Fiduciary C.P.R. for COAs - Dallas's Key Takeaways
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Couldn't make our discussion about high-rise fiduciary responsibility? Were you there, but now can't decipher your notes? We've got you covered! Take a look at the event’s key pointers about managing a financially sound condominium association.
What are the top COA budget best practices?
1. Understand your balance sheet. Be sure that you and your fellow board members know the numbers, how to allocate funds and meet your financial goals.
2. Identify your obligations. Do you have repairs that need attention or upgrades your residents expect? Remember to hold yourself accountable. Not only does it build resident trust, it also increases your property value, too!
3. Prepare a timeline. Your budget should span between 3-5 years. Start by using your previous statements and assess how residents responded to its effectiveness. Next, establish your needs and wants. Then, create a contingency plan worth 3-5% of the overall budget.
Did you know?
The biggest mistake boards make is not raising dues or
planning for "bad debt" (a debt that you can't recover).
4. Monitor your results. The hard part may be over, but there's still work to do. Keep an eye on how your COA is doing and, more importantly, if you're spending or saving money with the best intentions.
What's an ideal financial standard you expect your management company to operate by?
Accrual-based accounting. It adds an extra pad of protection and is a generally accepted accounting practice (GAAP).
What coverage do you recommend Dallas COAs have?
Have the right coverage for the size and style of your property, including uncontained liquids, floor and fire insurance.
The more you know: Due to many natural disasters in the last year, COAs could see their insurance premiums jump from 10% to 20% in 2020.
- A penny saved is a penny earned. Be sure to complete your financial reserve studies and update them regularly.
- Know your worth. Get an official appraisal of your property to determine the value of your building.
- Got a new budget coming up? Seek out feedback from residents! July is considered the best time to gather information and create a plan that everyone can be proud of.
- Annual audits are required by state law. Prepare for yearly reviews with detailed recordkeeping. If you recently transitioned to a new COA management company, gather all documents from your former company to make for a seamless preparation.
CONNECT WITH OUR SUBJECT MATTER EXPERTS
If you have specific questions about your building's budget, auditing, financial transparency, insurance coverage, or just want more information please feel free to contact us or reach out to our partners:
Jamie George, vice president, FirstService Financial - Insurance
Sam Timothy, president, CPA, Timothy, Devolt & Co.
Shannon Elder, business development manager, FirstService Residential
For more great budget information, read our article "Quick Tips to Preparing an Annual Association Budget".