Special Assessment Accounting. Aware. Diligent. Timely. Accurate. Complete.

Assessment Records

We recommend a permanent file of special assessment documents, including:

• Special Assessment notices to owners
• Board minutes including documentation of special assessments:
• Initial levy and approval by members
• Monthly status
• Amounts assessed to owners
• Review owner special assessment amortization schedules
• Amounts spent for the special assessment purpose
• Financial status
• Special assessment cash held
• Special assessments receivable (billed but not received)
• Remaining amounts to assess
• Amounts spent to date
• Projected remaining expenditure
• Projected remaining debt service: principal and interest
• Projected surplus or deficit
• Conclusion regarding financial status

The information and data recommended above are critical. However, only accurate and complete record-keeping and accounting will provide a board with the data needed to understand the status of a special assessment project and the projected financial picture.

Accounting and Banking

Associations should account for special assessment activity in a separate fund from operating and reserves. A separate bank account and specific account codes should be used. An amortization schedule should be maintained for all owners who are making monthly special assessment payments. Special assessment billing and expenditures should be processed using the special assessment bank account and accounting fund. Any amounts received or paid by other funds should be reconciled and repaid to the other funds at least monthly.

Board Meeting Review

At every board meeting, boards should review the vital data systematically. We recommend that board members review special assessment reports and supporting documents and ask questions before meetings. Keep your eyes on the goals: Collection of all assessments, control over expenditures including debt service, and determining the projected surplus or deficit. Boards need to formulate a plan should there be a projected shortfall. Another special assessment? Increase the loan? Hold off on expenditures?

Boards need to actively participate in the management and accounting for all special assessments.