It certainly came as no surprise to learn that the Association’s independent auditors, would be issuing a “clean” opinion of the 2023 financial statements. What did come as a surprise was the firm’s extensive and gushing accolades for management at the June 27th board meeting followed by a discombobulated presentation of the year end financial highlights erroneously utilizing 2022 data. (1a) How does this even happen?
Concluding with the POA President’s alternating exclamations of “dang good report” (1b) and requests for rounds of applause, the Board and others failed to recognize the discrepancies in the data found in the auditor’s presentation.
Note: It is unknown who prepared or reviewed the Mauldin & Jenkin’s slide presentation displaying 2022 financial results rather than the currently audited year 2023.
Regardless. Everyone makes mistakes.
Financials in a vacuum . . .
And to be fair, despite the errors in the presentation of the financial highlights, Mauldin & Jenkins (“M&J”) did issue an unmodified or “clean” opinion of the Association’s December 31st , 2023 financial statements. And that is a good thing.
Given that, it is acknowledged that on some level, it would be completely reasonable for any property owner to view the “clean” opinion in a vacuum thereby dismissing any additional financial analysis, information or details that might be provided elsewhere.
And that would be a mistake.
For example, it is important to recognize that M&J audited the accuracy of the Association’s financial statements as of December 31st, 2023. They presumably did not audit the information, detail or monthly financial packages presented to the community for the previous eleven months that are so often discussed on these pages as that would be outside the scope of their engagement.
Note: Perhaps this would help explain how management’s failure to verify food and beverage inventory for many months prior to year end could escape the attention of M&J.
Other observations . . .
However, the independent auditors did make several interesting comments during their June 27th oral presentation to the board. For example, it was admirably noted that reduction of debt in any organization is a “positive thing”. (1c)
Note: Kudos to the auditors as this writer wholeheartedly agrees with their position on debt reduction.
However, this observation is contrary and completely inconsistent with the Board’s current plan to take on substantial additional debt (via the $15 million line of credit) in order to fund the clubhouse and Choctaw golf course renovations.
In fact, the Board appeared not only euphoric but also emboldened as they announced later in the June 27th meeting that the entire postal facility project had been abandoned while proudly voting 7-0 to proceed with the clubhouse renovation at a total cost of $7.68 million versus the $6.35 million that had been approved by the property owners in August 2023. (1d) Amazing.
Note: This overt abuse of power by the Board of Directors is one that might likely be interpreted and addressed by others as this writer will continue to confine this discussion to financial issues.
Accounts receivable and those wicked AECD letters . . .
And while discussing their review of the Association’s accounts receivables, it was remarkably noted by M&J more than once that the Association’s delinquency policy was among the best they had seen. (1e)
One must wonder how the recipients of those abusive AECD letters feel about that item of praise?
Further, one might also question whether the review of that delinquency policy included an analysis of the proper calculation of finance charges on those late assessments and AECD fines?
For example, property owner statements specify that interest on all delinquent accounts will be calculated at 18% per annum whereas OCGA 7-4-2 states the maximum rate to be 7% per annum. To confirm compliance with code and ensure that the Association is not applying “usurious” finance charges, someone in leadership might want to take a look at Northside Bank vs. Mountainbrook of Bartow County Homeowners Association at https://caselaw.findlaw.com/court/ga-court-of-appeals/1742434.html and https://ljlaw.com/georgia-courts-strike-blow-hoas/.
Note: With finance charges contributing significantly to positive variances as highlighted on the General Manager’s April 2024 financial summary, (2) a review of this calculation might be in order.
Going dark . . .
And as noted in a previous post, (3) https://bcmatters.org/circling-the-wagons-part-one/ the community had no access to even an internally prepared 2023 year end financial statement until on or about March 25th, 2024.
Throughout December 2023 and during that dark period from year end through March 25th, management took the opportunity to make what appears to be an abundance of accounting adjustments in order to achieve that “very clean” and “books in very good order” description so repeatedly emphasized by M&J.
After further consideration . . .
And now, it might also be noteworthy to mention that leadership apparently had second thoughts after the previous post on this site (4) https://bcmatters.org/alarm-bells/ and offered this writer information in addition to the explanations provided by the Director of Finance on June 10th in an attempt to satisfy this writer’s request for specific accounting records.
And although it was noted previously that there would be no additional posts on the subject, leadership’s latest correspondence warrants further discussion.
Odd and disturbing . . .
