More About C.O.R.E. Services


Doug McLain wanted to expand the opportunity to provide highly effective but fairly priced audits to condominium associations in Oregon and Washington.  I was honored he asked if I would join him on this new adventure.  We officially spun off from Currie & McLain CPA’s, focused on providing audit and review services primarily to condominium and homeowner associations.

We officially kicked off on September 1 with the new company and immediately started to set up our condominium audit processes.  Since we are looking for new ways to leverage technology to provide us better audit results while also reducing time and cost, every step, every procedure, is evaluated to make sure it fits our model.

It is now November and we are into the exciting part of marketing to condominium and homeowner management companies so we can be informed when a board wants to receive a proposal for audit or review services.

We will explore various topics relevant to condominium associations, financial management and what board’s of directors may want to look for when evaluating their financial statements and reserve studies.

We would like the opportunity to discuss how we can be of help to your condominium and homeowner association.  Feel free to write us at or visit our website at

C.O.R.E. Services, focused on helping stakeholders rely upon management.

The Results are in

First, a brief update. Yes, we had a very nice chat with the association’s attorney. It ended as you might expect; we agreed to withdraw our resignation and request to only manage the back-end and the board agreed to stop pretending to be management and also agreed to act appropriately during board meetings. The best part was when the attorney acknowledged that even with 60 days notice the association would be hard-pressed to replace us – mostly because they want something that doesn’t exist. Everything done exceptionally well but no attitude. Pffft on that.

Moving on.

We got our first ASC 606 audit report back a few weeks ago. Ready for this?

A clean opinion. On C.O.R.E.’s interpretation of ASC 606 and the recognition of revenues which is infinitely more conservative than anyone else’s interpretation.

We prepared the financial statements exactly as we provided for in our ASC 606 guide. Multiple performance obligations with different methods for determining completion of those obligations. Heck, just for fun we changed from the columnar approach for the funds to separate statements for the funds. And we received a clean opinion.

Now, it does help we know exactly what we are doing and we take full responsibility for the preparation of the financial statement. But, it also goes to show that it is possible to get the financial statements more in line with how you run your association’s accounting. All you need to do is document why your association should be deferring the recognition of revenues until some future event.

Deferral actually makes sense in most cases. Remember, the association’s assessments are based upon a guess of what the expenses are going to be. The money you collect is accumulated to pay bills which may not be incurred until later. If the planned expenditure is 3 months away, why would you recognize the revenue now, when the purpose of the assessment is to pay that bill when it happens?

Something for all of us accounting nerds to consider. The conservative approach says to defer until you do what you promised to do; the aggressive approach is to recognize when you assess.

If nothing else, it may help you do a better job of budgeting, although I believe it can also be of enormous benefit in making sure your money is being used wisely. Remember, you are taking in from the owners and you should show them how their assessments (inflows) ultimately match up against the association’s expenses (outflows).

At C.O.R.E. Services, we focus on delivering superior value to boards and owners in condominium projects. We learn your bylaws and declaration and ensure that all decisions are grounded in these documents. We help bring order to chaos and provide tools for directors and owners to share their thoughts about how they would like their community to serve them. You can find out more about C.O.R.E. and our approach on our website.

Lessons Learned

As some of you have guessed, my recent musings are the result of current issues we are facing. Actually, to be fair, these are not particularly current; we have been addressing these issues since January – and even earlier with one client who we explicitly told how we approach management and why.

But this came to a head last month and we felt it was time to terminate the relationship. We went from 1 hour board meetings once a month to now 3 hour meetings 3 times a month. And no, there are no major reserve projects, no special assessments being planned, and the major work, the budget and the CC&R rewires are done in committee. They spend the majority of the meetings listening to two directors complain about management. The truth is, these directors simply want to take on management responsibilities – and we said no.

I know, shocking, right? Management not wanting to give the board the power to do things? Collect $3,000 a month and let directors do all the work. Sweet deal. Alas, it is not one we can ethically support. We were hired to manage; we will manage thank you very much.

But management and boards part ways all the time. It is, or should be, part of the business cycle. Every few years the board should sit down and ask if the community is getting maximum value from its relationship with management. Priorities change, skills change, prices often go up without any perceived increase in delivered value. Interview prospective managers.

What you really should not do is ask your corporate counsel to act as divorce counselor. That’s right, the board decided to have their Association lawyer call us to discuss why we were giving 60 days notice.

