 Understanding
Financial Statements –
Statement of Changes
in Members' Equity
Continuing
from the May edition of Association Times, we now cover
general information related to how the Board of Directors,
Members, and Management Company use the financial statements
to maintain close watch over the financial well being of
the association.
The
Statement of Changes in Member's Equity statement shows
the beginning and ending members' equity as a result of
changes in operations during the reporting period. For
example, replacement reserves will be increased by any
contributions made during the reporting period and the
replacement reserves will decrease for any expenditures. The
result of the current year's operations from the income
statement will either increase (net profit) or decrease
(net loss) members' equity. This
report is generally only a year-end report that summarizes
the year's activity in a concise format for the members. It is one of the reports that the association CPA would prepare
as part of an audit.
Sample
Condominium Association
Statements of Members' Equity
For the Years Ended 2002 and 2001
|
RESERVE/REPLACEMENT FUND |
2002
|
2001
|
Hail Damage Repair |
|
|
|
Beginning Balance |
$
21,626
|
$ -0-
|
|
Current Year Additions |
-0-
|
23,125
|
|
Current Expenditures |
-0-
|
(1,499)
|
|
Total Hail Damage Repair Reserve |
$
21,626
|
$
21,626
|
|
|
|
|
|
Exterior Painting |
|
|
|
Beginning Balance |
$
15,022
|
$ 8,080
|
|
Current Year Additions |
15,154
|
6,942
|
|
Total Exterior Painting Reserve |
$
30,176
|
$
15,022
|
|
|
|
|
|
Roofs |
|
|
|
Beginning Balance |
$
29,174
|
$
14,802
|
|
Current Year Additions |
19,409
|
14,372
|
|
Total Roof Reserve |
$
48,583
|
$
29,174
|
|
|
|
|
|
Deferred Maintenance |
|
|
|
Beginning Balance |
$
10,853
|
$ 3,021
|
|
Current Year Additions |
3,089
|
7,832
|
|
Total Deferred Maintenance Reserve |
$
13,942
|
$
10,853
|
|
|
|
|
|
General Operating Reserve |
|
|
|
Beginning Balance |
$ 7,106
|
$ 3,869
|
|
Current Year Additions |
1,332
|
3,237
|
|
Total General Operating Reserve |
$ 8,438
|
$ 7,106
|
|
|
|
|
|
TOTAL RESERVE/REPLACEMENT
FUND |
$122,765
|
$ 83,781
|
|
|
|
|
|
CAPITAL IMPROVEMENT FUND |
|
|
|
Beginning Balance |
$
16,665
|
$ 9,860
|
|
Current Year Additions |
1,771
|
6,805
|
|
TOTAL CAPITAL IMPROVEMENT FUND |
$ 18,436
|
$ 16,665
|
|
|
|
|
|
OPERATING FUND |
|
|
|
Beginning Balance |
$ 293
|
$ 105
|
|
Current Year Additions |
2,604
|
188
|
|
TOTAL OPERATING FUND |
$ 2,897
|
$ 293
|
|
|
|
|
|
TOTAL MEMBER'S EQUITY |
$144,098
|
$100,739
|
Mark Southall
PCAM®, AMS®, CMCA®, COS®, CPM®
President
Principal Management Group of North Texas
Dallas, TX
|
