CAI-NJ May 2019 (w)

consistently funded so that the neces- sary funds are available when future major repairs and replacements are needed. Significant Budget Variances In addition to the balance sheet, paying close attention to budget vari- ances can also help board members and property managers become bet- ter informed about whether the impact of negative cash flow may arise. In many instances, the association’s income statement, included in the monthly financial package, will pro- vide budget vs actual comparisons to show where the association stands with certain line items. For example, large differences in difficult-to-bud- get-for operating expenses such as snow clearing costs and general repairs and maintenance vs budget can often have a major impact on the association’s operating cash flow. Carefully monitoring the association’s income statement for these significant variances on a monthly basis can help boards decide on the need to pass special assessments or make other changes in spending in order to recoup these unforeseen losses. Monitoring substantial negative budget variances on the association’s income statement is also beneficial in determining if reclassifications to other funds are in order. For example, often associations will budget for con- tributions to a deferred maintenance fund for cyclical type expenses that occur less frequently than annually. Perhaps the association is having a maintenance project done which takes place every 3-5 years and

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