After we got over laughing at what we hoped was going to be a very expensive phone call for acting as a marriage counselor for this client, we got down to brass tacks: The board felt they needed more than 60 days to find management with the depth to replace us and wanted us to continue to serve them until they decided they found someone and then they would terminate us with 30 days notice. (the contract termination terms are all spelled out in our contract)

The ultimate sign of board dysfunction: Hiring an attorney at $350 per hour to play marriage counselor to try and delay our separation until after the annual meeting. Why? Perhaps this won’t surprise you:

  • 85% of residents say they are highly satisfied with our management approach
  • 100% of new owners say they are highly satisfied with our management approach
  • 2 years of unqualified audit opinions with no comments on internal control and no proposed adjustments from the auditor – that is, the books are accurate when we turn them over.
  • 2 years of managing within budget and not requesting money from the reserve
  • A bank loan which we were instrumental in getting 65% of the loan paid in the last 2 years

I know it sounds like I am bragging and I sorta am. We are good at this. What we don’t do is kiss the proverbial brass right and pretend that the board has mythical power. Which, if you read the past few articles, is exactly what this is about. According to the complaint from certain directors, We are not nice.

Of course not! It probably sounds strange, but we don’t particularly like having our time wasted. Makes us a little cranky. Toss in a director who believes that he has been anointed to take control of the Association back from management and I am certain that even the most obtuse person can see the end game.

One of us has to go. It is frankly easier for us to get new clients than for them to find management who delivers what we do. So we executed on our, very generous, termination clause and the board can do everything they want once we are out of the picture. Apparently it is easy and not worth the money anyhow; especially since we make one of them cry in frustration at every meeting because we won’t let him get his way.

What are the lessons to be learned here?

  • For CORE, it is that we need to address the potential disaster right up front. Most directors do not understand what their Declaration states or how the Bylaws provide the board’s power. We are implementing a mandatory 2 hour workshop with prospective boards before we agree to manage. We will charge for this class. After all, there is a good chance that, once they understand, they will realize their current management isn’t so bad after all.
  • We are highlighting our business philosophy of taking the Declaration literally and requiring the board to acknowledge the primacy of the document. If they can’t or won’t, that’s ok, we can’t and won’t manage.
  • For boards, they really need to accept the limits on their power. Most CC&R’s do not give the board the power to approve variances from the Declaration. And yet, most board’s believe it is their prerogative to do exactly that. And that starts the slippery slope towards directors believing they have individual power. You must live within the Declarations and Bylaw’s constraints.
  • For boards, stop meeting all the time. There are many problems with constant meetings, but the biggest problem is that the owners will start to see how hard you are working and will NEVER want to volunteer. For most boards, quarterly is more than enough. Set up advisory committees to work on the details – it provides a channel for owners to participate and takes some of the extra work off of you.
  • For owners, stop electing idiots to the board, no matter their platform. If they are promising to save you money they probably are not ideal as a director. Condominiums have no problems that effectively priced assessments cannot resolve. That is the blessing and curse of condo life. Besides, in almost all cases, you, the owners, have the final say on the budget. If YOU think it is outrageous, make motions to amend it at the budget ratification meeting. Or join the finance committee (or ask one to be created if you don’t already have one) and get involved in understanding where your money is going.
  • For owners in condominiums, remember that you own everything and nothing. the grass in front of your neighbors front door is also your grass. The siding on their building is your siding. Don’t think you can start adding potted plants and garden gnomes to the common element, unless you are absolutely OK with your neighbor putting up a 30 foot statute of himself. The good news is, the space between the walls is yours and you can do whatever you want, subject to the limits set in your CC&R’s.

Yes, we covered this, and more, with the attorney. We haven’t gotten the bill up to $5,000, YET, but I am absolutely positive the troubled directors will find a way to make that happen. We still have 52 days.

t C.O.R.E. Services, we focus on delivering superior value to boards and owners in condominium projects. We learn your bylaws and declaration and ensure that all decisions are grounded in these documents. We help bring order to chaos and provide tools for directors and owners to share their thoughts about how they would like their community to serve them. You can find out more about C.O.R.E. and our approach on our website.

The Emperor Has No Clothes

“You can’t do that.” We overheard as we were working with a contractor on a project at one of our condominium projects.  “I am a Director and I represent management and I am telling you that you can’t do that.”

I am certain that some of you have been involved in a conversation like this.  No doubt, more than one of you has even made such a bold statement to try and get someone to comply with your demand.  This statement, sadly, is predicated on a belief that not only lacks validity but even common sense. A Director has no power…

In other words, the Emperor, sadly, has no clothes.

The obvious problem is the one of agency.  A director is not an agent of the association.  A director, more importantly, is not a representative of management!  A brief sampling of Duties of an individual Director from various Bylaws indicates the vast power of said individual Director is

… (wind blowing in the barley)

Why do your directors feel like they are sovereigns?  How, individually, they have a power greater than the power of the board acting as an official body? This ignorance comes from not reading the governing documents, or reading them, preferring to ignore the obvious fact: That, in almost all cases, the Bylaws do not grant individual directors any authority at all.

