Summary of Finance Committee Meeting of 25 September 2007

Present:

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

            Board of Directors (BoD):  Mal Malo, Bill Nosal

FRCA Account:  Work was completed on operating and Replacement Reserve budgets for 2008.  They will be forwarded to the BoD for action.

Because of inadequate records, the recently completed 2005 financial audit failed to note transfer to Replacement Reserve of $40,655 by the Del Webb BoD during 2005, and $2,884 in interest earned during 2005 on Replacement Reserve funds.  The Finance Committee recommends that the BoD take action to provide a 2007 record of inclusion of those amounts in the Replacement Reserve so they will be picked up in the 2007 audit.  Also, because the amount of funds in Replacement Reserve accounts and investments exceeds the amount transferred into Replacement Reserve by BoD action over the years by $15,900, the Finance Committee recommends that the BoD take action to transfer that additional amount into Replacement Reserve.  In summary, it is recommended that the BoD document an additional $59,439 transfer to Replacement Reserve.

Draft 2 of the 2006 audit has been received.  The financial numbers reported in this draft are acceptable.  However, the explanation of accounts receivable is inadequate.  Mal asked the members of the Finance Committee to quickly inform him of any other concerns with draft 2 of the 2006 audit so he can forward them to the auditor.

The August financial reports were received from Armstrong Management.  No obvious concerns were noted.  However, they have not been examined carefully because of the work on the budgets and reviewing the draft 2006 audit.

Contracts:  A proposal from Shenandoah Landscape Services for maintenance of the irrigation systems at the Middleton gate, at the Community Center, and along Smithfield approaching its gate was discussed.  The proposal is for three years starting on 1 May 2007.  The Finance Committee recommends that the BoD accept Shenandoah’s proposal.  Since Shenandoah has been doing the work, they are owed $5,197.50 for the 2007 effort.

Concern was expressed that the Shenandoah proposal, dated 27 March 2007, was just starting its way through the approval process.  Where has it been for almost six months?  Fortunately, Shenandoah has been maintaining the irrigation system this summer without a contract.  There have been other recent instances where Armstrong Management Services have not been fully attentive to contracts and proposals.  In addition, for many months, the Finance Committee has been trying to get signed, dated, electronic copies of all of the FRCA contracts.  Armstrong sent a burst of about 60% of the contracts this summer, but there are about ten known contracts still missing.  Mal asked for a list of the contracts for which electronic copies are still needed.

Investments:  Our Replacement Reserve funds are well invested at this time.  Most of it is invested in CDs earning over 5%; the remainder is in a money market account at B B & T.

Most of our operating funds have been held in a checking account at Firstrust bank.  Recently a savings account at Firstrust was opened so interest could be earned on the operating funds.  The rate of interest on the savings account seems too low.  This will be corrected, if true.

Activity Director’s Travel Account:  Starting on 1 January 2008 the Activity Director’s travel account will be included as a separate account within the FRCA account handled by Armstrong Management Services.  Procedures will have to be put into place to make this new way of operating go smoothly.  Since Armstrong surely has other communities with similar accounts, they will be asked for recommended operating procedures and constraints.