HOA Community Income/Expense Financial Statements
I recently discovered our I/E reports do not contain any itemized entries for capital expenses from the Reserve account. Under “Expenses” they just entered a lump sum amount (debit) then just enter the same corresponding lump sum as Labeled “Transfer to From” with a credit resulting it a Total entry of zero.
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Darlene,
While the accounting practice is amateurish the real issue is are they transferring reserve account money to the operating account to pay for operating expenses or are they doing this transfer to pay for approved reserve account work like long term maintenance projects outside of the normal operating account.
If the latter is happening all is good but if they are using reserve account to pay for operating expenses because they overspent their budget than they are violating IRS rules for account separation for these communities. They could be fines and could lose their non-profit corporation status for violating and failing to report income to the IRS for taxation purposes. A simple letter to the IRS could generate an audit of the association for the last three years by the IRS.
Dennis
I get you represent the Board of the HOA for however they last ( because the HOA is the community the shareholders). Have a good day!
I don’t understand what you mean by that comment but i try and provide all members the truth about the laws and principles governing these communities, board members are homeowner as well.
I do understand our CC&R’s I wouldn’t questions their actions if i didn’t, but didn’t think it appropriate to disseminate online. CC&r’s are really pretty standard documents developers use to incorporate an HOA when they sell off the community. As far as the specially assessment that was done in nafarious way too, threatened to not fund our bulk cable contract to use the money for Reserve which was nothing more than holding it hostage to get us to agree to the special assessment, but they didn’t state a sunset date which I beleive is 1 year and has to be voted on again, but they call it perpetrul now and say they will threaten our cable again if necessary! I don’t beleive they get several bids for things either, they just find who they want could be a friend or involve kickbacks, but I know I was on the ACC committee and witnessed how they operate. These politician type board members go rouge and derail the HOA.
Board’s can get away with idle threats if homeowners allow them to. There is no legal way for the association to cut off your cable service if you fail to approve a special assessment. Anyone that believes that is simply blind. Just say no and call their total bluff. If they take away one homeowner’s cable service, they could be sued for everything they have and then some.
Well they did threaten and it came to going around and getting people to sign a petition of members against it and the HOA meetings were at full capcity, it was unethical to say the least, didn’t even try to approach our reserve issues from a position of working together it made me very disturbed and still does. But now they are trying to keep financial information that used to be in our financial reports from us now an that makes me very nervous as we are at the same point again with our reserve account due to their managment. This is how they think members won’t question their management and remove them.
I think you have served on the board where you live and are kind of on the defensive which is not what I expected but I understand why it seems I have to explain my position while you explain the boards. Thank you for some points you made I knew but see I will have no choice but to continuously request documents if they don’t change the transparency. If they don’t provide the documents, I will file a complaint with the state and go from there. I already told them this issue is not just going to go away because they hem and haw around hoping I will become discouraged.
Darlene,
I’m sorry that you believe that I’m not giving you the answers that you want, but I’m not an attorney and have to obligation to tell you what you want to hear. I have committed to inform both homeowners and board members of the truth irrespective of what you want to hear. There have been dozens of court cased on records request as the most litigated aspect of all common interest communities’ statutes and I’ve read every one of those cases. What I relayed to you is the reality relative to reasonable request for records and what courts have rules relative to those cases. If you want record request honored, you need to stay focussed and specific in your request and not give the association a reason to deny your request. You are free to take my advice or not but if you chose not to head my warnings, then you will get what you sow with the association. If you enjoy throwing money away on frivolous litigation then you are free to do that, but you will not only be hurting yourself but also every other homeowner in your community.
Dennis