ISBN: 978-1-59618-027-7
2009, 78 pages
Editor(s): Mitchell H. Frumkin, P.E., CGP, RS and Nico F. March, CFM, RRP
Item #: 0277
Retail Price: $25.00
Member Price: $15.00
Updated Second Edition!
Reserve funds are essential to the successful operation of a community association—not just an extra expense. In many states they are mandated, and boards need to understand how to comply with these laws.
This guide contains everything you need to know to establish the right funds and invest them responsibly. Understand the two parts of a reserve study—the financial analysis and the component inventory, and find out how to develop each. Learn how to educate homeowners about the value of reserves, what investments may or may not be suitable for your association, how to develop an investment policy and more.
What's New?
- How to view the reserve study as part of the association's overall budget
- How to take advantage of the relationship between replacement reserves, maintenance and energy costs to save money
- Chart: The Update Test—does your reserve study need to be updated?
- How to deal with the discontinuation of the AICPA Common Interest Realty Association Audit and Accounting Guide.
- About infrastructure items
- Changes in FDIC limits
Loaded with useful charts and sample documents, including:
- Sample Replacement Reserve Inventories
- Flowchart for Selecting Reserve-Inventory Components
- Flowchart of Preventive Maintenance Schedule
- Two Sample Investment Policies
- Representative Components of Replacement Reserve Inventories
- Sample 30-Year Cash Flow Showing Full Funding & Baseline Funding
- Laddered Portfolio Investments
- Investment Income Tax Treatment
Also contains three comprehensive appendices:
- National Reserve Study Standards of the Community Associations Institute
- Summary of State Reserve Fund Laws
- Questions & Answers about Community Association Reserves
Contents
Chapter 1—Why Reserves?
Educating Owners about Reserve Funds
Who Should Prepare the Reserve Study?
How Often Should Associations Conduct a Reserve Study?
Making the Most of a Reserve Study
Chapter 2—Conducting a Reserve Study
The Component Inventory
The Financial Analysis
Chapter 3—Investment Policies for Reserve Funds
Creating a Formal Investment Policy
Risks Associated with Investing Reserves
Inflation and Net-Net Returns
Investments Suitable for Association Reserves
Investments that May Not Be Suitable for Associations
Chapter 4—Investment Strategies for Reserve Funds
The Laddering Concept
The Barbell Concept
Generally Accepted Guidelines for Investing Reserves
USA Patriot Act
Fiduciary Risks
Tax Considerations
Chapter 5—Financial Reporting Requirements
The CIRA Guide
Required Disclosures
Supplementary Information
The Auditor's Opinion
Tax Considerations
The Representation Letter
Board Meeting Minutes
Appendix 1—National Reserve Study Standards of the Community Associations Institute
Appendix 2—Summary of State Reserve Fund Laws
Appendix 3—Questions & Answers about Community Association Reserves
Read an Excerpt
