Your HOA board plays a critical role in the well-being of your community, and your treasurer is at the heart of its financial stability. Managing finances and ensuring long-term viability, the treasurer’s work significantly shapes the financial outlook and future of the community. But do you understand the critical functions your treasurer performs? Here’s an overview of how a skilled treasurer contributes to the community’s financial health.
The treasurer’s main responsibility is to oversee and protect the association's financial health. This involves ensuring that funds are allocated, recorded, and utilized efficiently to support the community’s well-being. Key duties in this role include:
1. Ensures long-term financial stability
a) Developing the annual budget
The treasurer works closely with the board and management team to create a budget that covers all operating expenses, maintenance, and future capital needs. This budget should:
- Project revenue from assessments and other income sources.
- Allocate expenses for routine operations, including landscaping, repairs, and utilities.
- Plan for contingencies to cover unforeseen expenses.
The treasurer should consistently review the budget and make adjustments for any unexpected expenses or changes in revenue, both positive and negative. They must also provide regular updates to the board, ensuring that all leadership is fully informed about the association’s financial status.
b) Managing the reserve fund
Managing the association's reserve funds is the treasurer's most critical responsibility for maintaining the long-term financial stability of the community. These funds are designated for future capital projects, such as roof replacements, structural repairs, and other major expenses. Properly funding your HOA reserves is vital to maintaining the community’s financial health and safeguarding its future. Your HOA treasurer:
- Coordinates with financial professionals to ensure reserves are adequately funded based on reserve studies and future repair estimates.
- Regularly assesses community needs to secure future financial stability when large-scale projects arise.
- Manages the reserve fund in a way that helps avoid the need for hefty and unexpected sudden special assessments.
2. Educating the board and community on financial matters
While managing finances, the treasurer also educates the board and residents, fostering a clear understanding of financial processes. This is especially valuable when explaining the purpose and management of reserve funds and the limitations around how they can be used.
"Often, we see people with backgrounds in accounting or finance gravitate toward the treasurer role. It's a natural fit," explains Maureen Connolly, client accounting business partner at FirstService Residential. "But we don't want to discourage invested and engaged community members from taking on that responsibility just because they don't have that existing knowledge. The right property management partner will have the expertise to help any treasurer navigate the role and educate their community."
The treasurer regularly updates the board at scheduled meetings and, when necessary, the community on the association’s finances, including income, expenses, and reserve balances. That includes the annual meeting and any finance committee meetings. Transparency and clarity are always the best choices when it comes to communicating about association finances.
The treasurer serves as the point of contact for questions or concerns raised by the board or residents. The treasurer must be able to clearly answer inquiries about assessments, delinquencies, and budget allocations.
3. Advocating for financial stability
The board consists of members with varying priorities from maintaining safety to improving quality of life or ensuring rule compliance. It’s natural that board members will have different priorities. Regardless, the treasurer’s primary focus must always be on the financial health of the community. As the advocate for financial stability and sustainable growth, the treasurer:
- Makes sure that the board takes a fiscally responsible approach to decisions, especially when new projects or expenses are proposed.
- Emphasizes the importance of building and maintaining strong reserves for future needs, even when there is pressure to reduce assessments or increase spending on short-term projects.
- Acts as the liaison between the board and external financial professionals, including auditors, accountants, bankers, and reserve specialists. The treasurer guarantees that the community receives sound financial advice and manages these relationships effectively.
4. Overseeing financial operations
While the treasurer holds ultimate responsibility for the association's financial health, they are not expected to handle every financial task themselves. Instead, the treasurer oversees professionals and vendors hired by the association to ensure smooth financial operations.
They work closely with certified public accountants (CPAs), auditors, and other financial experts to manage complex tasks, ensuring everything is completed in line with industry best practices and legal requirements. These tasks include:
- Ensuring taxes are filed accurately and on time.
- Overseeing the completion of audits to provide transparency and accountability for the association’s finances.
The treasurer is also responsible for ensuring that vendors are paid on time and that financial records related to these transactions are accurately maintained. This includes payments for services like landscaping, maintenance, security, and more. Partnering with a professional property management company that provides strong bookkeeping and payment support can greatly simplify this task for the treasurer.
5. Focusing on the details
In addition to big-picture finances, the treasurer oversees details that keep the community running smoothly. They often work with a professional manager to handle the sheer volume of paperwork needed. This role includes:
- Maintaining accurate financial records and keeping track of assessments, expenses, and tax filings.
- Reviewing insurance policies to ensure adequate coverage for property and liability. The treasurer works closely with insurance providers to review and update policies as needed.
- The treasurer manages the association’s investment portfolio, working with financial advisors to ensure that funds are invested safely and in line with the association’s goals.
- The treasurer oversees the collection of delinquent assessments, working with collection agencies or attorneys if necessary to recover outstanding payments.
The treasurer plays a vital role in safeguarding the financial health and future growth of the HOA community. By managing budgets, overseeing reserve funds, providing financial education, and ensuring detailed oversight, an effective treasurer ensures that the association stays financially secure and well-prepared for the future.
It’s crucial for all board members to understand the full scope of the treasurer’s responsibilities, as their work has a direct impact on the entire community. For more information on board member roles and how a professional property management partner can ease the workload, contact FirstService Residential.