Why is the Preservation [Reserve] Fund Important?

2009 March 27
Click History for a list of changes and updates.

__This subject was included in the post, 2008 MOA&PCC Financial Results. Because of its importance concerning keeping MOA a viable organization, a separate post is created for further discussion and comments on Reserve Fund — more descriptively the Preservation Fund. The continuation of this post provides that additional discussion and will be updated with any new information concerning this important concept.

Don Nordeen
==========

• Key Words:_ Accounting Principles and Issues; Financial Information, General; MOA Operations, General/Total; Reserves for Capital Repair [Preservation Fund]

Click Continue for Post Continuation plus Comments. Or Click Show All for Above plus Post Continuation and Comments.

---

MOA Financial Information Re Dues Increase Vote

2009 March 25
Last update: 2009 Apr 30. Click History for a list of changes and updates.

__(added 2009 Apr 30) According the my notes taken at the meeting, the voting results on the proposal to increase the dues cap (annual fees) from $400 to $475 beginning in 2010 are as follows:

total votes cast: 1238
not in good standing: 33
invalid: 45
yes: 497 (43% of valid votes)
no: 663 (57% of valid votes)

__The most critical information concerning a proposed dues increase is the financial information, operating plan, and budget. The financial information provided by the board in the 2008Q4 Business Review has significant discrepancies and omission relative to the financial information in CPA's audit reports which include the financial statements. Further, the board states in the Business Review that the CPA's audit report for 2008 will not be available before the vote.

__The board has not provided an operating plan, but described some broad generalities which are not quantified.

__The published budget for 2009 is balanced likely for two reasons: (1) the numbers are not realistic; and (2) not all expenditures and obligations are included in the budget.

__The continuation of this post is my 2005 Mar 25 email to MOA members with a copy to the board of directors on this subject. Financial parameters based on the CPA's methodology are developed. Alternatives for comprehensive structural reform are described. The two recommendations are to vote NO on the proposed dues increase and to write to the board requesting a comprehensive plan for a New Bargain — structural reform of MOA's model, management, and operation with the dues increase required with the New Bargain — in time for a vote to implement the reform if approved or to cut operating to live within MOA's means.

Don Nordeen
===========

• Key Words:_ Business Reviews; Financial Information (2008 General); Members' Rights, MOA Operations (General/Total); Preservation Fund

Click Continue for Post Continuation plus Comments. Or Click Show All for Above plus Post Continuation and Comments.

---

2008 MOA and PCC Financial Results

2009 March 24
Last update: 2009 Mar 30. Click History for a list of changes and updates.

__The continuation of this post discusses three aspects of financial reports: importance of high-quality financial information, explanation of the Preservation (reserve of replacement) Fund, and explanation of the Preservation (reserve for replacement) Fund, and Estimated financial parameters for the end of 2008.

Don Nordeen
===========

• Key Words:_ Business Reviews, 2008; Financial Information, 2008 General; MOA Operations, General/Total; Reserves for Capital Repair; Working Capital

Click Continue for Post Continuation plus Comments. Or Click Show All for Above plus Post Continuation and Comments.

---

Comments Concerning MOA's 2008Q4 Business Review

2009 March 21
Last edit: 2009 Mar 22. Click History for a list of changes and updates.

__The 2008Q4 Business Review is significantly better than prior ones. It includes serious letters from the board and the general manager. We should also thank the board for these improvements.

__A saying attributed to former Senator Moynihan is that everyone is entitled to his/her own opinion but not to his/her own facts. Where members question or have concerns about what is represented as "facts" in the Business Review, we should speak out and ask for clarification, further investigation, and correction where appropriate.

__The continuation of this post speaks out and asks for clarification, further investigation, and correction where appropriate for selected items. If any of my "speaking out" is not correct, please advise.

Don Nordeen
===========

• Key Words:_ Accounting Practices, MOA, Business Reviews, 2008, Financial Information, 2008 General, MOA Board of Directors, MOA Members & Members' Rights, MOA Operations, General/Total, Reserves for Capital Repair

Click Continue for Post Continuation plus Comments. Or Click Show All for Above plus Post Continuation and Comments.

