The Importance of Independence

Several years ago I suggested to the Board of Directors that the HOA should have its own accountant (CPA).

You can guess where that suggestion ended up. Right in the same place with everything else I have suggested. In the round file. In the shredder.

The Auditor just gives you the facts. She looks at the books. Were income and expenses allocated correctly? She doesn't advise on operations.

She does not opine about whether business was conducted correctly. Only whether the numbers add up.

Or down, as the case is with the 2023 Annual Audit, which is now on the HOA's website.

The net income sailed right through Zero into the red. And no one spoke up about it during the year.

Who was in charge in 2023? Justin Martin was the HOA President. Vernell Butler was the HOA Treasurer. Remember Vernell's Treasurer's Reports? "Everything is in good shape."

Justin and Vernell were in charge for ten months of 2023 until the November election of directors. Justin was not re-elected. Vernell continued his term on the board but was not re-elected as Treasurer. He quit on the spot, leaving the Board as well. 

When the 2024 Annual Audit is finally done and released, we'll see the further damage to the HOA's finances. The Calendar (and Fiscal) Year 2024 started with a $27,799.97 deficit. As the Board approved the 2024 Budget, the ($27,799.97) was right there in plain sight, all the way at the bottom of the last page.

The PRM (Art. III, §C, ¶4(l)) says the budget is to be balanced. "An unbalanced budget is not allowed, [sic] Income must equal Expenses." 

Why did the Board, in November 2024, ignore that? That meant the Board must increase Income as necessary; hence, an increase in Assessment! But they didn't. They didn't for 2024 or for 2025.

You will be able to get a preview of the 2024 Annual Audit, when the December 31, 2024 Financial Overview Report is distributed at the February 4, 2025 BOD meeting (or sooner posted on the website). What effect will that starting deficit and the $129,000 in over-spending (Variances as of 11/30/24) have on the actual bottom line.

Was it in February 2024 when Finance Committee member Mike Bryant asked at a board meeting if the Motions to spend money were coming out of budgeted expense items? It turns out they weren't. 

Should the HOA have its own accounting professional (CPA) to advise the Board when they are running off the rails during the year?

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