Searching For A Management Firm? Try These Interview Questions

Association Board Members and Selection Committee members often are challenged to ask the right questions of potential management firms during the interview process. The following are sample questions for Board and others to use, along with appropriate responses one should look for.

What does your Management Company have to offer in helping to improve the property values within our Association?

The Management Company should be professional community association management firm and as such should work closely with the Homeowner Association in meeting their particular needs regarding budget preparation and implementation, reserves analysis, financial reporting, site inspections, architectural and rules compliance, and assisting in vendor selection. Most importantly, the job entails promoting open communication, fruitful collaboration and building community spirit within the association.

The Management Professional should share his/her knowledge, experience, and utilize the expertise gained from professional designations from Community Associations Institute (CAI). Designations from “CAI” are granted to those individuals meeting comprehensive requirements of education and experience.

Identify the number of associations managed, the size and type of communities, and the largest and smallest accounts managed. Please state the number of account representatives your company employs.

We manage ____ communities ranging in size from ___ single family homes to a ____ unit complex consisting of condominiums. We currently have _____ community managers, ____ assistant managers, and ___ personal assistants to each community manager. (Be cognizant of the number of communities the firm manages and the number of community managers and assistants – overload will mean manager turn-over and burn-out which leads to lack of continuity for your community).

Please indicate Management Firm's total number of accounting personnel and if there will be a specific accountant assigned to us. 

Management Firm should assign a specific staff accountant to your Association and currently has ________ accounting personnel on staff.

What are the available methods for members to make their Association assessment payments?

Management Firm should offer the following methods for payment:

Mail in, via coupon and envelope - - to lockbox (Deposit information from the bank should be downloaded daily, edited and posted to community and member general ledger.) 

Mail in or hand deliver – directly to management office. Deposits should be made daily to the bank by a bonded courier. 

Credit Card, ACH, or Check-on-line – via a secure website – The charge for these services should be to the individual member utilizing the service, not to the Association.

What approach do you use or recommend for drafting checks or other payments on behalf of the Association? Are employees with checking authority bonded?

Management Firm should accommodate the Board's comfort level in drafting checks or other payments.

• Emailing invoices and open accounts payable report to Board Treasurer weekly prior to cutting the checks.
  
  
• Cutting the checks for signature
  
  
• Signature by treasurer and another director (if documents or Board requires) on Friday. CEO of Management Firm could sign if so directed in writing (via email confirmation of items approved from the accounts payable list) by selected Board liaison such as the Board Treasurer.
  
  
• All employees are bonded – Management Firm should have a check and balance system in place in the accounting department. Examples are as follows:
  
  
  • Accounts Payable Department is only department allowed by system to issue checks – no signature authority
    
    
  • Accounts Receivable Department is not allowed access to waive or change account charges (i.e. violation fines, late fees, etc.)
    
    
  • Finance Department reconciles all sub-departments, reviewing both support documents and bank statements.

What is included in the monthly financial report?

The following should be standard in Management Firm's financial reporting:

• Financial Narrative
• Balance Sheet
• Income and Expense Statement
• Includes monthly and YTD variance budget reporting
• Fiscal year actual expense vs. budget spreadsheet (i.e. Jan – Dec)
• Cash disbursements journal
• Detailed list (including aging) of accounts payable
• Detailed delinquency report
• Delinquency Summary Status Report
• Copies of actual bank statement, fully reconciled
• General Ledger
• Copies of checks and invoices paid during month

Do you provide customized accounting reports, when requested?

The Management Firm's accounting system should support the accounting task on different reporting levels, such as providing sub-ledger detail, creating graphs and charts, and other period to period analysis. A Professional Management Firm should be able to accommodate most requests of the Board of Directors in terms of reporting requirements and analyses.

Do you use accrual or cash basis?

Management Firm should recommend Association follow GAAP Accrual as the accrual method will k eep track of all financial activities, including revenue, as it is earned (as opposed to when it is received) and expenses as the obligation is incurred (as opposed to when it is paid).

