|Re: CPA||<– Date –> <– Thread –>|
|From: Philip Dowds (rphilipdowdsme.com)|
|Date: Sat, 15 Sep 2018 03:27:08 -0700 (PDT)|
The two main things one should expect from an HOA management company are financial supervision and property upkeep. Financial supervision of an investment portfolio is an arcane art, and few civilians can make much sense out of what their “wealth manager” is up to. But on the whole, HOA financial supervision is about cash flows and savings instruments, and accounting for cash should be entirely scrutable. A basic protection against strangers ripping us off is simply to have the bank statements published to a community finance team as well as to the management company, and have the manager provide conventional accounting reports — P&Ls, reconciliations, etc — on a monthly or maybe quarterly basis. The biggest problem with turning the books over to a management company is that it will try to fit your budgeting into its own cookie-cutter chart of accounts. You may want to track the monthly dues, or the guest room expenses, in a certain way, and that way doesn’t fit with how the management company normally keeps book for its clients. Many companies would consider redesigning the chart of accounts just for you as outside their scope of service. For property upkeep, a good management company with dozens (or hundreds?) of HOA clients will be maintaining relations with a stable of vendors: several roofing subcontractors, several plumbing subcontractors, etc. This means an increased likelihood that a qualified mechanic will show up on short notice — and that the manager is in a position to bargain for favorable competitive rates. Most cohousing communities aren’t large enough, nor so heavily burdened with problems (we hope), that they can maintain relationships like this. On the other hand … most management companies will charge a mark-up for coordinating construction services, maybe 10% of the subcontractors’ invoice or hourly for a project manager. So the roofer’s $3,000 bill gets charged to the HOA as $3,300. Basically, there are indeed competent, honest management companies out there … but they cost more. If you take bids from three companies and pick the low bidder, the chances you’ll get a good one aren’t so great. At Cornerstone, we’ve had a DIY approach to bookkeeping and subcontractor relations for nearly a decade. We know we’ve saved tens of thousands of dollars, and we know it consumes volunteer time. We’ve had some glitches that should be expected as customary when well-intentioned amateurs are running things, but nothing major. If your community volunteer mix happens to include people with financial or design/construction backgrounds, glitching will be substantially reduced. Thanks, Philip Dowds Cornerstone Village Cohousing Cambridge, MA mobile: 617.460.4549 email: rpdowds [at] comcast.net <mailto:rpdowds [at] comcast.net> > On Sep 14, 2018, at 9:43 PM, Sharon Villines via Cohousing-L <cohousing-l > [at] cohousing.org> wrote: > >> On Sep 14, 2018, at 5:58 PM, Katie Henry <katie-henry [at] att.net> wrote: >> >> If you decide to use an outside entity to pay your bills and manage your >> books, you have to watch them closely. You can't just walk away. If you are >> informed enough to perform decent oversight, it might be easier to do it >> yourself. > > I agree with Katie. We’ve had several management companies and seem to have > found a good one but have had problems that one would think we shouldn’t have > had. And I do think it would be easier to do ourselves. > > Problems: > > 1. Not paying utility bills so the utilities were turned off—I think the > utility company called first so they weren’t all turned off but it took a lot > of detective work to find 3 months worth of bills in a desk drawer at that > management company. They were using a computer program and one would think > the financial manager would have noticed that there were no records of > utilities being paid. How they got in the drawer, no one knew. > > 2. Inability to get a checkbook-like list of payments and deposits. I and our > computer software geek went out to work with the accounting person to figure > out how to do this. They were using a software a friend of the owner was > developing and it was very strange. The process for getting journal was so > complicated the young woman in charge would never have remembered how to do > it. Most management companies use some other software only large companies > use. An advantage of working with an independent bookkeeper is that they will > use something accessible like Quickbooks or Freshbooks. > > 3. Another day our tech person spent 14-16 hours in the basement trying to > figure out why our internet was down, testing wires everywhere, switching > things in and out, etc. Finally he called the ISP to find out if they had > changed settings or equipment recently. They said, Yes, you haven’t paid your > bill for 6 months so we turned off service. > > 4. We changed banks and changed the credit/debit card we use for small > purchases — the management company didn’t review our accounts to ensure that > payments that had been charged to the card every month were transferred. More > things turned off and discontinued. Small things but more irritation, delay, > and do-overs. > > 5. We left one management company after repeated failures to follow through > on many things. They turned over the accounts and boxes and boxes of paper, > unsorted. There was $25,000 in our account that was unaccounted for. The > treasurer tried to track down the source but was unable to. It had apparently > been there somewhere for a few years and didn’t seem to relate to any unpaid > bills or taxes. Since it was in our favor we finally just shrugged and bought > a CD. > > 6. We had a contract for a quarterly servicing of our parking gate but the > company wasn’t showing up and the gate was breaking down. The servicing > company was a one person operation and he didn’t want to send a bill every > time he came out. Despite having a contract for 4 calls a year and a notice > from us that he had shown up, they wouldn’t pay him until he sent an invoice. > We eventually had to change service companies even though this guy was good > and understood us and our system. > > You will end up only being able to use companies that can deal with your > management company—meaning the service company has to have their own office > manager to produce paper and follow up on getting paid. > > —— > > I could go on but you get the picture. The people that management companies > hire are clerical workers and young. They don’t look for or flag possible > problems. You will in all probability have members who have much higher > skills and who certainly have a greater interest in keeping the lights on and > the elevator running. > > Last week a member had to sleep in the living room because she came home when > the elevator was out. We couldn’t get anyone to come out and see what the > problem was for 24-36 hours. We have 4 residents who can’t climb stairs. So > without the help of a management company, there are still things going out > all by themselves. It was a weekend so we were on our own. > > Not being negative about hiring a management company, just being realistic > about how well it many not work. You still have to check everything. > > Sharon > ---- > Sharon Villines, Washington DC > "We're only the light bulbs, and our job is just to remain screwed in.” > Bishop Desmond Tutu > > _________________________________________________________________ > Cohousing-L mailing list -- Unsubscribe, archives and other info at: > http://l.cohousing.org/info > > >
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