Kudos appear to be in order for management exceeding the original 2020 budget by $174k all the while in the midst of the covid pandemic. (1a) That is indeed good news. Likewise, many thanks are extended to the GM for his reconsideration of this writer’s previously denied request for an itemized listing of 2020 capital expenditures along with an itemization of capital components included on the 2021 capital budget.
But most of all appreciation is extended to those property owners who took the proactive position of protesting the removal and/or denial of the aforementioned information as referenced in a previous post on this site. (2) And although there is still work to be done, these results are a clear example of what might be accomplished when an issue is publicly presented AND property owners join together to challenge any perceived missteps by leadership. Afterall, we are the members of the POA, and we should exercise that voice . . . so neighbors . . . thank you.
All that said, despite the favorable comparisons to budget, some additional discussion is warranted as we visit the recently posted December financial package.
Accounting 101 . . .
Assets = Liabilities + Equity. Absolutely. Always. However, after only a quick glance, it is immediately apparent that while comparing the balance sheet to the previous year, that balance sheet is out of balance $460k. (1b)
Similarly, when reviewing the report titled “Reconciled Board Designated Capital Fund” (referred to elsewhere by the name “Master Plan Fund”), it quickly becomes clear that given the entries provided throughout the year that this fund does not reconcile at all. In fact, it is out of balance $265k. (1c) For example, the November fund balance (3a) actually decreased in December even though the report indicates that $61k (net) had been credited to the account during the month. (This fund projected to be $2.2 million at year end to fund the Creek nine renovation now stands at $1.9 million. ) Where did that $265k go?
Perhaps there are simple explanations for these accounting errors, but seriously, details and accuracy really do matter and should always be expected. And even more perplexing, it is difficult to understand how these reports could have been reviewed by the GM, BJL and finance committee along with the POA treasurer and other members of the board without any discovery of these glaring inaccuracies. How does this happen?
The December anomaly continues . . .
(December is always a busy month at the Big Canoe POA)
And just as in previous years, the POA has budgeted and posted a loss in December when other months are generally profitable. As an example, the loss for December was ($246k), whereas, the previous month of November indicates a net profit of $197k. (3b) (A $442k swing from the previous month.) For the most part, these losses appear to be attributed to increased payroll expenses throughout various departments in addition to increased operating expenses specifically attributed to administration and public works. It should also be noted that these similar questions have been asked in previous years without any real response.
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- What exactly makes up that ($246k) December loss? And, if those expenses are anticipated enough to be budgeted, and given Big Canoe utilizes the accrual method of accounting, why are those expenses not accrued throughout the year?
Further, this pattern began in 2016 as follows with the December financials also posting a loss:
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- 2019 – ($158k) (4)
- 2018 – ($141k) (5)
- 2017 – ($112k) (6)
- 2016 – ($115k) (7)
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Yet, to the contrary, earlier years such as 2015 and 2014 posted December profits of $69k and $62k respectively. (8) (9) Apparently, an accounting change was made in 2016 which effectively drives down the year end income during the month of December following the annual meeting. Perhaps, there is a valid explanation for this change that has not been provided to this writer.
(Keep in mind, if the financial package had been available to property owners prior to the January 21st board meeting and presentation, some of these questions might have been included in the Q&A sessions.)
2020 Capital Expenditures . . .
With unbudgeted capital expenditures totaling $497k, (10) it should be acknowledged that many of these expenditures were a result of the openly discussed “sprucing up” campaign. However, other notable unbudgeted expenditures include approximately $61k attributed to the Lake Petit dam for historical documents, divers, pipe inspection and long term planning. Once again, in order to be better informed, leadership is urged to post a copy of that 833 page report to the POA website prior to the February community coffee dealing with Petit dam repairs. (11)
2021 Capital Budget . . .
And it also can not go without mention that, already in the first month of the new year, two new unbudgeted capital projects have just been approved by the current board. Specifically,
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- Indoor tennis court renovation @ $210k (12)
- Engineering study for the Chimneys @ $40k
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These two items will be in addition to the $3.6 million Capital Budget approved in November already generating a $537k negative cash flow. (2) (13) Unfortunately, no mention was made by the board or management of deferring other expenditures to offset this addition to the capital plan.
