News

By Robert Jester
Chair, Finance Advisory Committee

As published in The View, March 2024:

Question of the Month: Why do we have a Finance Advisory Committee?

The reality is that a five-person board cannot do everything that is necessary to carry on the day-to-day business of this Association. The board needs attorneys, management services from Desert Resort Management, auditors, reserve study experts, and advisory committees to assist it in doing what is necessary for this Association to function properly. One of those advisory committees is the Finance Advisory Committee (FAC), and it has specific duties assigned under its charter by the Board. This article is to highlight those duties so you will better understand what the Finance Advisory Committee does for you, the resident.

The current FAC Charter was approved on September 27, 2021, and contains the following advisory committee obligations:

1. Meet regularly to analyze and review ALL the Association’s financial statements.
2. Review the monthly Bank Reconciliations and the investment accounts of all accounts held by the
3. Review the annual financial forecasts prepared by the Comptroller.
4. Prepare or review, if prepared by the Comptroller, the Management Discussion and Analysis of the monthly Forecast update.
5. Advise the Board on Best Industry Practices for the accounting reporting systems and systems of needed internal financial controls.
6. Advise the Board on the use of Best Industry Practices for the Association’s Annual Report.
7. Review the Investment Performance on a regular basis and advise the Board.
8. Assist the Board in the review of all major vendor and provider contracts.
9. Monitor contract compliance and report discrepancies to the Board in writing.
10. Assist the Board in the preparation, review, and evaluation of the Association’s Annual Operating Fund and Replacement Fund Budgets.
11. Review the Association’s annual insurance needs and policies with the broker and suggest changes to coverages, limits, deductibles, and costs.
12. Meet with the independent accounting firm in preparation for the annual audit and review the engagement letter of the auditor.
13. Review the Management Letter issued by the independent auditor, which identifies their recommendations for strengthened internal controls and procedures.
14. Review the Association’s draft tax returns, filings, and supporting schedules provided by the independent accounting firm.
15. Review the engagement letter for the annual Reserve Study.
16. Conduct special financial research or analyses at the request of the President or Treasurer for the purpose of improving aspects of the Association’s operations.
17. Assist the Board in educating SCSH residents regarding the Association’s financial condition.
18. The committee is to make written recommendations to the Board on the selection of professional service firms for the Association, i.e. accountants, auditors, attorneys, etc., including management companies for golf operations, F&B operations, and the Association’s management firm.
19. The FAC has a Financial Advisory Sub-Committee that assists the FAC in the review and analysis of all monetary requests for purchases or projects that exceed $5,000, per the Association’s approved Procurement Policy.

• • All reviews and analyses of matters are reported to the Board as a recommendation by the FAC. The Board makes all final decisions.
  • The Board Liaison for the FAC is the Treasurer of the Association.
  • All direction by the committee to Association staff is required to be made through the Association General Manager.

I hope this provides you with a clear understanding of the duties of the FAC and why we are the “Financial Watchdog” for the residents of this Association.

Contact the author at finance@scshca.com.

By Jim Bullock
Vice Chair for Sub-Committee for Major Repair and Replacement Fund

As published in The View, February 2024:

Question of the Month: What service does the Finance Advisory Committee’s Sub-Committee provide to the community?

The Finance Advisory Committee (FAC) sub-committee’s mission is to review, analyze, and approve or disapprove major repairs and reserve study components/projects that are submitted to the subcommittee on a Board Action Form (BAF).

The subcommittee members are all HOA volunteers with years of industry experience. These areas include construction, equipment, procurement, facilities man- agement, reserve studies analysis, and engineering. Three of the subcommittee members are also serving members of the Finance Advisory Committee.

Any expenditures less than $5,000 do not involve the subcommittee and can be submitted for Board approval by the Association General Manager (GM) or Assistant GM seeking written authorization for the proposed expenditures.

The BAFs are submitted from two different sources. The first is from the Facilities Maintenance Director, and the second is from the Troon General Manager or Troon Superintendent of Shadow Hills Golf Club.

The Facilities Maintenance Director will submit BAFs for any non-golf course expenditures, including Shadows Restaurant equipment. These submissions, for example, can include gatehouse and security access systems, asphalt and concrete repair, common area improvements, and fitness equipment. The BAF amounts will range from $7,500 for furniture replacement up to $1.2 million for the asphalt rehabilitation project.

BAFs submitted by the Troon GM and Superintendent include, for example, all golf course maintenance equipment, sand bunker rebuild, and golf course greens refurbishment. Again, BAFs for Troon will range from $7,000 for a walk-behind mower up to $750,000 to replace the golf cart fleet.

Any expenditure from $5,001 to $10,000 requires a minimum of two bids from vendors. Any expenditure over $10,001 requires a minimum of three bids. If the number of bids received is less than specified, the responsible Department Manager must submit a written justification to the Association GM. There are instances where there may be only a single source supplier. In these cases, that bid would supersede the minimum bid requirement.

All BAF expenditures over $5,000 will require the subcommittee to perform its duties in reviewing, analyzing, and recommending approval (with caveats if necessary), or not approving (with applicable justifications). Once the subcommittee has made its decision, the BAFs are presented at the monthly FAC meeting for their approval. Once approved by the FAC, they are presented at the monthly HOA Board meeting for approval. Ultimately, the HOA Board approves or disapproves these BAF expenditures.

The amount of work for the subcommittee in reviewing and analyzing will vary depending on the complexity of the project, components or equipment, and reserve or operating funds proposed on the BAF.

We request as much information as is available to help us make an informed, timely, and fiscally responsible decision. That process includes pictures, equipment hour meter readings, and onsite inspections to make these decisions. Communicating with the person submitting the BAF is essential.

On December 11 there was a committee meeting to review the upcoming reserve study replacements for 2024. The report identified 86 items to be replaced at an expenditure of $3.6 million from the reserve replacement fund. The committee and responsible parties discussed what equipment or projects could be deferred for 2024. A decision is still pending.

The subcommittee will be busy with an anticipated 86 reserve study items being replaced, plus any additional unforeseen capital or reserve expenditures for 2024. The subcommittee is currently looking for two individuals with construction or general contracting experience. If you meet these requirements and are interested, please fill out the HOA committee interest form available on the SCSHCA website or from the HOA office.

The work performed by the individuals on this subcommittee is of vital importance to our community. Their dedication and results-oriented commitment to make very important financial recommendations to our HOA speaks volumes.

Contact the author at finance@scshca.com.