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
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- Key Words:__Financial Information, 2007 General; Financial Information, 2008 General; MOA Operations, General/Total; accounting; financial statements; preservation fund; reserve fund
Accounting for the Reserve [Preservation] Fund (continued)
____ From:_ Don Nordeen
_____Date:_ 2008 December 13 12:27:42 EST
______ To:_ Kirk Yodzevicis, Vice President MOA
_______cc:_ Todd Chwatun, General Manager
__ Subject:_ Accounting for the Reserve Fund
Kirk,
__This provides the page numbers for the accounting for the reserve fund. Thanks for agreeing to look at the question and hopefully get an answer.
__ I am basing my question on the information in the 2007 audit report for MOA. See the Balance Sheet on page 1 [immediately below]. The total assets for the Replacement Fund are $200,419 and $264,474 for 2007 and 2006, respectively. The Net Assets (Liabilities) for the Replacement Fund are $282,272 and $264,474 for 2007 and 2006, respectively. The detail for Cash and Cash Equivalents and for Certificates of Deposit in the Replacement Fund Assets [is needed to understand the entries].
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__ The certificates of deposit line refers to Note 6 on page 8 [immediately below].Click on the image for a larger size. Then
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__My interpretation is that, for 2006, the Replacement Fund was properly funded according to the accounting and plan — albeit the plan is woefully short. For 2007, the total assets are short of the Net Assets (liability) by about $80,000.
__ The detail accounting for the revenues (receipts) and expenses (expenditures) is shown on page 3 [immediately below].
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For 2006, it shows the dues and interest revenues, the expenditures for the pool repair, and the end balance of $264,474. For 2007, the receipts were $62,486 and the expenditures (for pool repair) were $44,688 giving a net increase of $17,798. The net increase of $17,798 added to the 2006 ending balance of $264,474 yields the $282,272.
__ For the Replacement Fund assets to equal $282,272, about $80,000 cash is required over and above the $188,776 shown in Note 6 on page 8.
__ Where did the cash go? It was used for operations, meaning that the operational cash position is worse by $80,000 from what is being reported.
__ The incorrect account doesn't show up in the monthly and quarterly MOA account because the Replacement Fund sections are not shown in the asset and liability parts of the balance sheet, because the accounting on page 3 of the audit report doesn't exist, and because the detail in Note 6 of the audit report doesn't exist.
__ In my view, most of the accounting issues can be addressed by using the accounting presentations in the audit reports.
__ I note in the 2008 October accounting that the Line of Credit draws are $297,000 compared to $250,000 for 2007 October. Both numbers would be higher by $80,000 with the proper set aside of the $80,000 for the Replacement Fund. In effect, the operating fund borrowed $80,000 from the Replacement Fund.
__ Please call to discuss.
Don Nordeen
cc: Todd Chwatun (Please place copies in MOA's file and in the Members' Communication Notebook. Thanks.)
- History:xx
- 2009 Mar 13 — Access to PDF file added
- 2009 Mar 11 — Initial Post
- Links:__Accounting for the Reserve [Preservation] Fund at [http://swagmanmwpoa.blogspot.com/2009/03/accounting-for-reserve-preservation.html]
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