The Association is required to maintain accounting records so that it can provide an annual report to the members and submit Federal and State income tax returns. But an even more important reason to maintain good financial records is that they will provide information that your board needs to make good decisions. During the financial detail presented at the owners meeting, multiple financial reports are presented including:
The Income and Expense Statement - summarizes the activity which occurred during the fiscal year.
The Expense by Vendor Summary - details the amount of money paid to each vendor recipient during the fiscal year.
The Balance Sheet - shows where the association is at financially at a particular point in time.
The Budget and The Reserve Account - Although it operates as a nonprofit corporation, your association must still operate like any other business from a financial standpoint to ensure that it is able to provide its members with the services they have a right to expect. This means developing a plan each year identifying the services that will be provided and estimating how much income is needed to pay for those services. The budget which was referenced above in the annual meeting language, allows the association to check revenue and expenses against the budget each year to see how the Association is doing financially so that corrections can be made if needed. Within the budget is a reserve fund for the eventual replacement of major components such as siding, the roof, asphalt etc. The Board of Directors of the Summit Association (and by extension, each owner-member) has responsibility to maintain the common elements of the condominium community. Through the reserve fund, each member of the Summit Association contributes to the reserve fund for their proportionate amount of "depreciation" (or "use") of the reserve components. Through this equitable funding plan, the reserve fund should be sufficient at a given point in time to defray the future repair or replacement cost of those major components that the association is obliged to maintain. A capital reserve analysis was completed in 2016 to identify the various common components, the status of the reserve fund at that point in time, and and recommendations for the amount of funding going forward necessary to avoid reserve fund deficits and keep the reserve fund properly funded.