we suggest that the project show an “Other change in equity” for the amount of the return to the owner. Then we enter the same amount on the cash flow in line S1200-450 – Other changes in financing activities. In the detail we add the following description:
Excess proceeds of construction loan returned to owner.
There should never be any hint of the word “distribution” as that is always measured against surplus cash.
Les Sparks AHACPA (801) 547-0809
From: AHACPA Support <support@ahacpa.org> |