Net Income at the end of the year in our general checking account

Started by ThomasL • 3 replies • 1200 views

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ThomasL (Pennsylvania)
Posts: 16

Posted:

As our Board is Volunteer we are not sure if what we are doing by taking the excess monies at the end of the year and earmarking them in CD's for the future.We were told that this excess money could be moved from the general checking account into reserve accounts. Are we doing this wrong? any suggestions as we were told you dont refund the excess back to the homeowners.

TimB4 (Tennessee)
Posts: 21,046

Posted:

not really.

The better way to do this would be to adopt a budget that accounts for how much is to be placed into the Reserves (based on a Reserve study). The board should then either by establishing a resolution or via board vote, decide where any budget excess should go toward (lowering next years assessment, placed into a contingency fund or added to the Reserves).

If the excess money is added to the reserves, depending on the amount, you may need to adjust the reserve study (which may end up adjusting the budget for the following year).

Based on your postings, it sounds like your Association doesn't really have a plan for Reserves. You may want to check on that and ask to see the latest reserve study. If none was done, why not offer to chair a committee to either a) do the study as a committee or b) solicit bids for a study to be professionally done. You may be shocked to discover the amount needed for the Reserves. After our study was done, we needed to increase Assessments by 20% in order to fully fund the Reserves.

Tim

SusanW1 (Michigan)
Posts: 5,202

Posted:

Thomas, the HOA can put money into CDs but be sure that it is readliy accessible in case you have to get at it. Your bank may help you with an interest bearing checking account.

This "pot" of money needs to have a purpose. Be sure - as Tim said - to conduct a Reserve Fund study.

The balance sheet at the end of the month could list what you have in the checking, petty cash, and the reserve fund.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Thomas,

See my comment under "Reserve Accounts."

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