Financial oversight and management are two of the most important duties of an ASSOCIATION board or property manager. To keep your community funds secure, you need to have consistent control practices and policies in place, and they need to be enforced. There are a few specific things you can do to ensure your funds are safe and managed well.
Everything pertaining to how money is collected and spent should be documented and transparent. You need to be able to demonstrate that the financial house is in order. This is important to existing members of the association as well as new potential buyers who will want to see what kind of financial management exists within the association. Make sure you have everything accurate and easy to understand so it’s simple to see how and when the money is coming and going.
Dual entry accounting requires two accounting entries to document one financial transaction. This should be done for your protection and to ensure that all the ASSOCIATION funds are accounted for. If you are not already using a dual entry accounting system, put one in place so you can more easily audit what is being collected and what is being spent.
Your ASSOCIATION needs to have the ability to create true reports, including an income statement, balance sheet, and delinquency history as well as other necessary documents. If you don’t have the software to support this, you need to invest in a better system. You also want to be able to set up a short term and a long term budget. Track your income and expenses on a daily basis, a weekly basis and a monthly basis. This will tell you whether you are on track with your budget and it will help you plan for the future.
It’s important to limit the number of people who are able to write checks or approve check printing. Your management company should NOT have this authority. This is a major reason monies go unaccounted for, and the potential for corruption and questioning of finances can come into play. If you are the person who is responsible for the ASSOCIATION finances, you are the only one who should have this authority. Too many people signing and approving checks will cause problems and potentially lead to mistrust.
ASSOCIATION management requires a lot of extra skill and attention, especially when it comes to financially planning and protection. If you have any questions about your ASSOCIATION management or how to keep those funds secure, please contact us at Abacus Avenue Property Management in Hoboken, NJ.