Tips for reviewing your Association’s monthly financial statements.
Comparison Variance Report
1. The month-to-date and year-to-date budget comparison variance report is a great place to start your financial report review. This report is designed to provide board members with explanations of variance that go beyond the information supplied by dollar figures in a standard income and expense report. Your Community Manager can explain valuable operating and reserve activity details that cannot be captured in standard accounting reports. Also, it will assist you with questions you may have about the financial performance of your community. It may also answer many questions before board meetings so meeting time can be allocated as efficiently as possible.
Balance Sheet
2. A review of the balance sheet will provide the Board with a snapshot of the Association’s assets, liabilities, and equity as of the end of each month. Operating and reserve cash balances are listed separately so the Board can make informed cash flow decisions. AAM’s accounting staff members reconcile each operating and reserve bank account every month. The full financial package provides Bank reconciliations and statements to ensure financial transparency. As part of the reconciliation process, our accountants ensure total account balances do not exceed FDIC limits at each financial institution. They also assist in setting up new money markets and certificate of deposit accounts.
General Ledger
3. The General Ledger is the source of all accounting data used to build the monthly financial reports. Reviewing this activity provides detailed debit and credit information for each transaction processed during the monthly reporting period. Digesting this information may be a challenge, but once you are familiar with the report format, you can find many of the answers you might be searching for. It provides transaction dates, code descriptions, memos, debits, credits, and dollar figures.
Transparency
4. At least one designated Board member (generally the Board Treasurer) receives an additional monthly PDF file by email containing images of all paid invoices. This information is available to provide financial peace of mind and full transparency.
These are just a few quick tips for reviewing the monthly financial reports. Please feel free to contact your Community Manager as a starting point for any questions related to the financials. Additionally, we have an experienced and dedicated accounting support team ready to assist your Community Manager and Board of Directors at all times.