Financial Review

Financial Review

Country Club Villa Association, Inc.

for the period

January 1, 2022 through December 31, 2022

Purpose:  To assure the board of directors and membership that the financial records of the organization are accurate and complete, that they are maintained in accordance with the organizational documents, and to assist in protecting the continued financial viability of the organization.

Scope:  Information presented here is based largely on a review of the materials furnished by the Treasurer of the organization, Greg Mayer and the QuickBooks accounting program which I maintain.

Disclaimer by reviewer:  As a board member, I cannot claim total impartiality, and therefore I cannot claim that I do not have a conflict of interest, and the absence of a conflict of interest is one of the essential elements of a valid financial review. Also I am involved in most financial decisions of the organization, and I am an authorized signor on some financial assets of the organization.  However,  since dual signatures are required on all checks, I believe the potential for a conflict of interest or unauthorized use of funds on my part is negligible for the purposes of this review.  The QuickBooks accounting program which I maintain reflects the records of the Treasurer and the financial institutions which hold our funds.  Members will want all three parties to agree as to balances, when adjusted for items that have not cleared the bank at year end.  Also I am not an accountant or auditor by training or experience, so my review is limited to matters that seem appropriate to me. 

Observations:

1.   At $90 per month per unit, the organization’s budgeted revenue should amount to $36,720.00 for the year.  Deposits to the bank checking account from dues  totaled $36,720.00, so revenue from dues exactly matches our budget.  

2.  The treasurer keeps a record of who has paid, and their frequency of payment, and all members are shown to be current at year end 2022.  

3.  The position of our checking account is summarized as follows:  

Ending Balance on Bank Statement, 12/23/22.                                   $17,048.61

Add deposits in register, not on statement.                                                     $0.00

Subtract checks or withdrawals not on statement.                                 $100.00

Ending Bank Balance.                                                                                     $16,948.61

Ending Checkbook balance.                                                                         $16,948.61

Difference.                                                                                                                       $0.00

 The difference amounts to $0.00, so the bank and our checkbook agree.

This is a summary of our Reserve Accounts as of 12/31/2022:

Interest bearing accounts

TruStone, share account.         $52.65

CD   #1                       $12,573.31

CD #2                         $10,000.00

CD #3                        $10,000.00

Total                                         $32,625.96

Total cash accounts as of 12/31/2022:     $49,574.57   

4.  The bank has furnished digital copies of checks we have written.  All checks from #1635 and later had two signatures fully visible on or above the signature line.  Prior that , a portion of one signature was often not visible.

5.  Checks were paid to insurance agencies or companies for Directors and Officers Liability Insurance, the Treasurer’s Bond, General Liability, and Property Damage (for the well and equipment), and the policies appear in force as is required by our By-Laws. 

6.  The QuickBooks year end cash position, our year end checkbook balance, and the final depository institution statement agree.

7.  Budget and Reserves

1.   Budget:  The budget for 2023 shows a negative income of ($7,242).  This reflects:

a.  An increase in the amount we spend on lawn care and snow removal of $7,202.  

b.  An increase in irrigation expenses of $2,085. 

c.  An increase in Management Expenses of $8,000.

Because of these increases, the cash position of the association will be diminished by about $7,200 in 2023, reducing the operating account from $16,900 at year end 2022 to a projected $9,700 at year end 2023.  

The board notes that the organization has enjoyed a surplus in the operating account for many years, so it chose to spend down some of the surplus to cover the projected net operating loss.  

The board announced in December 2022 an increase in dues from $90 per month to $110 per month beginning January2023, which is the first increase since 2016.  

Since the expenses of the organization are expected to continue at the new level, the board has alerted the membership to expect another dues increase in January 2024.

All actions or assumptions of the board as to the budget, reserves, anticipated cash positions and dues seem reasonable, and should position the organization to meet its obligations and provide traditional services.  

2.  Reserves:  I feel the reserves we maintain are adequate to cover the burden of any foreseeable financial obligation due to the failure of one of our assets.  In October 2020, I have obtained estimates from two vendors to drill a new well and replace related well equipment, and those estimates are incorporated into the reserve analysis.  A copy of the reserve calculations is attached.  

Conclusion:  The financial activities of the organization appear to be timely and in accordance with the requirements of our By-Laws, and the records appear accurate and complete.  Although the revenue projected in 2023 is not sufficient to cover all ongoing obligations, the board’s decision to utilize some its operating account surplus seems reasonable for 2023.  It also seems reasonable that the board is predicting a similar dues increase in 2024. 

Joe Mullen

January 12, 2023