That is correct.  Individual Directors, as Directors, have no stated power.  The Board of Directors, on the other hand, has substantial power, when acting as a body:

  • Care, upkeep and maintenance of the common elements
  • Determining how association funds should be spent
  • Designation and dismissal of personnel and contractors necessary for the maintenance and operation of the condominium
  • Leasing, subleasing or hypothecation of common or limited common elements
  • Promulgation of rules of conduct for owners, subject to power granted by the Declaration and where such rulemaking was not given to the Association

It is, essentially, the power of the purse.  Which is vast power indeed.  It is not, however, plenipotentiary power and it does not imbue the individual director with such power. 

We get it, many people join the board out of a sense of righting a perceived wrong.  What we identify as the burning platform.  The problem with burning platforms is that they lead to myopia and an intense focus on an issue instead of the community. 

Never mind that the mobile basketball hoop is specifically prohibited by the Declaration; You want your kid to exercise where you can see him so you want to write a new rule which overrides the CC&R’s. 

Never mind that you don’t have authority, you see it as a benefit to you so therefore it must be a benefit to the community.  After all, you live there too and now that you are on the board, you speak for the silent masses you know support your position that the Declaration is too harsh and restrictive.

Substituting your belief in fairness for the covenants, conditions and restrictions is, from our perspective, the primary reason why Associations have substantial conflict within the community.  The vast majority of problems we see with condominium associations are

  1. Committees taking power which belongs to either management or the Board of Directors.
  2. Directors taking a power which belongs to either management or to the Board of Directors.;
  3. Boards of Directors taking a power which belongs to either management or to the owners acting as the Association.

I see the eye-rolling.  Don’t believe me?  Look at all the frenetic energy expended by people supposedly acting on behalf of your community.

  • Committees meeting 3 or 4 times a month
  • Board meetings every week
  • Committee chairs having authority to spend money
  • Directors having authority to spend money
  • Committees with right to contract
  • Rules which contradict your Declaration
  • Rules which contradict other rules
  • Rules intended to punish individual owners
  • Directors running around writing up violations
  • Directors running around granting waivers
  • Officer’s imposing punishments against owners

We understand.  You joined the board to make a difference.  Only you failed to consider what sort of difference you could make.  You wanted to bring your business acumen to the association – streamline the decision-making, shorten the approval process, eliminate the fixation with budgets.  Only, unlike at your employer, you can’t get new customers.  Go over budget and the only place you can get more money is through raising assessments.  Shortening the approval process generally leads to less transparency and greater control by individuals who are not officers.  And, at the end, all of this ultimately creates an “Us versus Them” approach to living in your community, where those who know someone on the board has their plan granted and those on the outside see notices of violation in their mail weekly.

This is hard to hear, I know.  Especially coming from a ‘hired gun’ who doesn’t love your community like you do.  That is true, we don’t.  We probably love your community more than you do because we see it for what it is – a little village with taxing authority who can make people’s lives miserable if not controlled.  Your community garden, your petty dictatorial acts concerning the community pool, your garage conversions, show a lack of love and respect.  You love the faux power which ultimately comes crashing down once things go bad.  And they will go bad.  Broken things cannot fix themselves.

We appreciate that your rules exist and that you owe it to current and future owners to act like they matter.  Which probably explains why we are often asked to step in by the association’s attorney and get things fixed.  Sadly, usually after the lawsuits have been filed.

Directors, you have no clothes.  Accept it, get dressed and get to work.  Your community voted for you to make decisions for what is best for the community, not to work on your personal disagreements with the declaration.  Understand your Declaration, live by the rules established in your Bylaws and do the work that you agreed to do when you accepted the position. 

At C.O.R.E. Services, we focus on delivering superior value to boards and owners in condominium projects. We learn your bylaws and declaration and ensure that all decisions are grounded in these documents. We help bring order to chaos and provide tools for directors and owners to share their thoughts about how they would like their community to serve them. You can find out more about C.O.R.E. and our approach on our website.

When Rules Collide

It has been far too long since my last article. I do blame the pandemic, but only because it stopped us from scheduling physical meetings days and weeks in advance to holding online meetings at a moment’s notice. Sometimes I pine for the ‘good-old-days’ of vigorous discussions with boards in person, instead of the dehumanized virtual meeting where my eye-rolls are lost on participants because my camera square is too small. Maybe someday…

Moving on…

This probably won’t surprise you, but there is a hierarchy of control when it comes to condominium and homeowners associations.  It likely won’t come as a shock to have it pointed out that boards and owners invariably want to ignore this hierarchy and substitute their own.  And sadly, this typically leads to all sorts of problems.

We appreciate that board’s can oftentimes face challenging decisions.  Work is identified which needs to be done only there isn’t sufficient money left in the budget… do you move the funds from another budget category or do you bite the bullet and ask the owners for additional money?  Or, can it be put off until the next budget cycle so you can avoid that conversation?  This is actually an easy decision; we believe that the association has to maintain the property and the owners have to pay so lets find the money and take care of the problem.  Afterall, unlike fine wine and excellent scotch, property problems never get better with age.

