Contributed by Lydia Pelliccia and Matthew Green, CAE
Yesterday, we celebrated International Community Association Managers Day to recognize and appreciate the talented and hard-working professional managers who support condominiums, homeowners associations, and housing cooperatives. Community association managers wear many hats and must be well versed in a wide range of skills, all of which are equally important. One component of a manager’s role is to completely understand the financial management aspects of a business. This means knowing and interpreting the financial pieces as well as the nuances that come along with decisions.
The financial management aspects to master include these actions:
❚ Develop and implement accounts payable and receivable procedures.
❚ Analyze and interpret financial statements and report significant variances from the budget.
❚ Manage association operations within the budget.
❚ Assist in the development of the reserve study.
❚ Assist the board in identifying funding sources for reserve expenditures.
❚ Implement the reserve funding model approved by the board.
❚ Provide regularly scheduled financial statements and reports to the board and members.
❚ Provide association financial records to the independent auditor or accountant.
❚ Distribute audited financial statements to the membership and board.
❚ Implement the board’s investment policies.
❚ Identify investment products.
❚ Document transfer of funds.
Cat Carmichael, PCAM, CEO of Strategy 1 2 3, Ron Duprey, CMCA, AMS, PCAM, senior vice president at Associa, and Rob Felix, CMCA, PCAM, RS, an executive of Consolidated Community Services, the Felix Reserve Group, and Mountainbreeze Management Company, all offer excellent advice and insight into how professional managers can enhance their financial management skills.
“Knowing how the money works is one of the most important services a manager provides to a board,” says Carmichael.
She suggests managers first ask the board to describe the type of community it wants to have and provide a budget adequate to meet the board’s goals. Paying close attention to monthly financial reporting tells the manager and the board whether the plan they created is working.
Duprey acknowledges that not everyone is a “numbers person,” which is why it’s so important to really understand balance sheets and income statements.
To really grasp financial management basics, he suggests a manager uncomfortable with spreadsheets or financial statements first sit down and prepare a balance sheet and income statement for their own life. Thinking about your own assets and liabilities is a great way to understand them, he says.
Often, managers are unaware of the financial position of their client because they don’t take the time to fully understand financial reports presented to them, says Felix.
He suggests managers ask questions of the community’s financial manager, if they have one. Prepare a variance report to explain the differences between what they’re spending versus what they budgeted and why. Also, thoroughly read the last audit (if any) that was performed and pay close attention to the notes section. It’s imperative that a professional manager knows more than their client; it’s how they add value.
Lydia Pelliccia is a consultant for Community Association Managers International Certification Board. Matthew Green is executive director of CAMICB.
