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Category Archives: Financial Controls

HOA Cash Management Programs

Cash Management Programs for Community Associations

Board members have the fiduciary responsibility not only to monitor the income and expenses of their association but also to utilize processes that provide both safety for assessments collected from homeowners and control of costs. If your community association or management company has not recently reviewed your payment processing and cash management systems, you may be unaware of innovations that can make your staff more efficient, save money and help to increase your investment earnings.

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Understanding Your HOA Finances

Understanding Your Community’s Financial Position in a Tough Economy

Financial Position

While it is always important to know where your community stands financially, it is especially important to understand the community’s financial status in an economy riddled with increasing expenses, higher delinquencies, and more bad debt write-offs. Following are several recommendations and standards for analyzing a community’s financial health:

Recommendation A: 2-3 months of expenses in your operating account(s) (liquid funds) at all times.

For example, if your community has a budget of $20,000 per month for operating expenses, we would recommend that you have between $40,000 and $60,000 in an operating fund savings account. Doing so helps to ensure that the association can cover monthly expenses plus any unbudgeted expense that may arise, even factoring in assessments that are delinquent and not received. Boards should keep this in mind when considering investment opportunities. Only funds in excess of two – three months of operating expenses should be considered for longer-term investments that commit the funds for months or years.

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9 Steps to avoid HOA Embezzlement

How to Recognize HOA Embezzlement–and 9 Steps to Minimize Your Risk

“Creative accounting” or “cooking the books” has been on the rise in HOAs the past few years. Headlines are unfortunately full of cautionary tales. Consider these two recent cases:

  • A former treasurer of the Woodbridge Townhomes Homeowners Association in Nevada City, Calif., recently entered a guilty plea to embezzling more than $100,000 from the association.
  • HOAs that contracted with Kroger Management Group claim the Fairfax, Virg., firm stole more than $2 million from client associations.

Embezzlement is also perennially under-reported. Many cases are simply settled quietly because the victims—the HOAs—don’t want to face the bad publicity of announcing the theft.

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* These articles and related content on this website are provided without warranty of any kind and in no way consitute or provide legal advice. You are advised to contact an attorney specializing in Association Management for legal advice related to your specific issue and community. Some articles are provided by thrid parties and online services. Display of these articles does in no way endorse the products or services of Community Association Management by the author(s).