While the board faces difficult decisions, sometimes, I would say most times, the board has gone out of its way to create the problem which now needs to be addressed.  This problem is almost universally created by the board in dealing with an owner who wants an exception to some clearly stated restriction in the Declaration.  And they inevitably get here because they lose sight of the fact that there is a hierarchy of authority which must be followed in order to support a decision.

So to be clear, here is how the hierarchy works in almost all association-related situations:

  1. State Law
  2. Declaration of Covenants, Conditions and Restrictions
  3. Valid Easements
  4. Bylaws
  5. Community created rules

Association’s ideally should not make rules which liberalize a document higher up in the hierarchy.   

What we sadly see in practice is typically:

  1. Board created rules
  2. Community created rules

The problem with the practice is that the rules and authorizations typically granted are not generally allowed by the Declaration. And yet, the board most often doesn’t consult with their Declaration or Bylaws to see what the restriction may already look like. They treat the Declaration and Bylaws as guidelines and suggestions, instead of the legal documents they are. And yet, the board’s pretend this approach works until, well, it doesn’t.

Today’s scenario:

We live in a little condominium association. Our Declaration maintains a restriction that vehicles must be parked in the assigned parking space.  Each unit has been deeded, as apartment property, a one-car garage.  There is no parking on the limited common element.  The driveway is a limited common element. Unit owners may, subject to reasonable rules approved by the Association, park in the common element – that is, on the street.

The board is approached by an apartment owner.  The owner bought one of those very large trucks and it, unsurprisingly, doesn’t fit in the assigned parking space.  The owner requested a ‘variance’ for parking on the driveway from the board of directors.  How should the board rule?

I see the eye-rolling.  “So what?”, you say.  “Our board grants this sort of variance all the time.”

Uh-huh.  Based upon what authority?

A plain reading of our little Declaration makes is pretty clear that there is no parking on the limited common element.  It is also pretty clear that the Association, not the board, can set reasonable rules for parking on the streets. 

Nowhere is there authority for the board to create a rule to enable someone to park on the driveway.  And yet, here we are with a board possibly creating a rule that establishes just such a rule; albeit a rulethat is likely without any support.

The problem is not just the ‘board created rule’ in and of itself, although it really should not be made.  It is the slippery slope that the first rule created by trying to make the Declaration ‘flexible’.  The next thing you know, you have garden gnomes greeting visitors in the common element landscaping and owners digging up grass to put in water features.

Again, I see the eye roll and I hear the heavy sigh.  “But what is a board supposed to do when faced with this type of situation?”, you ask.  “How can someone get the right to park in their driveway?”

Great questions.  Let’s start with the easy one first.

In this particular case, it is not their driveway.  The driveway in our little condominium association is Limited Common Element – meaning it is a common element assigned to one or more of the apartment owners but fewer than all.  The apartment owner is merely assigned that driveway but it is still part of the community’s property.  The only thing the owners “OWNS” is the volume of space inside the apartment – everything else is owned in undivided interest with everyone else in the condominium.  Nothing outside is likely yours.

Now, as for how to get the right to park in the driveway, there would be two ways, but both require the same initial step.  According to our Declaration, the Association, meaning us as apartment owners, can agree to a reasonable rule for parking.  If the correct number of owners agree that parking a vehicle on the driveway (which, remember is a common element assigned to an owner for their use) then that rule may be effective; although in all honesty I think that the restriction stated in our Declaration against parking in the driveways is hard to beat by a reasonable rule.  Notice though, it is the owners passing a rule for the use of their property, not the board granting a variance from the community’s covenants, conditions, and restrictions.

Ideally though, to make this stick, the owners should amend the Declaration.  The rule written above is a relaxation of the Declaration, which could lead to unintended consequences, like the garden gnome invasion.  It would probably be best to have the language changed in the Declaration to read something like, “Parking of vehicles is allowed on the limited common element.”  Simple and straightforward. And yes, this will still cause all sorts of problems down the road.  But that is a different article.

If this is an important enough issue to create a whole new bureaucracy, it is probably worth considering amending the Declaration and avoiding the paperwork and meetings.  Boards already have a great deal of power and control over the Association’s liquid assets, the assessments.  The Board determines, for the most part, how your money is spent on taking care of the property.  Should the apartment owners grant the board even more power to make exceptions for every little request for individual use of property owned by all of us? 

By the way, this isn’t to suggest that the board is helpless in this scenario.  The board is constrained though, until it has the blessing of legal counsel.  Perhaps there is some reason for the board to intervene.  But the board should not go that way without having a clear understanding of its authority and that requires legal advice.  When the board feels the urge to intervene, it should also have the urge to spend money on the lawyer.  Perhaps a good “RULE” would be, No legal advice, no intervention.  Just a thought.

