Four Steps to Financial Fitness for your Community
We all know the key to physical fitness is to practice moderation and to make smart choices. The same applies to keeping your community association association’s finances healthy! The only thing you have to exercise is good judgment. We’ve created four tips to help you do just that.
1. Make sure your internal controls are up to par.
Implementing best practices such as separating some duties like recording receipts and making deposits will help protect your association from financial misappropriation. A professional community association management company can help you guard against financial misdeeds and wrong doings, as well as guide you on providing financial transparency for your community association members.
2. Audit the books regularly.
Hire a good CPA to analyze your documents and records on a regular basis and make sure you are following industry-standards in your bookkeeping. Regular audits also help ensure transparency in your financial dealings. A review, which is less intensive than a full audit, can be conducted intermittently by an accountant to make sure your finances are on track.
3. Get the right insurance.
Your association will need to purchase multiple types of insurance. In addition to property or casualty coverage, you may need liability insurance to protect the association against lawsuits, umbrella or excess liability coverage and fidelity insurance, which covers claims related to theft. Directors and officers liability insurance is another coverage to investigate; it protects individual board members from liability for actions taken in the course and scope of their duty.
4. Invest wisely.
Establish a policy that dictates how your reserve funds can be invested, maintaining both the safety and liquidity of the funds. Corporate bonds, municipal bonds and stocks may be too risky, so stick to safer investments such as CDs. It is important to recognize that investment options may be limited by both your documents and applicable law; check with your community association’s attorney if you have questions.
There you have it – four quick ways to help ensure you’re keeping your community association financially fit and your finances transparent. Remember, this is just a start. An excellent community association management company will be your partner in developing further strategies for both the long- and short-term. To find out more, contact FirstService Residential, North Carolina’s leading residential property management company.