| ID | Status | Date | Public/Private | Industry | AHACPA Contact |
|---|---|---|---|---|---|
| #6960 | Closed | public | Multifamily | Les Sparks |
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We have a nonprofit that is consolidating two separate HUD projects into a new entity. We have the agreed upon cutoff date. The issue is that a few assets such as tenant security deposits were transferred to the new entity before the cutoff date. Should we, 1. Add these assets back to the old entity as though the transfers did not occur until after the cutoff date? We do not think so but this is an option. |
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From Les Sparks: In truth the transfer should not have happened before the the date of the split. That ends up being a compliance violation. Yes, I know that we just did it a few days late. So, if you leave it transferred it will look like a violation. I am not certain how HUD will react. If you transferred the liability at the same time, they might not notice. However, your AFS may be misstated. You could just “treat” it as if the transfer never happened. that is the easiest. However, it makes you look like you have purposely misstated the AFS and potential purposely tried to hide it. IMO, the best option is to show the transfer. Have a finding. Give it a thorough explanation and explain that no corrective action is required as the assets are now where they belong. I know that the client will not like the finding, but this is the cleanest and most true approach. Let me know if there are additional wrinkles. |