The moral of today’s story is that the board’s and community’s rules cannot and should not take the place of Declarations and bylaws.  Owner’s should make sure their Declaration does not unwittingly grant power to the board to address property decisions, such as how parking restrictions can be avoided.  The board’s job is to ensure the property is maintained and strictly enforce the governing documents, not liberalize them.  Allowing the board greater control will inevitably create a conflict which potentially costs your Association lots of money in legal fees battling owners.  The association almost always wins but it is often a Pyrrhic victory at best.

At C.O.R.E. Services, we focus on delivering superior value to boards and owners in condominium projects. We learn your bylaws and declaration and ensure that all decisions are grounded in these documents. We help bring order to chaos and provide tools for directors and owners to share their thoughts about how they would like their community to serve them. You can find out more about C.O.R.E. and our approach on our website.


  • We should require owners to turn over their health information so management knows who might get sick
  • We don’t need to bring in someone to fix the electrical switches.  It will only cost money and we have several retired contractors who live here who can do it for free
  • We always allowed owners to spruce up their yards
  • We need a rule stopping people from bringing friends over if they don’t pay their assessments
  • We shouldn’t force a poor widow to remove the puppy fence – after all, the puppy is her only companion and it is only a ten foot plot of grass in her back yard
  • We should fine Mr. Smith for speaking loudly to me by the mailbox
  • I decided that this is what I want for our condominium

These, and many more I didn’t write down, are words uttered by directors in board meetings.

These all have a primary source – or rather a lack of source – they directly contradict the governing documents of the association.  They all come from directors acting in either their own best interest (conflict of interest) or in what they believe is the best interest of the individual owner, not the association as a whole.  Most of it is driven by sheer ignorance of their CC&R’s and the bylaws.

I understand.  You volunteered to serve on your condominium board because you were passionate about something – your burning platform.  But you never once looked at your CC&R’s, declaration, bylaws, to see what was allowed.  You don’t even want to understand the basic rules of your community:

Who owns what

The yards?  The owners individually don’t own them.  They are most likely common element.  But because you wanted to plant daffodils, you let your neighbor remove her grass and put in rock.  And then you get upset when your landscape company starts to charge more and the flower gardens are no longer weeded.  You instinctively blame the company when it was your election to violate the CC&R’s that caused the problem.

Free labor?  So, you think it is ok for everyone to contribute $200 a year to pay for service but then ask someone to do it for free?  What kind of workers socialist paradise are you living in?  Can you think beyond your current anal fixation?  Of course not, you are bothered by the $150 bill to change out 20 light bulbs – in a community with 300 of them.  All of which were installed 5 years ago and are now going out (go figure).

Boards cannot manufacture power.  No more than management can.  If your community rules say that all grounds areas around the buildings are common element, then you cannot create individual exemptions so that owners can do what they want.  It is not their ground.  Your CC&R’s clearly state that each blade of grass, each bit of dirt is owned by all owners equally.  The exemption can only come from the owners through amending the CC&R’s.

You don’t like that your CC&R’s provide for a declared percentage of ownership?  You think it is unfair?  Great!  Talk with your fellow owners and try to amend the CC&R’s to change it to some other method.  Don’t join the board and force your fellow directors to adopt some other measure.  Or worse, secretly work with your management to sneak in the modified calculation and hope that no one ever catches it.

You think that as a director you should have the individual power to bind the association?  Ok, but you should get the owners to change your bylaws to give the directors that power because most likely the power lies in the board as a whole with only the board chair and secretary given the power to sign contracts on behalf of your association.

If you want to be workers and do everything, change your association to self-managed.  Your declaration and bylaws have a process for doing so.  It only requires getting permission from your neighbors and then mortgagees.  I know, you don’t follow any other rule so why bother with this one?

The rules exist to protect all of you in your association.  A director with visions of glory will individually try to overreach and will lead the board of directors down the road to hell.  Read your governing documents, understand what is allowed, what is disallowed and what powers you have.

The rules also exist to protect the rights of future owners.  That is why have a fiduciary responsibility to the association, not owners.  Everything you do has a current impact, but more importantly, has a future impact as new owners come in and what they think are their rights and obligations have been summarily and arbitrarily changed by well-intentioned but completely ignorant do-gooders.  Think about them before you make these well-intentioned but dubious decisions.

If it is time for your condominium association to look at how far you have slipped from the governing documents, consider C.O.R.E.  Services.  We are here to help your board understand what compliance means and assist your community with focusing on compliance with your governing documents through effective processes.  If you would like more information on how we can be of help. send us an email today.  We look forward to being of service to you.

Virtual Meeting Success… sorta

It is hard to believe that a month has gone by since my last post.  Two month end closings and about a dozen virtual meetings.  Like any matter where people are involved, the results take on a decidedly bell-shaped curve from excellent to “oh-my-god-never-do-that-again”!

Let’s start with what works well.

Get Organized – Stay Organized

The virtual meetings which have worked well have one thing in common, we had an agenda and the chair stuck with it.  The opposite is true as well; when the board chair was not in effective control the meeting went sideways.  Believe it or not, it is absolutely no different than meeting in person.