---

2008 Year-End Financial Statements

2009 March 20
Click on History for changes and updates.

__ The continuation of this post is my email to Todd Chwatun, general manager of MOA, concerning the 2008 year-end financial statements published by MOA to the members. The following areas for improvements are discussed:

• Need to conform to GAAP and the AICPA Audit and Accounting Guide for Common Interest Realty Associations. The MOA Board adopted a policy to conform to GAAP and specifically to the AICPA Audit and Accounting Guide for Common Interest Realty Associations.
• Need to compare MOA accounting financial statements with those from the CPA to identify accounting practice changes for MOA to implement.
• Need for MOA's accounting to always include comparisons to prior year and to budget.
• Need to correct the shortfall in unrestricted cash of $80,000+ as indicated by the CPA's 2007 audit report.
• Need to reduce the dues revenue in the income statement by the amount placed in the Preservation Fund (approximately $48,000) as required by GAAP. The effect is to increase the operating loss from about $250,000 reported in MOA's accounting to about $300,000 which is expected to be reported by the CPA.

These are all serious accounting errors. Use of accounting information with such error misleads everyone. Recommendations are included in the email. Please advise if you find any errors in the analysis.

Don Nordeen
===========

• Key Words: • Accounting Practices, MOA; • Accounting Principles and Issues; • Financial Information, 2008 General; • General Manager; • MOA Operations, General/Total; • Reserves for Capital Repair; accounting principles; audit; CIRA; Common Interest Realty Association; CPA; financial statement; preservation fund; preservation; reserve fund; reserve

Click Continue for Post Continuation plus Comments. Or Click Show All for Above plus Post Continuation and Comments.

---

Accounting for the Reserve [Preservation] Fund

2009 March 11
Click History for a list of changes and updates.__

__This post including graphics is available as a PDF file at Accounting Preservation Fund.pdf.

__The continuation of this post is my 2008 Dec 13 email to Vice President Kirk Yodzevicis concerning an incorrect accounting of $80,000 from the preservation fund (reserve for repair, replacement and renovation) which occurred in 2007. This shortfall of deposits into the preservation fund is reported in the 2007 audit report as described in the email. After three months, there is still no reply.

__ The effect of the incorrect accounting affects all financial results reported in 2008. The restricted cash (cash plus certificates of deposit) for the preservation fund has a shortfall of $80,000. The unrestricted cash is therefore reported with the $80,000 excess which gives a misleading statement of MOA's cash position. I have added graphics of the pages from the 2007 audit report that show this shortfall.

__This is more that just an accounting issue. The $80,000 cash does not exist. It has been spent on operations and not replaced.

__ I raised this question on several Open Forums at board meetings. The response was that neither the board more the general manager had time to look into the possible discrepancy. After the 2008 Dec 13 board meeting, I discussed the matter with Vice President Kirk Yodzevicis, who agreed to investigate the matter if I would send him the necessary information. The email provides that information.

__ Pardon me, but $80,000 of someone else's money for which the board and general manager have stewardship responsibility should seek to be a high priority. One must conclude that mishandling of $80,000 is unimportant to this board, whose members are Vicky Rigney (President), Kirk Yodzevicis (Vice President), Tad Latuszek (treasurer), Carolyn Study (secretary), Richard Gaubatz, Jay Welter, and Brenda Durant. $80,000 is not important to this board, particularly if it results in less favorable financial results.

__ Yet this same board is about to ask MOA members to approve an increase in dues which would provide more money for their stewardship.

__ I will gladly remove this post with an answer to the question with appropriate action.

Don Nordeen
===========

• Key Words:__Financial Information, 2007 General; Financial Information, 2008 General; MOA Operations, General/Total; accounting; financial statements; preservation fund; reserve fund

Click Continue for Post Continuation plus Comments. Or Click Show All for Above plus Post Continuation and Comments.

---