Why the Monthly Financial Package Matters
As a volunteer board member, you have a big responsibility to manage your community's money carefully. The monthly financial package from your property manager is a key tool that helps you track income, expenses, and overall financial health. Understanding it means you can spot problems early and make informed decisions.
What Is Usually Included?
Your monthly package will generally include:
- Income statement (or profit and loss) showing total income and expenses for the month
- Balance sheet listing assets, liabilities, and reserve balances as of the statement date
- Bank account reconciliation reports
- Delinquency report showing overdue assessments or fees
- Reserve fund status and updates on major upcoming expenses
If any of these are missing, ask your manager to provide a full picture each month.
How to Read the Income Statement
The income statement summarizes money coming in and money going out. Look for:
- Total income versus your budgeted income
- Major categories of expenses compared to plan
- Any unusual or unexpected charges
Ask your manager questions like:
- "What is causing any budget overages?"
- "Are there expense items we should discuss or approve?"
Understanding the Balance Sheet
The balance sheet shows what your association owns and owes. Pay attention to:
- Cash and reserve fund balances
- Outstanding accounts receivable (money owed to you)
- Accounts payable (bills not yet paid)
If cash balances are low or accounts receivable are high, this could be a red flag.
Reviewing Bank Reconciliations
Reconciliations show that bank statements agree with your books. Ask these questions:
- Are there any outstanding checks or deposits?
- Do the reconciliations match end-of-month balances?
Discrepancies should be explained quickly.
Checking the Delinquency Report
This report lists owners who are behind on payments. Essential points:
- How many accounts are overdue?
- How old are the delinquent balances?
- Is the association following its collection policy?
If delinquencies rise, it could affect your cash flow and reserves.
Spotting Red Flags
Watch out for:
- Consistent budget overruns without explanations
- Missing or incomplete reports
- Large unpaid bills or delayed payments
- Unusual charges or unexplained transfers
- Increasing delinquencies without a plan to address them
Practical Steps for Board Members
- Read the entire financial package carefully each month.
- Compare the reports to previous months and the annual budget.
- Ask your manager for plain language explanations of anything unclear.
- Confirm that reserve funds are being tracked and managed properly.
- Bring questions to your board meetings to discuss together.
- If problems persist, consider requesting proposals for different management firms.
How to Improve Your Financial Oversight
Sometimes, your property manager's reports may be difficult to understand or incomplete. You can:
- Ask for training sessions on your association's financial statements.
- Use resources like compare management firms to see what other managers offer.
- If needed, request proposals to find firms that provide clearer financial reporting.
For more details on how firms are evaluated, see how we rank firms.
Remember About Legal and Licensing Matters
Financial reporting requirements vary by location and association type. Always check with your association attorney to ensure your reports meet local laws and regulations.
Monthly Financial Package Checklist
| Item | What to Check | Questions to Ask |
|---|---|---|
| Income statement | Income vs budget, unexpected expenses | "What caused variations this month?" |
| Balance sheet | Cash, reserves, receivables, payables | "Are financial positions healthy?" |
| Bank reconciliation | Matches bank statements | "Are there any unresolved discrepancies?" |
| Delinquency report | Number and aging of overdue accounts | "Are collections effective?" |
| Completeness and clarity | All key reports included, understandable | "Can you explain unfamiliar items?" |
Use this checklist every month to stay informed and keep your community’s money safe.
By giving your monthly financial package the careful attention it deserves, you’ll help your community thrive while fulfilling your role as a vigilant and informed board member.