If you are planning your first one, make sure your board knows your expectation.  Create a relatively easy agenda with easy-win items.  And then don’t let it deviate.  Prove to your board that an online meeting can be successful.

I don’t think it can be said enough times – prepare a board briefing packet.  Put in everything that supports your agenda: Officer reports, management reports, committee reports.  Tell your participants you expect it in writing so you can have it flashed on the screen.  If they don’t have a written report, then they cannot present.  Make it a rule and stick with it.


I will let you in on a little secret, we do all the preparation for our boards.  We prepare management reports, the financial report, the committee reports if chairs would like, even the minutes.  This way, all directors have the same material to study.

We also prepare recommended motions.  If a report recommends that the board take action, then someone should be ready with a motion to accept those recommendations!  What the final motion says is up to the director, but knowing one might be necessary saves time and eliminates confusion.

Oh, and finally, we prepare a meeting script.  Don’t roll your eyes, no one ever won an oscar without a script!  The vast majority of directors would also starve to death if they had to do improv!  Unless you do a lot of meetings for lots of boards, you are probably not going to remember everything you need to say and do to make the meeting work.


The Power of the Gavel

It is as true in an online meeting as an in-person meeting, the chair controls the tempo and order of business.  Every meeting which ends up going to hell is due to, in some measure, the boad chair losing control.  It could be that a director consistently wants to talk out of turn or hijacks a debate in the hopes of intimidating the other members.

As chair, you have the primary duty of ensuring the order of business is carried out successfully.  This means, getting organized, preparing and then not letting the members run amok!  You must be ready to stop members from speaking out of turn.

Virtually, this could be as simple as talking loud enough to get the board attention or, in the worse case, signaling the meeting host to mute the speakers microphone.  I would strongly recommend that the chair follow a script like below:

Chair, “The member is out of order.  I insist the member stop speaking out of order.  If the member continues to do so, I will instruct the meeting host [manager] to disable your microphone until such time as the member agrees to follow the order of business.”

The tone is important.  Don’t call out the director by name and don’t cut them off without warning.  Finally, if they continue, you must cut them off or you will look like you are all bluster and no action and the behavior will continue.

Effective Meetings Can Happen

As we look at all the meetings we have held in the past month, successful meetings have all of these qualities plus one more – a healthy respect for the process.  If your board members are not interested in conducting the business that is vital to your association, then all the planning, organizing and control will mean nothing.  Sadly, some directors don’t believe it is their duty to be a successful member of the team; they think their duty is to disrupt and ensure that real business can’t be done.  But assuming that you don’t have that particular problem, a virtual meeting can be as effective, if not more so, than a physical meeting in almost all circumstances.

Business must go in, even in today’s COVID-19 environment.  Move online and prove to your association members that your board is up to the task of overseeing your association so that future boards can be successful too.

If you would like a generic copy of a meeting script or our board briefing book, send us an email requesting them.  We are happy to share our tools to help you and your board be successful.  And if you would like to see if C.O.R.E. Services might be a good fit to help your board, feel free to visit our website for more information and to request a conversation.  We are here to be of service to you.


Eliminate Chaotic Board Meeting

I don’t know about you, but I hate sitting through a board meeting where no one seems to know what to do or how to do it.  And the problem for us is that our hands are typically tied as we are there to present and to assist the chair – not run the meeting.  So we moved our work forward by 10 days.

Ten days before the board meeting we prepare the board briefing book.  It has a copy of the planned agenda, all our reports, a copy of any committee reports filed, and most importantly, recommended motions.

For example, we include a copy of the prior meeting’s minutes.  The directors can review it and if they find it in order, then our recommended motion, the “Move to waive reading of the minutes” is made at the meeting, followed by the “Move to approve the minutes”.  If there are changes that need to be made, we would do so through motions.  At a meeting a few months ago, a name was misspelled in the minutes.  It was pointed out and we drafted a recommended motion to “Amend the minutes by striking the work Smythe and inserting the word Smith.”  Everything out in the open.

Preparation helps keep the meeting focused.  The recommended motions are just that, recommendations to help the directors make the proper motion to address an issue.  There is nothing worse that watching a board member flounder because they don’t remember the right words.  And the decision, the motion, must be specific enough so as to help a future reader know what was accomplished.

“I move to approve paying the insurance.”  “Second.”  “All in favor?”  “Opposed?”  “The aye’s have it and the motion passes.”

What just happened?  I cannot tell you the number of times I have faced that predicament.  The copy of the insurance invoice is not presented with the motion. As a matter of fact, the invoice said pay an entirely different amount due on a different day.

“I move to approve paying XYZ insurance as called for in our insurance contract.  The terms of this contract require us to pay $5,000 for 2 months coverage to bind the insurance and then 10 months of $2,500 per month until the contract is paid in full.”

