FINANCIAL SERVICES
In order to provide the Board with timely and complete financial information, Main Street Property Management, Inc. will provide the following reports on a monthly basis. Sample reports are an exhibit to this proposal. It is our company policy to present quality, completeness, accuracy and timeliness in our financial reports to the Board so that they have adequate information to make sound decisions.
A. Balance Sheet - This report reflects the financial position of the community at the end of the month, including balances of all asset, liability and equity accounts, i.e. cash and investment accounts, accounts receivable, prepaid assessments, etc. A separate balance sheet is generated for both Operating and Reserve funds.
B. Budget Comparison Report - On a cash basis this report reflects income earned and expenses incurred for the current month and the year to date. These income and expenses are presented along with budgeted amounts to reflect any variances.
C. Income Statement - This report, prepared on a cash basis, shows actual (line item basis) income received and expenses incurred for both current month and year to date reporting periods.
D. Expense Register - This report includes a listing of check numbers, vendor names, check amounts, invoice description, invoice dates, and general ledger account codes for all disbursements made during the month.
E. Budget Detail - This is a report which allocates by month, for an entire accounting period, all budgeted income and expense line items.
F. Delinquency Report - This report lists all homeowners who are delinquent at the end of a month or for a particular reporting period. It shows delinquent amounts for accounts 30, 60, and over 90 days past due.
G. Owner Detail - This report shows owner addresses (for both resident and non resident owners) assessments billed, amounts past due, delinquency aging, and has room for remarks, which can include brief owner notes, move in dates and phone numbers.
H. Owner Directory - This report shows all owners and reveals amounts prepaid and accounts receivable.
I. General Ledger - This report shows all day-to-day financial transactions for a specified accounting period.
J. Optional reports include: Income Register, Journal Entry Report, Cash Flow Analysis, and Reserve Account by Component.
Main Street Property Management Inc. will provide each owner with monthly payment coupons, which are directly mailed to the MSPM Controller and accounting staff. Deposits to the Associations accounts are made on a daily basis.
This method of collection allows the funds to be deposited directly into the Association's account so funds will be available the same day that they are deposited.
MSPM follows the collection procedures established by the Board in accordance with the Maryland Contract Lien Act. Usually this entails issuing a late notice after a 10 or 15 day grace period the first month the account becomes delinquent. If the unit owner does not pay within 30 days of the late notice then it is suggested that the account be turned over to the Association's attorney for collection. All late fees, late fee notices, and attorney costs are a direct charge to the unit owner's account.
Invoices are approved by the Property Manager after verification of work completed or items received and then forwared to the controller for invoice review and payment. All vendor invoices are date stamped and forwarded to the Property Manager for review and approval. The Property Manager codes each invoice with the appropriate expense code and forwards the invoice to the controller. MSPM pays invoices every Friday of each month. Accomodations can be made to cut an emergency check on a non Friday. All checks over $1,000 are signed by both corporate officers who are appropriately bonded. A copy of each check along with the original invoice and any supporting documentation is filed with the Association's records. Reserve contributions are made in the middle of each month and are deposited into an account designated by the Board. The amount of the payment is approved by the Board based on the annual budget. It is recommended that all reserve expenditure checks not only be signed by MSPM corporate officers but also two members of the Board of Directors.
MSPM serves as an agent for the Association. All checking, savings, and investment accounts are maintained in the name of the Association and no funds are ever commingled with any other property. All bank accounts are assets of the Association and are designated in the Association's name at banking institutions. All funds received on behalf of the Association are deposited directly into the Association's account; all funds disbursed on behalf of the Association are made directly from the Association's account.
We will maintain a system of office records and books of account in accordance with generally accepted business and accounting practices. This includes the following records:
FINANCIAL: Financial Statements and general ledgers financial statement reconciliation file, which includes account analyses for all Balance Sheet accounts, journal entries, and supporting documentation.
BANKING: Bank statements for cash and investment accounts
Certificates of Deposit
Daily cash journals
ACCOUNTS PAYABLE: Check registers
Check copies and supporting invoices
Vendor payment histories
ACCOUNTS RECEIVABLE: Transaction registers for daily deposits (which include copies of all checks,
assessment billings, late fees, and settlements) Homeowner delinquency and prepaid reports
Homeowner payment histories
MSPM shall provide, at a minimum, the following insurance coverage:
General liability insurance coverage in the amount of three million dollars ($3,000,000.00) that insures against personal bodily injury, loss of life and property damage.
Workmen's compensation coverage for all employees in accordance with applicable local jurisdiction requirements.
MSPM shall provide an employee dishonesty bond in the amount of five hundred thousand dollars ($500,000.00) for all employees who handle or are responsible for the handling of the Association's funds.
All insurance policies and bonds shall be written by insurance companies licensed to operate in the local jurisdiction.
MSPM shall provide the Association with certificates of insurance to substantiate the required coverage and showing the coverage to be in effect for the entire term of this agreement.
MSPM shall include the certificates of insurance in the January management report each year that this agreement is in effect.
Requests for bids are sent to various certified public accounting firms. The Board will review all proposals received and sign a contract with the firm selected. All records will be available on-site for the auditor to examine. MSPM will answer any questions and provide any additional information requested.
After reviewing the Association's historical data, the cost-of-living index and any other known factors such as approved contracts (lawn maintenance, snow removal, etc.), we will prepare a draft budget to present to the Board. Once this draft budget is approved, it will be mailed to the homeowners for review prior to final approval. Upon approval, a second mailing will be sent to each homeowner to forward the approved budget.
As part of this process, MSPM will update the Association's reserve analysis (see reserve study explanation as stated above). This reserve analysis shows how the reserve funds are allocated to the Association's capital assets, shows the estimated remaining life of each asset, and the amount of funding needed to replace each item. This reserve analysis allows the Board to project large expenditures and budget accordingly.
