| ID | Status | Date | Public/Private | Industry | AHACPA Contact |
|---|---|---|---|---|---|
| #7225 | Closed | public | Multifamily | Les Sparks |
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I have a general question that has come up with one of my clients going through an accountant personnel transition (for-profit, 223(f)). Generally speaking, would my calculating of the mid-year Surplus Cash available for distribution create a threat to or directly impair independence in my capacity as the auditor? I cannot find any guidance that addresses this topic explicitly or implicitly in the audit guides/handbooks/PPC guides/etc. and would appreciate any input. |
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From Les Sparks: There is no specific mention of this computation as a prohibited activity. Therefore, this just becomes another non-audit service. Since the computation is really based on financial statement amounts. The only real issues would be areas of judgment, such as receivables from insurance or R4R deposits in transit. So, this just simply proceeds as another non-audit service. I would simply document it as that. From client: For a related follow-up question, if a project had an Unauthorized Distribution during an audit would they be able to take a distribution from Surplus Cash before returning the funds, or do the Unauthorized Funds go into the calculation somewhere? To better illustrate my questions, I have a client in the following situation (amounts assumed): – 12/31/16 – Surplus Cash available $30k – 12/31/16 – Unauthorized Distribution $35k – No distribution taken during first two quarters of 2017 – No distribution thus far in last two quarters of 2017, unsure of Surplus Cash at 6/30/17 – Unauthorized Funds to be returned 12/15/17 (or prior to year-end) I hope the illustration doesn’t confuse things, and thank you for your continued guidance. |