CAI-NJ July 2022

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FINANCIALS... from page 36.

Good Housekeeping Separate Operating Funds from Reserve Funds: many communities use only one bank account. It is recommended that communities have a second bank account for their reserve funds. This will help track these more clearly on the balance sheet monthly to see exactly how much one has to put aside for capital replacement projects. Operating Expenses Paid from Reserve Account: it has been seen where communities use the reserve account as a slush fund for operating account short falls. If communities have to use these funds, it is recommend ed to borrow them for a short term and then replenish them with a special assessment. One should try to do the special assessment quickly after the cause of the budget shortfall so it’s fresh in the owner’s minds – an example is more snow than anticipated in a year assessed while it’s still cold instead of during mid-summer. Collections: if a community doesn’t have a collection policy that outlines what will be done at what time and the associated fees owners will pay put, it is recommended to put that on your to-do list. This will aid the board, manage ment, accounting staff, and homeowners to be clear on the CONT I NU E S ON PAGE 40

sure you have a process in place to track the credit cards when board members or staff change. Petty cash can be just a bad idea. It is recommended to not accept cash as payment as it can easily “get lost.” The best way to avoid all of these scenarios is to use a supply house that will invoice the association or, if the purchases are infre quent, for a board member to make the purchase and then submit reimbursement through an online approval system as mentioned above. Payroll: a community had onsite staff and chose to “save money” by having that staff member use Quicken to run payroll. The person doing payroll ended up giving themselves extra paychecks as well as additional bonus checks! Moreover, if withholding rates change and you don’t change the rates in your software you may incur a shortfall. Depending on how quick the State is to notice this you’ll be liable to pay the shortfall as well as stiff penalties. Best Practice: It is recommended to use an outside pay roll company to reduce risk.

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