Legal Expenses in the Budget - Blown!

On May 7, 2024 the Board approved retaining a new law firm, Turner Padget.

The October 31, 2024 financial statement for the HOA reveals that your Board of Directors has spent $21,403.62 this year on Legal and Professional Fees (Line 6500). That's just for the first ten months of the year. The HOA has over-spent its budget by $8,903.62, and two months remain in the year. As of October 31, the Board has spent 42.7% over its Legal budget for entire year!

The budget for the entire year for this Line is $15,000 ($1,250/month).
The pro-rata budget for ten months for the Line is $12,500.

Here's what Line 6500 looks like month-by-month:

                           Month                      Y-T-D
January            $1,549.74               $  1,549.74
February          $1,092.50               $  5,030.10   Error
March              $   782.00               $  5,812.10
April                 $   764.50               $  6,576.60
May                 $4,000.00               $10,576.60
June                 $   847.76               $11,424.36
July                  $1,486.40               $12,910.76
August             $4,640.78               $17,551.54
September       $2,510.60               $20,062.14
October            $1,341.48               $21,403.62

According to this Line Item in the financials, the HOA spent $6,576.60 in the first four months of the year. In the next six months the HOA spent $14,827.02.

The YTD amount at the end of February is incorrect. The financial statement shows $5,030.10.

However, the correct two-month total is actually $2,642.24 ($1,549.74+$1,092.50). Why did the financial statement show $2,387.86 too much, and why didn't anyone catch it?

Because of the error at the end of February, every YTD total since is incorrect.

One of the reasons no one caught it is because the HOA's financials do not include a Percent-of-Change column.  If the YTD amount ($5,030.10) was compared to the two-month budget ($2,500.00), a 100.2% in a Percent-of-Change column would have been a red flag to anyone who looked at it.

What was that flat $4,000 for in May? Did the Board know about that when they approved the deal with the new law firm? Was that the fee for engaging the new firm? Was it the final bill from the previous firm? Was there a reason that was not discussed at the May 7th board meeting?

I have recommended use of Percent-of-Change columns to the HOA for at least four years. I suggested that a Treasurer (before Linda) confer with the HOA's Auditor about the importance of such a column. Who knows whether he ever did?

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