The difference is clear.  The latter motion spells out exactly what was authorized.  The board shows it is in control and the directors know exactly what they want to happen.  A reader a year from now will be able to see what was approved and, if they desired, trace it to the bank account to find the payments.

Remember, management works for the condo association’s board of directors.  Their job is to execute the approved plan.  That plan is the minutes.  The clearer your directions, the less conflict there is when it comes to determining if execution was correct.

Which is why we invest the time in the briefing book.  We use the reports as a request for action.  If the issue is simple and direct, we ask the board to approve our plan.  If it is more involved, we recommend it go to a committee first to be studied.  We then work with the committee to gain consensus and lay out a plan for the board to approve.

Which gets us back to our approach.  Committees plan.  Boards approve. Management executes.  Planning, organizing, collaborating, controlling and innovating.  When all parties do their part, the whole works smoother, with less effort.  Owners, through committees, feel empowered, directors are not overworked, and management has a clear understanding of what the owners want accomplished.

Eliminate chaos at your board meetings.  Ask for a briefing book with information on everything on the agenda.  You will be better prepared and ready to use the meeting time in the best interest of the community.

At C.O.R.E. Services, we focus on delivering superior value to boards and owners in condominium projects.  We learn your bylaws and declaration and ensure that all decisions are grounded in these documents.  We help bring order to chaos and provide tools for directors and owners to share their thoughts about how they would like their community to serve them.  You can find out more about C.O.R.E. and our approach on our website.

The Potential for Trouble with ASC 606

It is a bother, a pain, and can be considered a waste of time by most people who don’t think it matters.  ASC 606 planning and implementation entails some thought and effort – and the trouble begins when those who need to put in the effort decide it isn’t worth it.

I have heard form a good number of CPA firms who are struggling with ASC 606 implementation for their clients.  Why are you struggling with it?  Like it or not, this is a management problem.  You are struggling because you are not management.  Think about it, are you asking your clients to decide on your firm’s performance obligations?  Of course not!

I have heard some interesting takes.  That there is  no real change to business and that it can be papered over with a memo.  That the performance obligations are immaterial.  That the contracts are simple and revenues are recognized at billing.  Possibly.  But how do you, the independent CPA know?  Have you sat is your client’s office and listened to their sales people?  Did you take the time to learn how they handle call-backs or parts under warranty?  No.

If you want to be really helpful to your client, get them off of GAAP.  You are spending time trying to fix a problem your client doesn’t understand, that you are not entirely sure of because you don’t report on GAAP, and that at the end of the day can get you into a ton of trouble.  It would be more honest to go to their bank, their bonding agent, whoever is insisting on GAAP, and explain why some other method of accounting would give reasonable information with far less cost and risk of error.  But you think it is your responsibility to help your client get through this; and that is a mistake in judgement.

If you performing an attest service and you are helping your client identify performance obligations and transaction prices, you are already on the path to attest failure. Think about it – your client has no one on staff who understands the new accounting rule.  No one can take responsibility.  You are creating revenue based upon your theory of how your client should record transactions – not theirs.  And then you are performing an attest.  You are attesting to your own work.  No amount of memos can cover that up.

Don’t get me wrong, I think you trying to help your client deal with this is the right move.  Someone has to.  The problem isn’t the helping by itself.  The problem is pairing the help with the attest.  And you should know that.  So take a side – attest or assist.

I think that the same problem exists when you help your client by encouraging them to change to another basis of accounting.  I think you should offer that advice but you should probably step back and let another firm perform the attest.  The risk to your firm, to the profession overall, is real.  The more it seems we are part of management, the less useful our audit or review service becomes.  Look at the troubles the Big 4 are facing for this very subject and we all know that this stuff rolls downhill.

Honestly, if your client has no exit strategy or the plan is to sell to the kids or some key employees, your client probably should not stay on GAAP.  Go to FRF for SME; go to tax-basis.  Help your client talk to their banker, get them to rewrite covenants.  Do anything but treat ASC 606 trivially.  You risk treating every company’s commitment to their contract with the same cavalier attitude and then, in about 4 years, one of your clients will approach you and say they are thinking of going public and their new auditor has questions about how they documented their revenue from contracts with customers and since you were the one responsible

ASC 606 isn’t really difficult.  It is time consuming though and most contracts have been written to satisfy lawyers, not to help identify when control passes between vendor and customer.  Therefore, management faces lots of judgment calls.  And that judgment falls squarely on management like it or not.

At C.O.R.E. Services, we focus on delivering superior value to boards and owners in condominium projects.  We learn your bylaws and declaration and ensure that all decisions are grounded in these documents.  We help bring order to chaos and provide tools for directors and owners to share their thoughts about how they would like their community to serve them.  You can find out more about C.O.R.E. and our approach on our website.

