ASSOCIATION MANAGEMENT INC

FINANCIAL STATEMENTS CHECKLIST FOR ADMINISTRATORS

ASSOCIATION ______MONTH______

BALANCE SHEET

  1. Verify that maximum bank balances are not exceeded. Southwest Bank has no maximum in accounts that are ‘swept’ nightly. Merrill Lynch has a $500,000 maximum. All other banks (including ‘unswept’ SWB accounts) have a maximum combined balance account of $100,000 to ensure FDIC coverage.
  1. Review bank reconciliations for agreement to the General Ledger.
  1. ‘Total Accounts Receivable’ on the balance sheet should equal the balance due on the Aged Analysis Report. ‘Clearing’ and ‘Other’ should be zero. Any credit balances under ‘Accounts Receivable’ need to be investigated.
  1. The ‘Total Replacement Fund’ (1500 accounts) should equal ‘Total Replacement Reserves’ under Liabilities (3000 accounts). If they are not equal, the difference is usually interest income in the ‘Replacement Fund’ bank/investment accounts
  1. ‘Total Assets’ should equal ‘Total Liabilities and Equity.”
  1. ‘Prepaid Assessments” on the Balance Sheet should equal ‘Prepaids’ on the Aged Analysis Report.
  1. ‘Unearned Assessments’ will generally only be found in the associations having annual assessments. The amount of unearned assessments Is the balance of the budget for the remainder of the current fiscal year and is generally based on 1/12 of the budget per month. The amount in the operating fund should exceed the unearned assessments to ensure adequate funds for the remainder of the fiscal year.
  1. The ‘Total Replacement Reserves’ should equal the Total ending balance on the Replacement Fund Report.
  1. The variance column alongside the ‘Prior Year-Net Variance’ should be zero. The only exception is auditor’s adjusting entries for the prior year.

STATEMENT OF INCOME AND EXPENSE

  1. The variance in regard to assessments on both the MTD Actual and YTD Actual should be zero. In accrual accounting, the assessments should equal the budget.
  1. The ‘Surplus (Deficit)’ under both the MTD Budget and YTD Budget should be zero. BUDGET AMOUNTS SHOULD NOT BE CHANGED-ONCE ENTERED CORRECTLY-WITHOUT BOARD APPROVAL.
  1. Check the MTD and YTD variances in the income and expense categories for anything unusual. Investigate significant variances.

STATEMENT OF INCOME AND EXPENSE SPREADSHEET

Scan all line items to determine trends and investigate discrepancies, e.g., failure to receive income such as interest; failure to pay a regular expense item; unusually high expense, particularly water, etc.

CAPITAL EXPENDITURE RESERVES REPORT

Scan report for any apparent discrepancies and for adequacy of funding.

AGED ANALYSIS REPORT

  1. Check report for delinquencies and follow up on any balances due. Make notes for board meeting.
  1. Scan report for any apparent discrepancies. From time to time, check the Open Item Ledger for discrepancies.
  1. If there are a number of very small amounts owing, make a note to ask the Board for authority to write off these balances.

CHECK REGISTER

  1. Review check numbers to ensure that they are in sequence and that all checks are accounted for.
  1. Review each payee and description on each check for any discrepancies; e.g., check payable to HL&P does not have a description of ‘Mowing’.

GENERAL LEDGER

  1. Scan General Ledger for any apparent discrepancies.
  1. Compare General Ledger account name and balances to Balance Sheet and Statement of Income & Expense.
  1. The ‘Ledger Total’ on the last page of the General Ledger should always be zero.