Mid-Year & End-Year Surplus Cash

ID Status Date Public/Private Industry AHACPA Contact
#18066 Closed public Multifamily _General Support
Customer Reply

I have a project who took a Mid-Year distribution totaling ~$100k, however, when we recalculated their surplus cash at 6/30 (mid-year) they only had ~$28k available to distribute. We are currently doing their year end audit and they had a positive surplus cash calculation at 12/31 of ~$49k.

For the mid-year distribution, will they have to repay the project ~$72k as they distributed too much? If they have to repay that amount, wouldn’t that only increase their 12/31 calculation?

This is also their first year with a HUD regulatory agreement (refinanced their construction loan to be a 223f HUD-insured loan in March 2022.

Les Sparks

Marissa, When this type of thing happens there are really two concerns. You mention the 6/30 calculation was $28k. However, was any of the other amount distributed from the excess proceeds? If so, they were allowed to take those separately from surplus cash. If they just took the $100k out of operating cash, it is a finding. Since they had positive surplus cash at 2022 of $49k., then you may avoid having to repay. You will also be able to call the finding a closed finding.

 

I will say that HUD’s position is that a repayment has to be made. However, I would not force the client to do it until HUD required it.

 

Les Sparks
AHACPA | 459 N 300 W #10 | Kaysville, UT 84037 | Phone: 801-547-0809
Support Center  | Send a Secure File | AHACPA Newsletter | Twitter

 

From: AHACPA Support <support@ahacpa.org>
Sent: Monday, February 27, 2023 10:57 AM
To: les@ahacpa.org
Subject: Mid-Year &amp; End-Year Surplus Cash [NEW]

Write a reply

The ticket has been closed. If you feel that your issue has not been solved yet or something new came up in relation to this ticket, you can re-open it by clicking this link.
Item Status Opt-in Date Opt-out Date Action
Subject
Additional Information
Subject