CACM: California Law Series-Principles Of CA Law Flashcards
Assessments
Payments from members used for common association expenses
Operations
Cost associated with running the association
Reserves
Costs associated with maintaining,repairing or replacing the major components of the common areas identified in the reserve study.
Reserve Study
Document identifying the components the association is obligated to repair,restore,replace and maintain; Provides expected costs and timeframe for repair,restoration and replacement.
What are the Community Managers Role and Responsibilities?
- Assisting the board in undertaking their financial position
- Liaising b/w the board and the financial professionals they engage. (I.E Bookkeeper,CPA,Reserve Specialist)
- Documenting the receipt and use of all association funds.
- Assisting in the pre and implementation of operating Budget.
- Creating reports for the Board of Directors
- Providing info ration for preparation of reserve study and reserve funding plan summary.
- Collecting and disposing of association funds
What are Board Directors Financial Duties?
- Review a current reconciliation of associations operations and Reserve accounts.
- Review the current year actual reserve revenues and expenses compared to the current years budget.
- review income and expenses statements for the association operating and reserve accounts
- Review the latest account statements prepared by the financial institutions where the association has its operation and reserve accounts
- Prepare an accounting of expenses related to litigation, unless the governing documents impose more stringent standards.
What are the typically designated consideration of the board of directors for investment of funds?
- Safety and Security
- Liquidity
- Return on investment )(CD and MMA)
What are the safest investments for HOA’s
The safest investment are deposit in a sound FDIC-insured banking institution:
CD and MMA accounts
Management Responsibilities
Answer Board questions.
Identify any issues requiring board attention
Guide the board appropriately
Must be familiar with basic accounts terms and methodologies used in the finial MGMT process.
The three main bases of accounting are:
Cash Basis, Accrual Basis, and Modified Accrual Basis
What are the two main methods used to present financial reports:
Equity Method of reporting (Commercial Method)
Fun Accounting method of reporting
What is the Equity Method or Reporting Equation?
Assets = Liabilities + Member Equity
What is the Fund accounting Method of Reporting Equation?
Assets = Liabilities + Fund Balance
Liabilities and fund balances are shown separately for operating and reserves
What method of Reporting is the most used in HOA Financial Reports?
Fund Accounting Method or Reporting
Reserve Study defined
A reserve study is a document that identifies the components the association is obligated to repair,restore,replace and maintain and provides an expected cost and timeframe for each. A qualified reserve study preparer should conduct the study.
