Podcast
Questions and Answers
How often should a reserve study be commissioned or updated?
How often should a reserve study be commissioned or updated?
- Every year
- Every five years
- Every ten years
- Every three years (correct)
What should be included in a long-term operating budget?
What should be included in a long-term operating budget?
- Expenses for the current year and the next year only
- Only expenses for the current year
- Only expenses for repairs and replacements
- Reasonable reserves for future major repairs and replacements (correct)
How often should financial statements be requested from the manager or accountant?
How often should financial statements be requested from the manager or accountant?
- Annually
- Quarterly (correct)
- Monthly
- Bi-annually
What should be done with the annual financial statement?
What should be done with the annual financial statement?
What is the purpose of a written collection policy?
What is the purpose of a written collection policy?
Who should approve all write-offs of delinquencies?
Who should approve all write-offs of delinquencies?
Why should the board solicit competitive bids for services?
Why should the board solicit competitive bids for services?
What is the purpose of requiring board authorization for expenditures over a certain amount?
What is the purpose of requiring board authorization for expenditures over a certain amount?
Who is the publisher of the Financial Operations Report?
Who is the publisher of the Financial Operations Report?
Under what conditions can readers reproduce the Best Practices Reports?
Under what conditions can readers reproduce the Best Practices Reports?
What is the purpose of the Financial Operations Report?
What is the purpose of the Financial Operations Report?
Who are the intended users of the Financial Operations Report?
Who are the intended users of the Financial Operations Report?
What is the address of the Foundation for Community Association Research?
What is the address of the Foundation for Community Association Research?
What is the disclaimer about professional services in the report?
What is the disclaimer about professional services in the report?
Who are the panel members of the Financial Operations Report?
Who are the panel members of the Financial Operations Report?
What is the copyright year of the Financial Operations Report?
What is the copyright year of the Financial Operations Report?
What should be ensured when collecting assessments from owners?
What should be ensured when collecting assessments from owners?
What is the purpose of specifying a timeline for collecting late assessments?
What is the purpose of specifying a timeline for collecting late assessments?
What should be guaranteed by state statute or governing documents?
What should be guaranteed by state statute or governing documents?
When should an account be referred to legal counsel?
When should an account be referred to legal counsel?
Why must all associations file a federal income tax return every year?
Why must all associations file a federal income tax return every year?
What should be provided for in the collection of delinquent assessments?
What should be provided for in the collection of delinquent assessments?
What should be ensured when communicating with delinquent owners?
What should be ensured when communicating with delinquent owners?
What should be guaranteed in special cases of delinquent assessments?
What should be guaranteed in special cases of delinquent assessments?
Study Notes
Financial Operations
- Commission a reserve study and/or update the current reserve study at least every three years, and review the report annually.
- Prepare a long-term operating budget covering the next three to five years, including reasonable reserves for future major repairs and replacement of common facilities.
Disclosure
- Provide homeowners with reasonably detailed summaries of budget and reserve information annually, with further information readily available.
- Request financial statements from the manager or accountant at least quarterly.
- Inform homeowners that the annual financial statement is available for review, which may be a review, compilation, or audit.
Policies/Record Keeping
- Develop a written, board-approved collection policy for enforcing owners' assessment obligations.
- Establish that the board must approve all write-offs of delinquencies in a timely manner.
- Solicit competitive bids for services and require board authorization for all expenditures over a predetermined amount.
Collection Policy
- Outline the steps to be taken by the person(s) responsible for collecting assessments when a payment is late, with a specific timeline for each step of the process.
- Provide proper advance notice of the due date for assessments to all members of the association.
- Uniformly apply collection policies to all owners.
- Ensure that steps taken to collect assessments are authorized by enabling statutes, governing documents, and fair debt collection requirements.
- Allow for discretion in special cases, with the burden of requesting special consideration placed upon the owner.
Federal Income Tax Filing Responsibilities
- All associations must file a federal income tax return every year, regardless of taxable income.
- Filing a tax return does not necessarily mean that the association owes the government money.
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Description
Test your knowledge on condo association financial operations, including reserve studies, long-term operating budgets, and assessments for future repairs and replacements.
