I just did a cursory review of the CPA report we were given yesterday. As mentioned, it is not an audit. It is an overview of information provided by the board. A LOT of the information the board has may already be flawed as the information provided by the last audit was based on each association member paying a direct assessment of over $4,000 each which never happened.

The report just displays data and warns us several times that there was no actual audit done. Keep in mind that even the last audit done did not have actual data collected on site by the bean counters. By that I mean that no one ever looked at the actual buildings, streets, equipment, etc. but rather they used charets, graphs and handbooks that tell them approximately what replacement costs SHOULD be.

And a lot of projected numbers are just way off. For example the budget is $775 for camera surveillance but the board authorized buying a camera system for over $20,000 (estimated). And the board just spent around $11,000 for repairing the solar water heating panels for the pool - that is more than the $7910 budgeted. What about the pool cover cost?

Ok, my opinion and this is just my opinion, is that by borrowing from Peter to pay Paul as the board does is unsustainable. Even looking at the data the CPA shows us, given her by the board, says total income expected still doesn't quite cover yearly costs ($759 short). Using their numbers we are only 32.9% covered for EXPECTED repairs and operating expenses. Our reserves should be closer to 70%, not 33%. 

What the board is now having to do is hope and pray we won't have any unforeseen expenses as the income coming in slowly helps increase reserves. Sinkholes, sewer repair, roof leaks, etc. are not helping.

Ok, disclaimer time: I am not a CPA, I am a registered civil engineer but I have overseen construction contracts over $100 million dollars. I am familiar with budgets, operating expenses and unforeseen occurrences. This report basically was intended to put us at ease about the financial situation. If the data presented is accurate, we are screwed.