A time of reckoning . . .

On June 26^th, a representative and partner of the accounting firm, Mauldin & Jenkins, declared the Association books to be “clean and in good order”. (1a)

This audit opinion was made possible only after the required write-off of $1,544,897 in capital assets (associated with the Clubhouse and Choctaw renovations) resulting in a similar reduction to 2024 income and property owner equity. For example, management’s restated financial results (2) now reflect a net loss from operations of  ($761,185) versus the $730k positive result originally reported.

That said, the books were not clean and in good order when the 2024 financial results were presented to the community by management at the January board meeting. (3) Nor were the 2024 year end financial statements (stamped preliminary) posted to the POA website in late March and delivered to Wells Fargo as a requirement of the loan covenants in clean and good order. Not even close.

Note: This vital information and detail can not be found in the recap of the June 26^th board meeting published by Smoke Signals. (4) https://smokesignalsnews.com/news/big_canoe/big-canoe-poa-board-meeting-clubhouse-may-financials-audit-update-upcoming-election/article_f781bf84-a2cb-4256-bdb0-c6cda869aab7.html

As for Wells Fargo . . .

As confirmation, AskThePOA Ticket#17431  (5) was submitted to determine if the internally prepared December 2024 and March 2025 quarterly financial statements had been delivered to the bank and whether these statements contained the same information as was posted to the POA website. Confirmation was received via  AskThePOA Response#17431 . (6)

Note: It is unknown if the restated financial statements have been delivered to the bank.

One must seriously wonder if the Wells Fargo lenders will be dismayed to learn of such a massive write-off six months after the fact and after the May conversion of the line of credit to a 3.46% term loan.

Make no mistake. Management must have known that these write-offs were imminent. And given that the Director of Finance has assured this writer that she is in constant contact with the accountants throughout the year, it is difficult to understand how it was not also known that significant write-offs would be required in 2024. Instead, information related to the loss was withheld from the property owners and withheld from the bank until the completion of the annual audit.

One must also wonder . . .

Would leadership have secured that favorable property owner vote for the $6.35 million clubhouse renovation if leadership had disclosed the likelihood of a $1 million plus demolition and write-off of clubhouse assets prior to the vote rather than waiting until the conclusion of an annual audit?

Clearly the property owners have been misled as important details and financial information have been hidden and/or withheld.

A “significant misstatement” (7) . . .

Although no mention of the massive clubhouse write-off could be found in any of the Finance Committee minutes, the Choctaw loss at approximately $260k was characterized by the committee as a significant misstatement of the useful life of that asset. In turn, as also suggested by this writer, (8) the committee directed management to evaluate the remaining asset portfolio to identify any others that may require accelerated depreciation or adjustments. (7) Kudos to the committee for that directive.

Further, and as noted in the June 12^th meeting with the Mauldin & Jenkins representatives, (9) the committee directed management to make adjustments to record the Choctaw loss effective year end 2024 in accordance with GAAP rather than defer that loss to 2025. Quite honestly, that decision should have been a no-brainer.

And yet, the community is subjected to ridiculous tutorials on what is and isn’t important when it comes to the Association’s financial performance . . .

The POA vice-president’s pattern of waving her arms together in mock applause for management and another clean audit while proclaiming to the community over and over and over that losses on asset disposals are “nothing to get excited about” as they are not cash expenses is quite frankly getting old and overused. (1b) https://www.youtube.com/watch?v=VdQMEC0UVzU at 38:35 and (1c) at 1:01:30 through 1:03:05

Many accounting transactions are non-cash expenses. That fact does not mean that they do not matter nor does it mean that they can not and do not have a significant impact on the financial performance of the Association that should at all times be taken into consideration. Perhaps it would be worthwhile to list a few additional examples of non-cash expenses.

• • For example, the $100k in missing or unaccounted for food and beverage inventory (10) resulting in an additional charge to cost of sales at the 2023 year end was a non-cash transaction.

Note: To this writer’s knowledge, no investigation has ever been conducted regarding the source of that discrepancy.

• • The write-off of $41k in pending insurance receivables intended for the restoration of the Chimneys damage was a non-cash expense. (11)

Note: It remains unknown why management delayed the adjustment until after the January 2025 board meeting when the Association had been notified by the insurance company earlier in 2024 that they would not be releasing those proceeds due to the Association’s failure to restore the facility within 24 months.

• • Likewise, write-offs of delinquent property owner assessments or charges perceived by management as uncollectible are non-cash expenses.

The examples go on and on, so maybe it’s time to give that story line a rest.