Another metamorphosis – Board work sessions renamed . . .
And lastly, it is now learned that the newly seated board has chosen to refer to the closed board work sessions as “Special Board Meetings”. And just since their December 5th swearing in, the current board has already conducted at least eight closed door meetings totaling almost 23 hours of discussion! (14) Apparently this leadership believes that their copius notes equate to transparency when in actuality, it is now patently obvious that all open board meetings are nothing more than an elaborate presentation designed to impress the property owners. (“dog and pony show”)
As mentioned in a previous post, the 2011 POA board actually introduced and approved policy mandating that all meetings be open excepting executive session. This policy was presumably observed by the 2012, 2013 and 2014 board of directors until it’s revision by the 2015 board specifying that only those meetings where “the board is scheduled to vote on Association business” must be open.
Here’s an idea . . .
Perhaps it’s time to follow the example set by those 2012 – 2014 directors and open all board meetings (excluding executive session). If it was workable for those directors, there is no reason to believe it can’t work again in present day. And given the results achieved by property owner involvement as described at the beginning of this post, this might be the optimum time to join together and insist on that change. (Further, with the introduction of Zoom and other communication techniques, this change could be easily instituted if leadership truly desires to govern in transparency. )
For those who might be interested in pursuing this objective, please contact me at thepcrosses@gmail.com. Alternatively, independent requests addressed to the board might also be effective.
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If you would like to see additional articles posted in the future, please check back frequently or subscribe for an email notification. Likewise, please feel free to forward and share this information with your friends and neighbors. Till the next time . . . take care and stay safe.
Patricia Cross (10438 Big Canoe)
References:
1) December 2020 Financial Package, (a) Summary of Operations, pg. 1, (b) Comparative Balance Sheet, pg. 2, (c) Reconciled Board Designated Capital Fund, pg. 5
(POAwebsite>login>POA>Financials>SummaryOfOperations>December2020)
2) ”Reality Check 2020”, December 30th, 2020, bcmatters.org https://bcmatters.org/reality-check-2020/
3) November2020 Financial Package, (a) Reconciled Board Designated Capital Fund, pg. 5 (b) Summary of Operations, pg. 1
(POAwebsite>login>POA>Financials>SummaryOfOperations>November2020)
4) December 2019 Financial Package, Summary of Operations, pg. 1
(POAwebsite>login>POA>Financials>SummaryOfOperations>December2019)
5) December 2018 Financial Package, Summary of Operations, pg. 1
(POAwebsite>login>POA>Financials>SummaryOfOperations>December2018)
6) December 2017 Financial Package, Summary of Income from Operations, pg. 1
7) December 2016 Financial Package, Summary of Income from Operations, pg. 1
8) December 2015 Financial Package, Summary of Operations, pg. 1
(POAwebsite>login>POA>DocumentArchive>Administration>FinancialReports>2015Financial Reports>2015_12Financials)
9) December 2014 Financial Package, Summary of Operations, pg. 1
(POAwebsite>login>POA>DocumentArchive>Administration>FinancialReports>2014Financial Reports>2014_12Financials)
10) 2020 Capital & Master Plans, pg. 6
(POAwebsite>login>POA>Financials>Budgets>2020Capital&MasterPlans)
11) ”About that Dam”, January 18th, 2021, bcmatters.org,https://bcmatters.org/about-that-dam/#more-763
12) Meeting of the Board of Directors Video, January 21st , 2021 (a) 46:50
(POAwebsite>login>POA>Meetings>SubscribeToOurYouTube . . . >)
13) 2021 Capital Plan
(POAwebsite>login>POA>Financials>Budgets>2021CapitalPlan)
14) Special Board Meeting Minutes, December 7th, 11th, 14th, 21st, 28th, 2020 and January 4th, 12th, 18th, 2021 (POAwebsite>login>POA>Meetings>Minutes)