Summary of Finance Committee Meeting of 3 October 2006

Present:

            Finance Committee:  John Frisch, Sanya Ham, Don Horan, Paul Rankin, Jean Strub

            Board of Directors (BoD):  Mal Malo, Toni Brown

Monitor FRCA (Koger) Account:  Koger Management had agreed to deliver requested financial documents by 21 September.  The requested documents were delivered on 21 September including:

·  Financial Reports and General Ledger from June 2006 to the present with the ledger showing ALL accounts, whether they had activity or not;

·  hard copies of August 2006 invoices;

·  hard copy of the General Ledger, showing ALL accounts, from January through May 2006.

Based on these documents and documents previously received, members of the Finance Committee agreed that we have an acceptable knowledge of the financial condition and accounting status of the Falls Run Community Association provided we can obtain information on the sub-ledgers of the Accounts Receivable.  New accounting software put into use by Koger Management on 1 July 2006 is supposed to let us access this information via the internet.  It will be to our advantage if we can really access our financial information through the internet, so we will try to access the Accounts Receivable information in this manner.

The 2005 audit of the FRCA accounts by Goldklang, et al. has still not been completed.  Mr. Goldklang promised Mal Malo that it would be completed by 6 October.

Monitor Community Center Account:  Matching the Visa debit card transaction records with the Activity Director’s records is still pending.  However, the document delivery by Koger Management on 21 September included more detailed information on the debit card transactions which should make matching these records with the Activity Director’s records easier.

Investment Strategy:  Mal Malo has received a check from Merrill Lynch to close out that account.  The check will be given to Koger Management so they can open a new, separate, liquid account paying good interest and deposit the entire check into the new account.  This new account is to be opened so that it will be covered by FDIC insurance and will contain only replacement reserve funds.  After the account is open, additional replacement reserve funds will be moved into it so that all of our replacement reserve funds will be in CDs and accounts completely separate from our operating fund accounts.

One of the replacement reserve CDs will mature in January 2007 and there was discussion of what to do with that money at that time.  It is clear that it must be moved out of the present bank to have it covered by FDIC insurance.  Possibilities include purchasing CDs at local banks and buying US Treasury bills by means of Treasury Direct.  Since replacement reserve investing could be handled by the FRCA BoD or by our management company, no recommendation will be made until our management company for 2007 is known.

It had been requested that the document delivery of 21 September by Koger management include copies of all bank statements since 1 January 2006 and copies of all CDs.  All was received except for statements for the primary operating account.  These have been requested again.

Budget:  A modification to the Replacement Reserve budget identifying the basis for the amount to be put into Replacement Reserve must be added according to Virginia law.  The basis is Table 3.1 of the Condition Assessment and Reserve Fund Plan Update 2005 provided by Mason & Mason Capital Reserve Analysts, Inc.  This information will be added to the proposed Replacement Reserve budget.