One of the common agenda items that are acted upon at regular meetings of a homeowners association’s board of directors is the „Treasurer’s Report.“ Unless a specific format is mandated by state laws or the association’s governing documents (generally the „Bylaws“ ), the report is frequently a verbal statement made by the Treasurer, but it is also common for treasurers to have some form of a writing that contains the necessary information which is presented to the directors at the meeting.
Content of the Treasurer’s Report
Because it is important to keep association directors and members informed about the financial condition of the association, the Treasurer’s Report should contain sufficient information to apprise the directors and association members of the current status of the association’s finances. Thus, the report should include the following information for the period covered by the report:
a. Total receipts.
b. Total expenses incurred by the association.
c. Current bank balances for the various accounts maintained by the association.
d. Total assessments levied.
e. Total assessments collected by the HOA.
f. Total outstanding assessments.
g. Number of liens filed and the gross amount of said liens.
h. Total amount due from all recorded liens.
i. Number of liens satisfied and released by the HOA and the amount collected.
j. Number of foreclosures of liens on owner separate interests (if any).
Some of the above described items could be satisfied by the treasurer providing the board with a copy of financial statements such as a balance sheet and an income and expense statement that compares the income and expenses to the approved budgeted amounts for the various line items contained on the income/expense statement. It is also a good practice to include year to date information on the financial statements. Some associations will also create graphical accounting presentations of the information to facilitate a quick understanding of the reported information.
Approval or Acceptance of the Treasurer’s Report
The minutes of the board meeting at which the treasurer’s report was given should reflect that the Treasurer delivered his or her report to the board and that copies of written material utilized by the Treasurer were received by the association’s Secretary and filed. Common language that may be included in the minutes of the meeting to reflect the fact that the report was given to the board is, „The Treasurer’s monthly financial report was submitted to the Board of Directors and received by the Secretary,“ or “ The Treasurer’s financial report covering the period of __________________ was given and delivered to the Secretary.“
A common mistake made by association boards is to collectively act to either „accept“ or „approve“ the Treasurer’s Report. Action by the board following receipt of the Treasurer’s Report to accept or approve the report is unnecessary and improper because the directors lack sufficient knowledge of the facts that were reported upon and the expertise to evaluate the correctness of the report. The acceptance or approval process does not take place until the association’s accountant or auditor actually reviews the information and certifies the correctness – subject to any stated limitations. An association’s governing documents and/or state laws will specify the requirements for financial audits and reviews that must be complied with.
A homeowners association’s finances are critical to the success of the association. Association directors are obligated to manage the association’s finances in a prudent manner and, without regularly receiving and evaluating complete financial information, they cannot properly perform their responsibilities. Associations that are not receiving proper financial reporting from their Treasurer should take immediate action to correct this deficiency.