| ID | Status | Date | Public/Private | Industry | AHACPA Contact |
|---|---|---|---|---|---|
| #7235 | Closed | public | Multifamily | Les Sparks |
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Have a client that requested a withdrawal from the RFR at the end of the year. The withdrawal was approved before year-end but the cash wasn’t actually taken out of the RFR and transferred back to operations until AFTER year-end. Our client has booked a reserve withdrawals receivable to account 1140-010 and reduced the RFR account (as if the RFR withdrawal had already occurred). Normally, you don’t show interfund receivables and payables but it appears based on the REAC filing that this would be acceptable to HUD (since the drop down menu actually has a description called “reserve withdrawals receivable”). The problem, though, lies in how this is shown on the cash flow statement. Because the transfer did not happen, the change in receivable on the balance sheet is added back to the RFR “net deposits” amount in investing activities (because wasn’t a true cash flow activity). However, this gives us an error message b/c this account S1200-250 does not reconcile back to the activity as shown on the supplemental schedule. The error message for S1200-250 is “This value must equal the sum of accounts 1320P and 1320UGL, less account 1320”. Is our client misinterpreting the use of account 1140-010? Or are they supposed to show the change in cash flows as if the reduction/withdrawal of the RFR did actually occur before year-end? I know this is very technical so I’m happy to talk this through on the phone if that would be easier and/or provide you with the draft electronic filing. Thanks a bunch! |
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From Les Sparks: It is not too technical at all. It is just one of the facts of life. If you are going to include the A/R (and most people do not), then you will have to force all other balances to appear as if the transfer happened. IMO, The best approach is simply leave it all where it is, then add the R4R deposit in transit to the surplus cash calculation if it is need to account for cash spent and not yet reimbursed form R4R. Can anyone tell me the benefit of recording the R4R A/R? Doing it this way keeps all of the accounts just where they are because there is no way to actually “fudge” the cash back to what everyone is trying to do. Best to leave it as it is as there is no way to reduce the R4R balance with a payable. In essence, I think the Maintenance Expense 25,000 R4R A/R 25,000 Now on the cash flow the actual R4R balance does not change and there is no way to adjust the A/R in current assets, as it is not operating so it goes against the S1200-350 account. I think that is your dilemma. Best to do nothing and if needed, adjust the surplus cash calculation for the amount in transit from R4R. |