HOA - Balance Sheet - Liabilities

Greetings everyone, I'm a new Board Member and have no accounting background. I'm trying to get up to speed on understanding the Balance Sheet in general.

I am looking at our HOA's Balance Sheet and I would help understanding the Liabilities section. Under Current Liabilities, what does Deferred Semi Annual Assessment mean? Also, Under Restricted Equity - Reserves, what does Deferred Maintenance mean?

Thanks!!!

-Mark

Money in the reserve account(s) is earmarked for spending in two broad categories: Capital expenses and deferred maintenance. "Capital expenses" tend to refer to full replacement (or major upgrade) of reserve components. "Deferred maintenance" should be taken literally: It is maintenance that should have been done but was not, due to a lack of (reserve account) funding or possibly the desire to spread the funding of a project over several years. An example of a "deferred maintenance expense" is when a condo association is responsible for painting the exteriors of buildings, but intends to complete this project over say three years. The money to be spent in the coming years for building maintenance (exterior painting), is a liability on the association's balance sheet.

Mark

Do some reading up on types of financial reporting there are. Most HOA's use a Modified Accrual Method. Our monthly Financial Reports (from our MC) are over 30 pages long but it includes 2-3 pages of summaries and the summaries are what we pay attention to. It takes some time to understand Accrual Method but it is the method preferred by accountants.

The reserve studies done by 4 certified firms over a dozen years of our condo high rise or so never use the term "capital expenses." A full replacement of a reserve component isn't termed that in our study or CC&Rs. Our CC&Rs do refer to capital improvements. It's basically an addition to our assn.property. this could be a big upgrade to a current reserve comment, e.g., replacing a cheap roof with tiles. The study only estimates a useful life and replacement cost for the cheap roof. In our CC&Rs if the cap[ital improvement were to be estimated over a certain amount, the Owners would have to vote to approve it.

In some reserve studies, the reserves specialist, knowing that not all roofs will be replaced in one year will make a replacement schedule breaking up to total estimated cost over, say, 3 years.

Stand by, Mark, you may get further as answers from a few here who know these balance sheets really well. On doc you may want to look up is your annual audit or review if required in NY.

I think when sources are used here, it's always best to cite the source so those who are interested can read further nd/or assess if th source is a good one for the topic.

My thanks to each of you for jumping in on this complex subject.(understanding our HOA financials.) OMG!!!
Particularly, Augustine's summary of some complex terms brought me closer to some semblance of sanity. Much appreciated.

You are welcome. For the record, one can google on the accounting terms I used, along with keywords like "condominium" or "hoa," and see that what I wrote is HOA/COA Accounting 101. Granted the latter is a course I expect no new volunteer to have already taken.

I expect the phrase "balance sheet" never occurs in CC&Rs and reserve studies as well. Golly, why is that? (This question is rhetorical.)