Chad, unfortunately, these items are almost always findings. Here is why. First, client calculated at December 31, 2015. It has $100k. This was included int he prior year submission. Second, you enter the calculation at “mid year”. You can only enter 1 mid-year calculation in the submission. There is no ability to enter another “mid-year” calculation. That is the definition of mid-year. (ha ha). So, HUD takes the sum of the prior year and mid year calculation and subtracts all uses of surplus cash. If you show more distributions than cash available, then it is a flag – automatically. There no avoidance of this finding if the totals do not match.

So, you have seen the discussion about the definition of mid-year. Not much too add there. However, I can unequivocally state, that there only one mid-year calculation per year – not two.

So, yes it is a finding. The only question to answer at this point is “How much was improperly taken from the project?” I find it best to look at proforma calculations of what surplus cash would have been had they not taken the early distribution. Then at the two aspects separately. Were they taken in the wrong period, but would have had sufficient surplus cash had they not messed up the timing and did they take too much no matter what.

Based those answers, you will know what the findings will be. There can be a finding for timing (too early, but would have had enough cash) or a finding where too much was taken no matter the timing.

Les