Understanding Financial Statements –

Cash and Bank Accounts

Are bank reconciliation's reviewed by the Board?

Is the bank statement reviewed with the bank reconciliation?

Are outstanding checks dated over 90 days reviewed and action taken?

Are cash deposits in FDIC insured accounts?

Are the bank account signature cards current?

Is the total cash balance in any one financial institution over $100,000?

Are bank accounts (operating and reserve) in the name of the association?

Is the management company who handles the cash bonded?

Cash Disbursements

Are vendor invoices paid timely to avoid late fees/penalties?

Do reserve transfers between accounts require two signatures?

Are checks pre-numbered and accounted for in sequence?

Are vendor invoices reviewed and approved for payment?

Are vendor payments posted to the proper general ledger account?

Accounts Receivable

Are bad debt write-offs approved by the board?

Is there a written, approved collection/delinquency policy in place?  If so, is the policy followed?

Are late charges being levied on past due balances?

Is the Accounts Receivable aging reviewed each month?

Are past due balances vigorously pursued by collection agency, attorney, other legal action?

Are liens and lien releases filed on a timely basis?

Are cash deposits made on a timely basis and safeguarded until the time of deposit?

Are adjustments to member accounts made with executive approval?

Are assessments being properly charged in compliance with the governing documents and budget?

Financial Statement

Do the board members and/or Treasurer review the financial statements each month?

Are reserve balances compared to reserve study?  Is there a supplemental report for reserve contributions and expenditures?

Is there an income statement to budget comparison report?

Are variances noted on the financial reports?

Are the financial statements prepared promptly?

Is the general ledger chart of accounts adequate for tracking association transactions?

Accounting Administration

 Is there an accounting manual that details control measures?

 Is the reserve study updated on a periodic basis?

Are there accurate minutes of board meetings where financial decisions are approved?

 Is the budget prepared and approved by the board each year?

Is the budget approval process in compliance with the governing documents?

Are the records in good order and easy to access?

Does the records retention follow approved IRS guidelines and practices?

Does the association contract for an audit on a periodic basis and/or in compliance with the governing documents?