The June 26th extravaganza continued in all it’s glory . . .

In an apparent effort to divert attention from the financial performance,  a balance sheet comparing May 2025 to May 2016 (12) was displayed at the conclusion of the board meeting’s financial segment.

With an $8.9 million increase in cash as compared to 2016, the Director of Finance noted that a portion of the increase in cash was attributed to draws against the Wells Fargo line (for prior capital expenditures) to be set aside for the remaining clubhouse and Lake Petit dam spillway expenses. (1d) at 1:10:35

To be more specific, approximately $5.9 million of that increase in cash is attributed to those draws taken out (February through April 2025) and deposited to the Capital Fund account.

However, that Capital Fund reflects a balance at May 2025 of only $3.7 million indicating that a significant portion of that cash has already been consumed by capital expenditures other than the spillway or clubhouse.

It is also most important to emphasize that without those additional dollars, the cash and current ratios would be significantly less favorable than the 2016 ratios rather than improved as proclaimed by leadership.

Despite that, and while ignoring a 54% increase in debt and 69% increase in total liabilities, all focus shifted to property owners equity totaling $50.9 million.

With the Director of Finance declaring “it’s your money” (which it is by the way), the board went into an ecstatic frenzy jokingly clamoring to buy/sell stock in Big Canoe. Needless to say, it was quite the performance. (1e) 1:13:30 through 1:14:25

Note: Yes. Property owner equity has increased $20 million (69%) over the nine year period fueled by each year’s comprehensive income. And of that $20 million increase, over $9 million came from capital assessments and capital contribution fees initiated since 2020.

Everything is relative and must be kept in perspective.

And then there’s still that dam . . .

A significant expenditure still hovers somewhere out there in the very immediate future with a previously conservatively estimated price tag of $6 million. And yet, since the successful test of the lower level outlet, the community hears only crickets regarding the subject of the spillway.

In fact, despite that $6 million price tag, note 12 to the now posted 2024 audited financial statement (which will likewise be forwarded to Wells Fargo Bank) directs the reader to the 2021 reserve study that references a cost of only $1.5 million.

Seriously?  Now how truthful is that?

. . . . .

If you believe the information contained in this post is important, please pass it on. As this writer does not have access to a mailing list, sharing via email or posting links wherever possible will be appreciated. Should you wish to see additional articles posted in the future, please subscribe for an email notification or check back frequently. And as always, feel free to contact me directly at thepcrosses@gmail.com for questions or further discussion. Meanwhile, take care, stay safe and thank you for your readership.

Patricia Cross

10438 Big Canoe

References:

1)    Big Canoe POA board meeting, June 26^th, 2025, video on Youtube at a) 27:15; b) 38:35; c) 1:01:30 through 1:03:05; d) 1:10:35; e) 1:13:30 through 1:14:25

https://www.youtube.com/watch?v=VdQMEC0UVzU

2)   December 31^st , 2024 Financial Package, Summary of Operations, pg. 1

(POAwebsite>login>POA>financials>2024>December)

Note: Posted to the POA website, June 30^th, 2025, in replacement of financial package posted in late March.

3)    Click here – December 2024 Financial Summary slide presented at the January 2025 board meeting

4)    “Big Canoe POA Board meeting: Clubhouse, May financials, audit update, upcoming election”, June 30^th, 2025.

https://smokesignalsnews.com/news/big_canoe/big-canoe-poa-board-meeting-clubhouse-may-financials-audit-update-upcoming-election/article_f781bf84-a2cb-4256-bdb0-c6cda869aab7.html

5)   AskThePOA Ticket#17431

6)   AskThePOA Response#17431  

7)    Finance & Audit Committee Meeting Minutes, May 23^rd, 2025 (posted to the POA website on or about June 23^rd, 2025)

(POAwebsite>login>POA>Committees>Finance&Audit>Minutes>2025>May)

8)    “Back to the numbers again”, June 9^th, 2025, bcmatters.org, https://bcmatters.org/back-to-the-numbers-again/

9)    Finance & Audit Committee Meeting Minutes, June 12^th, 2025

(POAwebsite>login>POA>Committees>Finance&Audit>Minutes>2025>June12th)

10)    “Circling the wagons: Part one”, April 2^nd, 2024, bcmatters.org, https://bcmatters.org/circling-the-wagons-part-one/

11)   “The untouchables”, April 15^th, 2024, bcmatters.org, https://bcmatters.org/the-untouchables/

12)    Slide presented at June 26th board meeting, click here – a balance sheet comparing May 2025 to May 2016