MOTIVATING BOARDS TO MAKE SOUND FINANCIAL DECISIONS

10 tips for working with boards on financial issues.

1. Always plan enough time on the Agenda to review the monthly financial statement.
2. Make sure each board member understands the monthly variables between the budgeted numbers and the actual numbers. Record the information in the minutes.
3. When reviewing the annual Reserve Study, make sure all the members of the board understand and discuss the report. Are all components included? Is the life expectancy realistic?
4. When reviewing the Audit Draft point out any “interesting points” that the Auditor has made. Consider hiring a different Auditor about every 5 years to get a “second opinion” and feel confident that another Auditor is looking at the books.
5. Recommend experts to create specifications for large reserve projects. Then, create a matrix to clearly show the board the differences in the bids. Make sure enough is budgeted so that the expert can supervise to make sure that his specifications are being followed.
6. When comparing bids be thorough and able to determine the quality of each product that is used. What is the life expectancy of the application?
7. Collect assessments fairly. Review cost of living increases, completeness of reserve allocations, adequacy of reserve accounts and community expectations, each year. Homeowners should expect assessments to go up most years. Homeowners that “live” in the community should be setting aside money to pay for their fair share of the replacement of the assets.
8. Asking homeowners to pay for a special assessment shouldn’t come as a surprise if the board has been monitoring expenses, planning for the future, setting adequate budgets and making reasonable decisions.
9. Communication with owners is a large part of the board’s duty. Share the information. Invite owner participation in solving the problems. Create ad hoc committees to research and advise the board.
10. With the cost of housing increasing every year, it is in everyone’s best interest to invest in maintenance, refurbishment and revitalization of homes and community centers. Hiring architects and landscapers to re-design and create newer looking facilities is exciting and rewarding for all the owners that live in the community. Keeping existing communities repaired, clean and well-funded adds to the value for every owner.

Karen Bennett, PCAM®, CCAM®
Community Association Consulting
www.CIDexpert.com