August 2024 CT

PROCEDURE REPORTS... from page 16.

developer gave up control of the board. 5) Calculate the replacement funding based on an updat ed capital reserve schedule using the cost index appli cable to the year the first unit was sold and subsequent updates and compare it to amounts funded to the replacement fund as per the audited financial statements and calculate the difference through the end of the year when the developer gave up control of the board. 6) Inspect material cash disbursements (over $XXX) and underlying invoices and/or documentation for the peri od from date of inception through the end of the year when the developer gave up control of the board and identify any disbursements not included in the budget for the operations of the association. To clarify #5, normally when a developer issues a Public Offering Statement, for a condominium association or a homeowner association with more than 100 units, it includes a budget and a schedule of reserve funding. The new regulations require that the schedule be prepared by a reserve specialist or an engineer. When associations

maintain attorney client privilege. Communication directly between the board and the accountant are not privy to the same. All that said, we can look into what are the most common procedures performed: 1) Obtain the association’s governing documents and detail the sections that reflect the developer’s financial responsibilities. 2) Obtain any prior audited financial statements and cal culate the developer’s responsibility regarding the deficit for each year of the association through the end of the year when the developer gave up control of the board. 3) Calculate the members’ initial working capital or other based on initial closing of all units through the end of the year when the developer gave up control of the board. 4) Calculate maintenance fees due from the developer, if any, on unsold units after end of the year when the

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AUGUST 2024