Financial - Oversight Committee

Being a Board member can be challenging with all of the day to day items that arise. Board members are trusted with ensuring that the Association runs smoothly. This includes overseeing financial matters, such as review of the monthly expenses and financial statements, and preparation of the Association’s annual budget. Transparency is the key; the Association will establish a better rapport with owners by providing as much information as possible and involving owners in the financial planning process. 

There are many things that a Financial Oversight Committee can be tasked with; ongoing assignments such as review of the monthly financials and/or the task of drafting the Association’s annual budget are most common.

Reviewing the monthly financial statements and comparing them to invoices and the annual budget can be a time consuming task, especially for Associations that have a considerable number of monthly expenses.  As a result, it can be very helpful to assign this task to a Committee that can help share the work load.  This is also an excellent way to practice fraud prevention as having additional people reviewing the financial statements deters fraud and increases the likelihood of catching any suspicious activity.
  

A Financial Oversight Committee can also be an invaluable asset in preparing the Association’s annual budget.  As many Board members can attest, preparation of the budget requires hours of research including time spent contacting vendors, estimating upcoming utility usage, etc.  Estimate cost of compliance with the new ADA regulatory rules for the swimming pool. The Financial Oversight Committee can assist with these tasks, as well as make recommendations to the Board for upcoming expenses to include the budget.  In addition, involving as many owners as possible in the budgeting process helps create a widespread understanding of the Association’s income and expense requirements throughout the community.  They can then help educate owners who were not involved with the budgeting process and as a result, more and more owners will become informed and a greater sense of community is created through the power of knowledge.

The Financial Oversight Committee’s duties can also be extended to assist with large projects where multiple bids are required.  The Board of Directors may not always have time to research companies, acquire references and perform an in-depth review of the proposals.  The Committee can perform much of the legwork and provide a recommendation of the top one or two contractors for Board review and approval
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It is important to note that in no way does having a Financial Oversight Committee take away from the fiduciary duty of the Board in reviewing the financials, making sure the budget is appropriate and correct, and ensuring that the invoices are accurate and being paid in a timely manner, however, the Committee can be of great help. Having a Financial Oversight Committee to find any “issues” ahead of time and perform some of the leg work can greatly assist in making the Board’s financial review and decisions smoother.  In addition, it involves owners in the community who may not otherwise be as engaged, and thus helps create a greater sense of community.