Budget Allocations

Started by JimH5 • 7 replies • 1232 views

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JimH5 (Indiana)
Posts: 17

Posted:

We are a newly formed board and preparing our first budget. We are a combination of townhomes (14) and a condo building with 24 units. The previous budget was prepared by the developer and split certain expenses directly related to the condo building such as cleaning, electricity for the lighting and heating for the parking garage, etc. Obviously this makes the dues paid by condo owners much higher that the townhome folks. The problem is that all of these funds are co-mingled into one account and expenses not allocated to each enity based on the amount paid in. For example some of the townhomes need repairs that will cost far above the amounts that they would have available if the funds were not co-mingled, so if these repairs are made most of the funds will have to come from the monies paid by the condo owners. I don't really see any equitable way to split the fees collected and then put them all into one account to pay expenses that are not specifically related to those who paid the money. I sure would like to get some thoughts on this as it seems to be difficult to get a win win for all concerned. My only real solution has been to consider this as one community where after the budget is finalized that the amount is shared by all based upon their percentage of ownership.

Thank You, Jim

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Jim,

Have you considered setting up two budgets (and two reserve accounts) to reflect the differences? The reserves wouldn't be co-mingled, though having a single operating account could work. Or, you could have a pair of those, too. Twice the work, but might give you some peace of mind.

JimH5 (Indiana)
Posts: 17

Posted:

We actually have two budgets already that are then combined into a single master budget for the whole association. The problem, as I see it, is that all dues are then put into one checking account and expenses not allocated based on the individual budgets.

Jim

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Okay. Sounds now like you're talking about poor or non ordinary accounting practices.

So, how about 1. beef up the accounting practices, and/or maybe 2. set up THREE checking accounts: One to cover shared expenses, plus one each to cover the separate expenses of the two factions.

#1 would be easier.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Jim - if you have one master account that's OK.

There should be an itemized list of Chart of Accounts. This lists any revenue and any expenditure, and assigns an account number to go with it. So, any revenue deposit OR expense has this special account number, making it easy to track.

Your report will spit out all information by account number.

The issue is the reporting system.

MaryA1 (Arizona)
Posts: 7,043

Posted:

I agree with John & Susan. All that needs to be done is to set up separate income and expense accounts for the townhomes & condo.

JimH5 (Indiana)
Posts: 17

Posted:

Thank you all for your suggestions. We are going to go with the bookkeeping entry mathod.

Jim

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By JimH5 on 12/14/2008 1:56 PM
Thank you all for your suggestions. We are going to go with the bookkeeping entry mathod.

Jim

Jim,

Say what? I'm afraid I don't understand what you're saying.

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