Summary of Finance Committee Meeting of 5 December 2006
Present:
Finance Committee: John Frisch, Sanya Ham, Don Horan, John Lynch, Jean Strub
Board of Directors (BoD): Mal Malo, Bill Nosal, Toni Brown, Art Gabler, Jackie Richards, Chuck Heath (elect)
Armstrong Management Services, Inc.: Jim Armstrong
Jim Armstrong talked briefly about progress with the transition from Koger Management Group, Inc. to Armstrong Management Services, Inc. A check from Koger for $30,000 has been received by Armstrong Management to be used to open new bank accounts for FRCA and to pay initial bills. Koger Management was asked to provide an electronic file of Falls Run residents’ addresses so an introductory letter could be quickly sent by Armstrong Management. However, Koger only delivered a paper list of the addresses and the introductory letter is delayed until Armstrong Management can manually type the addresses into their data base. Jim said they had previously transitioned accounts from Koger Management and expressed confidence that the transition will be accomplished successfully and in a reasonable time.
Jim was then asked to describe how Armstrong Management would deal with specific financial activities. His responses follow:
Operating funds: Coupon books will be available for payment of the monthly assessment by residents, or residents can choose to pay electronically. Instructions will be sent to the residents as soon as the addresses can be prepared. Monthly reminders will not be sent. Jim was informed of FRCA’s procedures for handling delinquent payments and he gave assurance that their accounting system could implement our procedures. A copy of the procedures will be sent to Armstrong Management by Mal. Assessment payments will go directly into a FRCA bank account and payment status will be updated daily. Processing of payments to creditors will start with somebody from Armstrong Management, generally the on-site manager, reviewing the invoices and designating the account to be debited. This would be an opportunity for a representative of the Finance Committee to become involved in the process. A copy of the chart of accounts proposed by the Finance Committee was given to Jim and he will review it for compatibility with their accounting system. After the invoices have been reviewed and coded, they will be sent to Armstrong Management’s Fairfax office for payment. Payment will normally be made within a week, and payments can be made more quickly if there is urgency. Jim agreed that timely payments to creditors are important. Jim is aware that the Finance Committee has encountered significant problems with accounting in the past and that it will keep a close watch until full confidence in Armstrong Management’s accounting is attained. Jim said that the Finance Committee can expect to have direct contact with the person responsible for our accounts at Armstrong Management. Jim was not aware of our income from the Resale Transfer Fee, and it was discussed. He said that Armstrong Management had people who routinely monitor real estate transactions and they could ensure that FRCA received proper payment.
Contracting support: Armstrong Management has a contracting team comprising three people who will do the major work involved in placing our contracts. The on-site manager will not be directly involved in the contracting effort except for relaying information between Armstrong’s contracting team and the FRCA BoD. Armstrong Management will develop the statement of work with input from the FRCA BoD or relevant FRCA committee. Armstrong already has standardized statements of work to cover many of the commonly encountered tasks. They have lists of potential providers of commonly needed products and services, but we will not be restricted to their lists. Armstrong Management will request proposals from potential vendors and control the acceptance of proposals. Armstrong Management will evaluate the responses and provide a spread sheet comparing the various proposals. Armstrong Management will also make recommendations to the BoD. Ultimate selection of the winning contractor will be done by the BoD. Armstrong Management will then negotiate the contract with the selected contractor. After the contract is signed, Armstrong Management will monitor the performance of the contractor. The monitoring task will generally be done by the on-site manager. Jim was given a copy of our contracting guidelines and will review them. He was given a list of contracts in force, which indicates when action to renew each contract is needed. Armstrong Management will now prepare these lists for us.
Investing support: Armstrong Management has a person who routinely shops 15 to 20 banks for current rates on CDs, treasury bills, and other investment instruments. This information will be sent to us each month. Jim Armstrong agreed with our desire to keep replacement reserve accounts separate from other funds, and said it would be done. He understood our expectation that our funds be invested in federally insured institutions, and said this would be done. Armstrong Management will keep a list of our investments and provide warning when some action was needed by FRCA. Armstrong Management, however, will not make recommendations on investments. The BoD will have to select the investment instrument to be used. Armstrong management would then handle the purchase of the selected instrument at no additional charge. We explained that we expected the interest earned by our replacement reserve accounts to be credited to our replacement reserve and not be used as operating funds. He said it would be done, and that he would have to look into how best to accomplish it within their accounting system.
Budgeting support: Armstrong Management will provide a draft budget at the proper time to allow Finance Committee review and BoD approval by the date specified in our governing documents.