Advantages:

• Makes possible a more accurate determination of the financial condition of the association at any point in time.
• Is a better method for multi-year tracking of capital reserves and deficiencies.

When can the Board expect to receive its monthly financial report?

The Management Firm should have the reports to the Board of Directors five (5) to seven (7) days prior to Board meeting.

When can the Board expect a draft operating budget for each year?

Management Firm should have to the Finance Committee or Board of Directors a first draft of the annual operating budget for review ninety (90) days prior to each new fiscal year. 

Will your firm prepare and file our state and federal tax returns? State Corporation Commission annual report? If so, what will this cost?

Management Firm should assist in supplying the names of CPA firms for the selection of same by the Board of Directors for completion and submission of state and federal tax returns. The CPA firm should directly bill the Association. The Management Firm's assistance regarding this process should be included in the basic management fee.

Who prepares your reserve fund analysis? How are the reserve funds and reserve transactions accounted for?

The Management Firm's community manager and community staff accountant should scrutinize the community's reserve study, as prepared by an outside expert, and submit reports monthly detailing funding of the reserves and related expenditures.

How does the Manager keep the Board informed between board meetings? Is such communication limited to just the Board President? What do you recommend in this regard?

The community manager should submit to the entire Board of Directors a monthly Board meeting recap report. The report would allow the manager to list the goals and work list for the next month and an overview of the meeting. The report would be used as a tool for the manager and Board to not allow issues to go unaddressed.

The community manager should then submit to the entire Board of Directors via e-mail a weekly update of the open action item list. This is a great benefit for ongoing communication and information between the Community Manager and Board of Directors regarding community response, issues, and on-going projects.

Does your Management Firm have a system in place to monitor service levels?

The Management Firm should have a monitoring system to verify its own performance. A performance survey should be mailed to the Board of directors with a number of categories and questions and also allow room for additional feedback. This form at a minimum should be mailed semi-annually with a return envelope addressed to the President of the Management Firm. The returned Performance Surveys should be reviewed, shared and acted upon. The Management Firm should respond to all performance survey responses with a personal phone call or card from the President or other senior officer following up on issues. This tool of management is crucial for quality control and keeping a pulse on overall service levels.

Please describe your supervisory structure in the event the Board desired to address concerns beyond the manager.

• President, CEO –
• Vice-President –
• Operations Manager –
• Quality Control Officer –

What education or training do you provide or recommend for Board members? For Officer positions?

Management Firm should hold weekly training sessions for its community managers and staff as well as the following:

• Periodic Board member education for new and existing Board members
• Officer position education – educations sessions should be arranged when requested by the Board of Directors.
• Committee education for new and existing committee members
• Homeowners in general –Annual informational sessions on their website and at new homeowner orientations.

What are the steps in that collection process and the costs associated with each?

Management Firms should follow the collection policy of the community. If the community does not have a policy, the Management Firm should help the Board of Directors adopt a policy and then notify the homeowners.

Recommend the following:

• Friendly reminder - 30 days – Cost ___
• Demand Letter – 60 days - Cost ___
• Intent to Lien Letter – 90 days – Cost ___
• Turn over to Collection/Legal – 105 days Cost___

How promptly do you guarantee a response to resident inquiries and by what means? 

The Management Firm should promptly respond to resident inquiries as follows:

Homeowners Assistance Desk:

• A resident's call is received by the Homeowner Assistance department and responded within four hours or less.
  
  
• If the Homeowner Assistance Dept. does not have the needed information, a call should be placed to the Community Manager to return resident's call or Homeowner Assistance Dept. to relay information.
  
  
• The Community Manager should be fully aware at all times of what is being processed by Homeowner Assistance with an automatic and immediate email message to the manager for their review.
  
  
• A post card is mailed or an email sent to the resident that called in, reading as follows:
  • Dear Owner/Resident
  • Thank you for calling on: __/___/___
  • (_____reason for call is restated ___)
  • (_____solution is restated and if needed additional information_____)
  • If you need further services or assistance please call 555-555-5555.

