Reserve account question

Started by EW1 • 2 replies • 1345 views

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EW1 (Florida)
Posts: 10

Posted:

My Florida HOA has reserve funds in several bank accounts. One account was opened when we had to take out a loan for a major improvement. There are currently reserve funds in that account, but the loan payment is transferred into it from an operating account every month as well. The bank then automatically debits the account for the loan payment.

My question is - is this considered co-mingling of funds? The PM (who does our accounting) says that this is fine, but I am unsure.

RogerB (Colorado)
Posts: 5,067

Posted:

EW1, the PM is correct. Consider the monthly payment to be going from the operating account to the reserve account for payment on the monthly note for a reserve expenditure. For accounting purposes the reserve account can show an income from the operating account and an expenditure from the reserve account; both are equal to the monthly loan payment. All income is usually first placed into the operating account and the portion budgeted for reserves is transferred later.

EW1 (Florida)
Posts: 10

Posted:

Thank you very much, Roger. I really appreciate your help!

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