SECTION 4 – FINANCE & ACCOUNTING
4.A
ANNUAL BUDGET & FUNDS
1. Each year the General Manager and Controller will submit to the Board of Directors, a proposed Annual Budget. The Board, with input from the Finance Committee, will review, request amendments/adjustments if necessary, and adopt the Budget. The Budget will establish monthly member assessments and designate portions of the assessment to be allocated among the various association funds, including an Operating Fund, Reserve Fund, and Capital Fund. The Annual Budget will also approve expenditures from the various association funds. The Annual Budget will be distributed to the members not less than 30, nor more than 90 days prior to the end of the fiscal year. 2. The Association will maintain its monies in separate funds, each fund having a separate bank account, as follows, and to the degree possible, payments for obligations associated with those funds will be paid directly from that fund. 3. Operating Fund – receives a designated portion of monthly owner assessments, resort fees, and other income, and disburses money to pay the obligations of the association under the annual Operating Budget such as utilities, landscape & mowing, administration, etc. The Controller shall maintain 2 – 4% of th e Operating Fund’s current annual budget as working capital for unforeseen circumstances. Monies in excess of the 4% at the end of any fiscal year will be reallocated, as determined by the Board of Directors in accordance with our Governing Documents and California Civil Code. 4. Reserve Fund – receives a designated portion of monthly owner assessments and disburses money the association has set aside to defray the future repair or replacement of, or additions to, those major components which the association is obligated to maintain. (Civ. Code §4177.) Except for temporary borrowing, the Board may not expend funds designated as reserve funds for any purpose other than the repair, restoration, replacement, or maintenance of, or litigation involving the repair, restoration, replacement, or maintenance of, major components that the association is obligated to repair, restore, replace, or maintain and for which the reserve fund was established. (Civ. Code §5510(b).) 5. Capital Fund – receives a designated portion of monthly owner assessments and disburses monies to acquire new assets which are not replacement items and do not qualify as Reserve Fund expenditures. The Capital Fund accrues funds for capital improvements that are reasonably anticipated to occur during a fiscal year as established in the Annual Budget. Additionally, funds may be accrued to cover expenses associated with the Master Plan. The maximum annual spending for capital improvements, as set forth in Article 4, Section 4.6(B) of the CC&Rs is 5% of budgeted gross expenses for that fiscal year. All single item expenditures in excess of this limit, must have the approval of the ownership by a vote of a majority of the quorum established in our governing documents. The Board of Directors may also make disbursements or borrowings from the Capital Fund for unexpected or emergency items. Any borrowing must be paid back in the same year or through a payment plan not to exceed three years. 6. Interest Earned – any interest received on each of the separate bank accounts will be credited to the Fund account for which the interest was earned.
4.B
INVESTMENT POLICY
1. Monies in excess of the amounts reasonably projected for disbursement under the Annual Budgets will be managed by the Controller and Board Treasurer, according to the following investment policy. 2. All additional funds will be invested with a primary objective of capital preservation and a secondary objective of income generation. Such funds will accordingly be invested in Certificates
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