The Management Firm should pride itself as a leader in customer service so that:

• Residents are attended to promptly, consistently, and efficiently
• Manager is fully informed and has more time to visit and assist the community.
• The Community Board of Directors has an organized record of resident calls.

How do you handle after-hours communication? How do you handle emergencies?

• Management Firm should have a highly informed and trained Answering Service that provides immediate “live person” after-hour response, 24/7.
  
  
• When a call is placed to Management Firm after hours, the answering service calls the Community Manager on Duty. The On Duty Community Manager responds to the emergency call within 15 minutes or less. Procedure would be as follows:
  
  
  • Respond to person placing emergency call to confirm you are working on the emergency or ask additional questions to gain more knowledge of the situation.
    
    
  • The On Duty Manager would determine the severity of the emergency, time of occurrence, community manager and Board of Director notification requirement as to whether they would contact the emergency liaison of the Board of Directors
    
    
  • Effectively eliminate or control in the most cost efficient manner the emergency utilizing the On-call procedure for the community involved and community's vendors.
    
    
  • Emergency Report form is filled out and emailed to the Association's Community Manager at the beginning of the following workday.

MAINTENANCE and OPERATIONS

What is the procedure for obtaining Proposals on behalf of the Association?

• Completion of cost effective and efficient contract bidding, negotiations and administration.
  
  
• Management Firm's procedure for all contract bidding should be as follows:

1. The manager discusses all prospective projects with the Board of Directors or designated Committee. A “Scope of Work” for the project is then formulated and from that meeting a “Request for Proposal” (RFP) is created and reviewed by the Board and/or Committee. Once Board/Committee approval is given for the RFP, it is sent out to bid to a minimum of 5 to 7 vendors.
   
   
2. Upon receipt of bids, the manager should review them for accuracy and content against the RFP and set them up on a spread sheet for the Board/Committee's review.

• Verification of insurance and Bond coverage for all Contractors providing Services to the association.
  
  
  1. As part of the bidding process the manager should also research each vendor with the following agencies along with verifying that the vendor is properly insured, licensed and bonded. The property manager should also check out references and inspect quality of work whenever possible.
     
     
     1. Better Business Bureau
     2. Registrar of Contractors
     3. Insurance carriers
     4. Client references

What is the inspection and compliance program?

Management Firms should offer the following at a minimum:

• Implementation of a preventive maintenance program and development of a reserve for replacement analysis.
  
  
  1. Community Manager and Community Inspector should inspect the community and set up both a preventive and deferred maintenance schedule for the community.
  2. Community Manager should work closely with an independent reserve study specialist to prepare for the community's long term maintenance needs.
     
     
• Completion of field inspections and field supervision of contractors.
  
  
  1. Community Manager should meet on-site with all chosen vendors (example Landscape vendor) and review the scope for a project prior to the commencement of the job.
     
     
  2. Community Manager should make periodic inspections of the work being done.
     
     
  3. Community Manager should inspect the completed job and make a report to the board prior to the vendor's invoice being approved for final payment.
     
     
• Completion of scheduled property inspections to review property appearance and condition as well as overall curb appeal.
  
  
  1. The Community Manager should inspect the community for violations as well as maintenance issues and curb appeal as often as Board of Directors and community desire to assure a consistent and attractive appearance.
     
     
  2. The Community Manager should stagger violations inspections to include evening and/or weekend inspections for specific types of problems such as parking and/or trash can issues.
     
     
  3. The manager should report his/her findings to the Board by way of a weekly “Action Item List” which is e-mailed to each board member at the end of each week.
     
     
• Identification and notification to the board of serious non-routine maintenance needs along with proposal solutions.

The manager should report these issues to the board along with suggested solutions for the problems within 24 hours of the property inspection tour.

These are just a few of a myriad of questions that should be answered by a prospective management candidate before being awarded a contract for such services. While no candidate is likely to offer all services that a client might conceive, the more compatible the relationship on day one, the more likely it will be successful and meet expectations of the Board and homeowners at large.