In lieu of any of the accounting records previously requested, the Board instead offered an administration variance report prepared on Excel by the Director of Finance along with an Excel spreadsheet titled “Administration Trial Balance Report” oddly prepared by the POA Board Treasurer.
Unfortunately, what we now have here are three sets of information prepared by the General Manager, the Director of Finance and the POA Board Treasurer with none of the three corresponding or tying to the other. Suffice it to say that not all information included in the Director of Finance’s explanation corresponds to the GM’s May 30th slide presentation or the POA Board Treasurer’s spreadsheet or vice versa. In other words, the data provided appears to be determined by the individual preparing the information.
Further, one must seriously question WHY a board director would be compiling a mocked up version of a partial trial balance report. Is this director charged with actively managing the POA?
It is also important to note that although the Association has invested in various computer software programs and support agreements, not one single item of information provided to this writer was prepared by the accounting software presumably used to generate the actual accounting records. Go figure.
So there you have it . . .
Should this community completely rest on the laurels of an unmodified and “clean” audit opinion of the year end financials as leadership forges ahead to spend every available current and future dollar of our money? And should we become or remain complacent?
Again, as property owners, we are entitled to know and understand how every dollar is spent, invested or squandered, and those answers are beyond the scope of an audited year end financial statement.
. . . . .
If you believe the information contained on this site is important, please continue to share and pass it on. 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 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 27th, 2024, video on Youtube at: a) 24:30; b) 30:50; c) 26:40; d) 1:08:00 through 1:36 :00 with vote at 1:34:45; e) 17:25
https://www.youtube.com/watch?v=cmOr7cSd68k
2) Big Canoe POA Board meeting, May 30th, 2024, video on Youtube at 33:20
https://www.youtube.com/watch?v=0KxXq_37GFw
3) “Circling the Wagons: Part One”, April 2nd, 2024, bcmatters.org https://bcmatters.org/circling-the-wagons-part-one/
4) “Alarm Bells”, June 13th, 2024, bcmatters.org https://bcmatters.org/alarm-bells/
Call me ignorant if I am, but why is Mauldin & Jenkins the go to firm for everything? Financial audit authorization, vote tabulation for POA board elections…even if I’m not mistaken tallying up the votes for Renew Big Canoe. All we received from that one was a percentage for the victory…not even an actual for or against vote number. Maybe I’ve been reading too much national politics lately but I’m a cynic when it comes to this stuff.
Mauldin and Jenkins are the “go to” for CPA and audit services. M&J also conduct governmental accounting for municipalities and state government.
So, we’re going to drop $7.8M on the clubhouse renovation. Wow. Seems like just yesterday when we built the entire structure for $11M. Hopefully POA management will put this project out to bid amongst general contractors. They didn’t when the new clubhouse was built. That misguided decision alone cost property owners $1M.
You know, since the First National Bank of the Property Owners is always available to dip in to, regardless of general economic conditions, fiscal prudence is not one of the objectives of the POA board.
It seems that since property owners voted on a new postal facility, a remote is required to allocate our money in a different way. The slick brochure that was sent out, which no information has been given to the cost, shows the poor research done by the board. The postal facility had to be abandoned. They spend our money in such a haphazard way that I am amazed that a suit has not been brought previously.
Since The Chimneys has been declared a lost cause due to extensive water damage and heavy doses of asbestos filling the walls and ceilings, it should be torn down with the land it presently sits on treated for any and all types of problems, including termite underground infestation.
Once clean, the land would be a prime spot on which to build a new postal facility. Since such a facility would be more utilitarian than “fancy,” the cost to build would probably be fairly reasonable. Bells and whistles wouldn’t be needed. It’s close to the Package Porch so we would have a centralized mail/package facility. Adequate parking could be worked into the equation.
The old postal facility could be revamped, rebuilt or renovated to create meeting space for small groups.
Property owners use the postal facility far more often than they use The Clubhouse or golf courses. Updating our mail and package services should be a priority.
I’ve heard the argument that in the survey taken a few years ago, The Clubhouse was considered a Number One priority. I’m fairly certain most who checked that box weren’t thinking of spending millions of borrowed dollars to renovate the actual building. Instead, I suspect they were thinking of providing better service, keeping a chef more than a few months, better quality food and a more interesting variety of choices on the menu. Most were hoping the renovations in the kitchen done a few years ago would help. Has it?
Losing hundreds of thousands of dollars each year on The Clubhouse points to problems that fancy, expensive chairs or flamboyant dinnerware won’t fix. Clubhouse management should be critically evaluated. Let’s get priorities in place.