Published May 1, 2019
by Mark O’Neil, Treasurer
As was mentioned in last quarter’s Perspective, during the first quarter of every calendar year, one of the Finance Committee’s principal responsibilities is to review and recommend to the Board, the external auditor’s report on the PDPOA’s financial statements.
We accomplished this during the March Board cycle. This audit is carried out to assure that the financial statements as presented by management are an accurate representation and in accordance with generally accepted accounting principles (GAAP) for not-for profit organizations. As in previous years, the auditor gave the Management team, Finance Committee and Board a “clean opinion”, meaning they identified no material weakness in our financial reporting systems.
It may be helpful to review how funds are accounted for in our organization on an ongoing basis. The following is a portion of the audit that delineates how funds are accounted for:
Fund basis of accounting
To ensure observances of limitations and restrictions on the use of financial resources, the Association maintains its accounts using fund accounting. Financial resources are classified for accounting and reporting purposes in the following funds established according to their nature and purpose:
Operating Fund– used to account for financial resources available for the general operation of the Association.
General Fund- used to account for Board of Directors designated financial resources that are excess operating funds to support future operating shortfalls or future board approved projects.
Repairs and Replacements Fund- used to accumulate funds for future major repairs and replacements of existing facilities and equipment. These include things like roads, buildings, drainage systems and bridges.
Storm Recovery Reserve Fund– used to accumulate funds designated by the covenants for repair and damage to common properties from weather disasters such as hurricanes.
Community Enhancement Fund– used to account for capital transfer fees charged to purchasers of land and improvements within the Association for future capital projects and major improvements to existing fixed assets. It is this fund that was used to purchase 7 Lee Shore.
ARB Escrow Fund– used to accumulate compliance deposits accumulated by the ARB.
During the remainder of 2019, the Finance Committee will be working with management to identify all potential future uses of the of the Repair and Replacement fund in the form of an inventory of needs and the potential timing of the repair and replacements. As of now, we plan to spend over $25 million on these items in the next ten years.
While current expenditures are very important, so is our responsibility to look to the more distant horizon to understand and fund long term needs. As these needs and funding sources are identified, we will be certain to share them with you.