Comprehensive Tasks: The Role of The Treasurer

The Role of the Treasurer

The association treasurer is responsible for maintaining the finances and ensuring the financial stability of the association. He or she is the financial voice of the board and liaison to auditors, CPAs, brokers, agents, and bankers. This includes a number of duties and responsibilities.

P R E PA R E   T H E   B U D G E T

The most important responsibility the treasurer has is preparing the annual operating budget.

M A I N TA I N   A S S O C I AT I O N   A C C O U N T S

The association’s documents and bylaws specify a number of financial responsibilities that the treasurer must oversee. These may include: 

** Maintaining adequate insurance coverage

** Keeping financial records

** Investing association funds

** Collecting assessments and delinquencies

** Reserving funds for future needs

** Filing income tax returns

UN D E R S TA N D   B A S I C   F I N A N C I A L   S TAT E M E N T S

The treasurer must understand at least the basic components of the financial statement:

** Assets

** Liabilities

** Members’ equity: reserves and operating fund balance

In addition, it would be advantageous to the association if the treasurer also had an understanding of the other components of the financial statement such as:

** Initial working capital

** Special project funds

** Income statement

** Statement of cash flow

R E P O RT   T O   T H E   B O A R D

The treasurer should report at regular board meetings on the state of the association’s finances based on the following information, which may be maintained and provided by the manager or finance committee:

** Balance sheet

** Statement of income

** Cash receipts and cash disbursements activity

** Unit owner balances

** General ledger activity and journal entries

** Schedule of accounts payable

** Bank statements and bank reconciliations

I M P L E M E N T   A   R E S E R V E   P R O G R A M

Reserves are a primary responsibility of the treasurer and the board of directors. The treasurer must:

** Conduct a reserve study.

** Update the reserve study periodically.

** Develop and implement a reserve funding schedule.

** Fund the reserve accounts appropriately.

S E L E C T   A   C PA   A N D   C O N D U C T   A N   A U D I T

Ensuring that the association is working with a qualified certified public accountant (CPA) is one of the treasurer’s important duties. CPAs with community association experience are better equipped to provide the expertise you need. The treasurer should work with the CPA to perform an annual audit—a very important document for a community association, the management company, and the board. Even if your association uses the services of a CPA, or if your treasurer is a CPA, all board members—especially in self-managed associations—should have a basic understanding of community association finances.

B O O K K E E P I N G

In smaller, self-managed communities, the treasurer’s duties may include bookkeeping.

F I N A N C I A L   L I A I S O N

The treasurer is the liaison between the association board and finance committee, its subcommittees, and between the board and the members on financial matters. In addition, the treasurer is the liaison to reserve study engineers, bankers, CPAs, insurance agents, investment brokers, and auditors.

M A I N TA I N   R E C O R D S

The treasurer should make sure that important financial records are safely maintained for an appropriate time.

T H E   R O L E   O F   T H E   T R E A S U R E R

Cautions

*Diverting association assets from their intended use or purpose is a very real possibility in any community association. It’s important that treasurers use internal controls to prevent the misuse of association funds.

*Safety and liquidity of association assets are essential to the community association. It’s important for treasurers to know where and how to invest homeowner’s funds to ensure their protection.

*Treasurers must decide whether to file the association’s income tax returns under Internal Revenue Service Code Sections 528 or 277. It’s important to make the right decision—the wrong one can cost the association substantial penalties.

*There are numerous important considerations when developing a community association operating budget. It’s important to avoid some and include others to maintainthe financial strength of the community.

*Check your state’s laws for specific provisions regarding audits, financial statements, delivery, etc.