What’s the Story with Your Financial Statements? Gayle L Cagianut, CPA

Comedy? Tragedy? Mystery? Suspense? Fiction or NonFiction? Research Paper? Textbook? Foreign Language Translation?

Plot – Where does the money come from and where is it going? What do we have and what do we owe? Is our budget adequate? Are we financially stable?

Characters – Who is handling the money/financials? Who is watching over the dollars/financials? Watching out for “villains”! Error or fraud Remembering whose money this is!

Setting – What type of Association do you have? Older, newer, single family, condo, high rise, mixed use, rural, amenities, etc.? Obligations, needs, expectations?

YOUR FINANCIAL STATEMENTS NOT just a bunch of numbers!!! They are telling you a Story… Let’s begin!

Operating Cash Sufficient cash to pay bills? Excess cash sitting in checking? Reviewing the bank statements? Are there old, outstanding items on the bank reconciliation? Is someone other than the manager or treasurer seeing the cancelled checks?

Reserve Cash Funds invested in accordance with your investment policy? Consider FDIC or other insured coverage Funds available when needed? Expenses/transfers approved? Are there 2 Board signers? Receiving statements on ALL cash accounts?

Assessments Receivable Do you review the aging report? Does it agree with financial statements? Collection policy followed? Bad debts reviewed? Does the Board approve all account adjustments over a certain dollar amount?

Revenue Assessment income agree with the budget? Interest, late charges, compliance fees….posted timely? Miscellaneous income monitored? – especially cash or nonstandard E.g. Laundry, Move In/Out, Amenity rentals, Insurance Proceeds, Settlement Monies

Expenses Items over or under budget – explained? Bills paid timely? Operating or reserve expense? Annual vs. long-term? Or extend the life of asset Operating budget or reserve study? Often Board discretion – but document! Board approval for unusual, non-recurring and reserve expenses? Bid process, where appropriate?

How much $$ is enough?? Fund Balance Replacement Fund (Reserves) Look to Reserve Study Percent Funded Funding Plan

How much $$ is enough?? Fund Balance Operating Fund (Members Equity) CAI/Industry standards Generally 1-3 months of operating expenses BUT…know YOUR Association’s needs For Contingencies & Cash Flows

This IS an important story! Some Hints & Helps Read a “chapter” at a time Choose to focus on one area at a time Look to the big dollars first Cost-benefit rule Ask someone who knows Get help from those around you Don’t give up!! You will be rewarded when you find those savings and successes. This IS an important story!

Enjoy YOUR Association’s story!! I am available for questions via e-mail gayle@ hoacpa.com Our website contains many FAQs on financial, audit, accounting and tax www.hoacpa.com