Finance Committee Minutes

January 20, 2009

The Finance Committee of the Falls Run Homeowners’ Association met this afternoon in the Center.

Personnel in Attendance: Don Horan, Bill Barnes, Daniel Owens, Tom Whalen, John Frisch, Art Gabler, Nancy Garner, Bill Trzyna, and Casey Naatjes. Also in attendance were Debbie Sutton and Ann Jones.

Center Financial Procedures:

Bill Trzyna and Ann Jones provided the committee with a summary of center financial procedures. These procedures support the community in three ways: The director has a budget for social events that are supported by the Operating Budget of the HOA. Additionally there are many social events that are largely self-financed. Finally, the Director makes several purchases to “keep the wheels turning” efficiently.  The following points of consensus surfaced during this presentation.

• Community members pay, in advance, for self-financed events by check. Each check payment by a participant is logged-in on an Excel Spreadsheet by name, amount, and check number. This documents revenue on a “by event” basis.

• Reimbursable Expenses are paid from the Center Checking Account. Paid receipts are consolidated, as necessary, and sent to Armstrong Management Services (AMS) to replenish the Center Checking Account.

• The Director maintains an organized file of paid receipts for all events for documentation and for audit purposes.

• The Director uses Quick Books to record all deposits and disbursements. Bill Trzyna, a member of the Finance Committee, works with the Director (Ann Jones) to summarize events as they are completed. Summary Journal Vouchers of these events are prepared, signed by the chair of the committee, and submitted to AMS for entry into the official accounting system of the HOA.

• In general, there was agreement with the foregoing procedures, except that it was noted that there are instances where “normal” replenishment of cash was not sufficient to support operations. It was agreed that Bill Trzyna and Casey Naatjes would write up a draft procedure for Board approval to support this need.

Reserve Requirements Administration

Casey Naatjes reported that, with help from Don Horan, he had replicated the financial computations from the Mason and Mason Reserve Requirements Study (last updated in 2007). After discussion, we noted that the Equity Section of the Balance Sheet had been modified to reflect contributions, interest, and capital expenditures. Additionally, it was agreed that such expenditures, by risk pool, should be recorded as they occur. This record will support the next mandated “repricing” of Reserve Requirements. It was noted that State law requires a “repricing” at least every five years (2012). However, the committee will monitor expenditures, and income to determine if the HOA should “reprice” more frequently. Participants expect that the Board probably favors the funding of the next “repricing” effort as a line in the Operating Budget. If there is guidance to the contrary, we request it from the Board.

Financial Report Products

It was noted that Financial Reports could be distributed as early as the 20^th of the following month, but that AMS was not required to complete these reports until 30 days after month-end. Expectations, therefore, have been tailored to this reality. This may be an issue when the support contract is renegotiated.

A new product, an Excel-based posting journal was described. It will be distributed by Casey to the finance committee each month. He was able to “parse” this output from the General Ledger pdf file produced by AMS.

Insurance Requirements

Art Gabler was introduced as the newest member of the committee. His role in monitoring insurance coverage was discussed, stressing that his role was not operational. AMS has the operational responsibility.

Other Matters

Delinquency rates were noted. It was agreed that the rate is low. However, it was important to execute liens on a timely basis and/or bar delinquent residents from Center participation. The ability to monitor center attendance and participation was discussed briefly: no conclusions drawn.

Adjournment: 4:15 pm.

Casey Naatjes

Chair