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New Reserve Study Standards Issued by International Group

The International Capital Budgeting Institute (ICBI) announced the adoption of new professional reserve study standards effective April 16, 2015.  These standards, known as Generally Accepted Reserve Study Principles and Generally Accepted Reserve Study Standards, represent the culmination of a year-long effort by ICBI to provide standards for reliable, consistent reserve studies for the community association and timeshare industries.  These standards represent the biggest change in the reserve study process in twenty years and will result in better reliability and consistency of reporting in reserves.  

ICBI formed a team of 16 industry professionals from six countries for this process.  The ICBI standards committee included a broad spectrum of industry professionals that were able to provide a perspective reflecting all stakeholders in the industry.  These are truly global standards and are already being applied in several countries.

The primary differences of the new ICBI standards as compared to previously existing standards are best summarized in four broad categories:

1) A more comprehensive definition of components – The standards expand and clarify the definition of components to reflect the true maintenance responsibility of the association.  This results in greater consistency and reliability in reserve studies.

2) A more definitive description of service levels – ICBI provides for three service levels; independent study, reserve management plan (collaborating with the association), and consulting.     


3) A requirement for consistent calculations – ICBI standards establish requirements for consistent calculation methods and software capable of making accurate calculations.  Standards also require consistent terminology definitions.      


4) A consistent and uniform approach to reporting on reserve studies – ICBI standards require specific, consistent reporting formats on a summary basis, generally with a report of no more than 20 pages.  Supplemental schedules providing the detail are generally separated from the basic report.

The result to the public is a reliability and uniformity that benefits all users of reserve studies.

There are articles providing a more complete description of these standards in the Linkedin groups “Condo and HOA Finances” and “Condo and HOA Reserve Studies.”  Another financial related group is “Condo and HOA Taxes.”  All are open groups, but you have to be a member of Condo and HOA Finances before you can join the other two.





Read 2413 times Last modified on Wednesday, 22 April 2015 10:17
Gary Porter

Gary Porter, CPA, RS, PRA, has been working in the community association industry for more than 30 years.  As a CPA, he has performed thousands of association audits, and prepared thousands of association income tax returns.  He has specialized in the preparation of tax exemption applications, and has successfully taken more than 80 associations tax exempt, at a cumulative tax savings of millions of dollars.  He is the primary author of PPC's "Guide to Homeowners Associations" and "Homeowners Association Tax Library," which serve as the principal guides used by CPAs within the community association industry.

As a reserve preparer, he has performed hundreds of reserve studies since 1982, and is author of the 1988 book "The Reserve Study Manual."

Mr. Porter is a past national president of CAI, and a member of the Association of Professional Reserve Analysts.

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