When are Budgets due?
Within 90 days after the end of the fiscal year, or annually on such date provided in the bylaws, the association must have prepared a financial report on the financial activities of the preceding fiscal year.
Within 21 days after the financial report is completed, but no later than 120 days after the end of the fiscal year, the board must provide each member with a copy of the financial report or, at a minimum, provide written notice that a copy of the financial report is available upon request, at no charge to the members.
Some things to consider:
- Don’t delay – Start the process as early as possible so that you don’t miss items that could significantly impact your budget. Now is the perfect time to start preparations if your budget starts January 1.
- It is a monotonous task, but a vital one. In this day and age, assessments will more than likely have to increase due to increases in insurance, utilities, and that never ending “wish list.” Have a budget plan. Look at the goals for the community. What does the Board want to achieve?
- Review past budgets and the final year performance. If you overspent more years than not, obviously you need to make some changes.
- Pet projects don’t always make the cut. Be realistic about what can be achieved.
- Go over all contracts. You should have a spreadsheet of all contracts with expiration dates, whether they are auto renewed unless you send a cancellation notice, what is the cancellation timeline, does auto-renew have an increase and how much.
- Ensure you are funding enough for your reserves.
- Get a Reserve Study, or at least an updated Reserve Study to ensure you have accurate numbers.
- Have a well-funded maintenance program. The disasters of the recent past is an indication of just how important it is to keep up even the most mundane maintenance. Proper maintenance may help delay some of the replacement items in your reserve study.
The financial report must consist of a complete set of financial statements prepared in accordance with generally accepted accounting principles. The level of financial reporting that must be prepared by the board is based on the total annual revenue (including reserves) of the association, as follows:
- An association with total annual revenues of $150,000 or more, but less than $300,000, shall prepare compiled financial statements.
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An association with total annual revenues of at least $300,000, but less than $500,000, shall prepare reviewed financial statements.
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An association with total revenues of $500,000 or more shall prepare audited financial statements.
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An association with total annual revenues of less than $150,000 shall prepare a report of cash receipts and expenditures.
Interestingly, if the board desires to raise the level of financial reporting, it may be increased without membership approval by board action alone, unless the governing documents provide otherwise. In addition, if the board is not inclined to approve a heightened level of reporting, but the members want to do so, then upon twenty (20%) percent of the parcel owners petitioning the board to increase the level of financial reporting from that required by Statute for that fiscal year, the board must notice and hold a membership meeting within thirty (30) days of receipt of the petition. To raise the level of financial reporting, a majority of members present at such meeting must cast their vote in favor of doing so.
However, lowering the reporting threshold is a different matter entirely because only the members can make that decision. To accomplish this, a majority of members present at a properly noticed membership meeting must cast their vote in favor of lowering the level of financial reporting. The meeting must take place prior to the end of the fiscal year in question.
Tags: Budgets, Budgets & Finance
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