By Bill Wethe, Chair
Finance Advisory Committee (FAC or Committee)
The purpose of this article is to describe the status of the 2017 audit.
On February 23, 2018, the FAC recommended approval to the Board of the draft 2017 audited financial statements. In connection with their written recommendation, FAC advised the Board of certain items including work performed by the Committee as well as significant items included in the 2017 audited financial statements. Both items are described in further detail below.
On February 26, 2018 the Board approved the draft 2017 audited financial statements so that they may be issued by the Auditor for the Association.
Thank you to all the parties involved in this significant accomplishment including:
- The Auditor for completing their work as planned.
- Tyler Ingle for his dogged determination to provide the Auditor with all the information needed to complete the audit and issue weekly audit status reports to Carey Thompson and FAC to keep us updated.
- Associa, DRM and PCM for providing schedules and supporting documents needed by the Auditor to complete the audit.
- Troon for providing schedules and supporting documents needed by the Auditor to complete the audit.
- Members of the FAC for timely reviews of the drafts of financial statements, notes to the financial statements and supporting working papers and written recommendation to the Board.
- The Board for their very timely review and approval of the final draft of the audited financial statements.
Summary of work performed by the Committee for the 2017 reported amounts
- Review of unaudited working trial balance
- Review of audit adjustments and supporting working papers
- Review of audited working trial balance
- Review of audited financial statement report groupings schedule
- Review of draft audited financial statements
- Review of draft notes to audited financial statements
Summary of work performed by the Committee for the 2016 reported amounts
- Written recommendation to the Treasurer and Auditor for reclassification of certain 2016 financial statement amounts to be consistent with and adopt the 2017 reporting format
- Review of worksheet which reconciles 2016 amounts previously reported in the 2016 audited financial statements with the reclassified amounts for 2016 reported in the 2017 audited financial statement.
Summary of significant items in the 2017 Audited Financial Statements
New for 2017 (and 2016 has been updated to provide comparative amounts):
- Balance sheets:
- Fund balance, the total operating fund balance at the end of 2017 and 2016 is segmented between its three sub-components including: operating fund balance, chartered clubs fund balance, and property and equipment fund balance.
- Assessment revenue received by the HOA in advance of when due is now reported in a separate line item in the balance sheets.
- Deferred revenue received by the HOA in advance of when the revenue has been earned is now reported in a separate line item in the balance sheets.
- Cash balance in the chartered clubs is reported as a separate line item in the balance sheets vs. being included in the balance sheets category cash and cash equivalents. The cash balance for chartered clubs is equivalent to the chartered clubs fund balance in the balance sheets.
- Statements of revenues and expenses:
- Chartered club revenues and chartered club expenses are reported as net revenues vs. being “grossed up” (revenues reported on a separate line and expenses on a separate line) as was reported in prior years.
- Common area improvement expense is reported as a separate line item in the statements vs. being included in maintenance expense as was reported in prior years.
- Notes to the financial statements:
- New footnote reporting that certain reclassifications were made to the 2016 balance sheet and expense accounts as further described below.
- New footnote on concentration of credit risk including disclosure of surety bond with the Association as a beneficiary for amounts in the operating fund of the Association in a commercial bank above the FDIC insured amount of $250,000.
- New footnote on chartered club cash and fund balances at year end as well as total revenues, total expense and excess of revenues over expenses for the years 2017 and 2016.
Certain 2016 amounts reported in the balance sheet and expense accounts have been reclassified to be consistent with the financial reporting adopted for 2017 including:
- As noted above, cash balance and fund balance for chartered clubs has been reported as a separate line item in the balance sheets.
- As noted above, assessments received in advance has been reported as a separate line item in the balance sheets.
- As noted above, deferred revenue has been reported as a separate line item in the balance sheets.
- As noted above, chartered club activities revenues and expenses have been reported as a net revenue number in the statements of revenues and expenses. As noted above, a new footnote has been added to report the gross revenues and expenses from these activities as well as the excess of revenues over expenses from these activities.
- Depreciation expense on golf carts placed in service in 2016 has been reclassified from “community depreciation expense” to golf department expense on the statements of revenues and expenses and as set forth in the supplementary information, departmental revenue and expenses for golf operations.
- Common area improvements expense has been reported as a separate line item in the statements of revenues and expenses; the expense was previously included in “maintenance expense” in the statements of revenues and expenses.
Tyler Ingle, the Controller for the HOA, has prepared a memo and supporting schedules, Management Discussion and Analysis (MD&A), of the audited financial statements including a review of the financial position as of December 31, 2017 and a review of the results of operations for the year ended December 31, 2017. The MD&A will be posted to the Resident Only Section of the website for the HOA.
Tyler will also post to the Resident Only Section of the website for the HOA the summarized reconciliation of the unaudited financial statements to the audited financial statements as of December 31, 2017 and for the year then ended.
The 2017 audited financial statements will be mailed to the unit owners and will also be posted to the Resident Only Section of the website for the HOA.
The Auditor will prepare and issue a written report with their observations and recommendations for enhancements to internal controls. Tyler will draft a written response for review by the Committee and the Board.