Chairs, Know thy Robert’s

Part of our vision and mission is to help condo boards of directors make good decisions.  We do quite a bit of preparation for the board by writing up staff (management) reports and recommended motions where they might be helpful to ensure the right information is documented.  We get the board briefing book out to the directors about a week to 10 days in advance of the meeting.  For the most part, it helps by ensuring the directors have study materials in advance of the meeting so they know what is to be discussed and voted on.

But, once we get into the meeting, all that preparation is only as effective as the chair’s ability to manage the meeting.  If the chair isn’t careful, the meeting spirals into chaos – board members are constantly speaking and the audience is weighing in on the subject.  Board meeting chaos can be avoided though, and without the chair being overly heavy-handed and closing the meeting.

Prepare a Script

One of the things we do for our chairs is write a meeting script.  It has the language that the chair should use throughout the meeting.  It is formalized and comes almost straight out of Robert’s Rules of Order Newly Revised (RRONR).  We understand that it may seem silly, but lets be clear, even comics prepare for their standup routines.  Scripts have been used by every Academy Award winner so using one can’t be a bad thing.

Meeting Script for Board Meetings of the Association

The plain text is the Chair’s spoken words. Italicized words are actions or reminders of steps

  1. The Meeting will come to order (one rap of gavel)
  2. The first order of business is determining directors present and establishing a quorum (scan the directors and ensure 3 or more are present) A quorum is established for this meeting
  3. The next order of business is the reading of the minutes
    1. Secretary will move to waive the reading; a director will second
    2. A motion to waive the reading of the minutes has been made and seconded. Is there any objection? Hearing no objection, the reading of the minutes is waived.
  4. The next order of business is the approval of the minutes
    1. Secretary will move to approve the minutes of the prior meeting; a director will second
    2. A motion to approve the minutes to the January 23rd, 2020 meeting has been made and seconded. Is there any objection? Hearing no objection, the minutes for the February 23rd 20XX meeting are approved.
  5. The next order of business is the chair’s report. While the chair reports, the Secretary will act as the meeting chair.
    1. Chair will make a report.
    2. [Secretary speaking] Are there any questions for the chair? Once questions are done
    3. The Chair’s report is filed. I yield the gavel back to the chair.
    4. At this point, if there is a motion to be made (sometimes) then a director will make a motion regarding the chair’s report and will likely be seconded.
    5. A motion to adopt [whatever the motion is] has been made and seconded. Is there any discussion?
    6. Allow the directors to debate and ask questions as necessary. Once they are done.
    7. The question is, do we [adopt the motion]? All those in favor say “AYE”; opposed say “NAY”.
      1. The AYES have it and the motion passes; or
      2. The NAYS have it and the motion fails to pass

Maintain Control

In the best of situations, it is inevitable that people start to talk and get sidetracked.  It is the chair’s responsibility to maintain control of the meeting.  While it can seem disrespectful to you, as the chair, to stop people from whispering back and forth, it is equally disrespectful for the audience or the board to have sidebar conversations which can derail the concentration of the directors.

Don’t be afraid to use the gavel to get everyone’s attention.  If the disruption is from the board, gavel once and say

  • The board will come to order.

If it is the audience, again gavel once and say

  • The audience will refrain from talking while the board is in session.

Keep in mind that a board meeting is representative democracy in action.  You come to do business on behalf of your condominium association, not to spend hours answering questions from owners.  If you have owners who feel that your actions are infringing on their rights, perhaps the board needs to establish committee and owner workshops to air issues before you get to the point of deciding.

We believe that every major issue should follow this pattern:

  • A director moves to bring an issue up for vote
  • A second director moves to refer the issue to a committee
  • The committee is charged with meeting and reporting back with its recommendations at a future meeting
    • The chair creates a committee and appoints a committee chair
    • The committee meets and gets feedback from the owners
    • The committee writes up a report with recommendations
  • The committee chair submits the report to the board
  • The board reviews the report and votes on the recommendations

All the gaveling, all the yelling in the world, will not stop an owner or group of owners who feel they are being ignored.  Give them the channel to discuss their concerns; just not the board meeting.  Let the owners weigh in on the issue. The worse that happens is that owners do not show up to the meeting and the committee can’t report.  At that point, you can say in good faith you tried and then hold the vote.

Meetings require preparation, practice and scripting.  You do not need to memorize the words, write them down.  Don’t let the meeting get sidetracked or taken hostage by others.  Your meetings can be productive and effective by you taking control of the board and ensuring that regular order is followed at all times.

Association Strategic Planning

Planning is what drives a successful engagement.  And longer-term, or strategic planning, is a big part of an association’s success.  And a major component of strategic planning is the reserve study.

The reserve study helps your association identify those long-lived assets which will need replacing.  Typically, the reserve study is capped at 30 years – meaning that it attempts to identify those common elements which will need some major work or complete replacement in that 30 year window.

But the one thing that isn’t addressed in your reserve study is improvement.  Over a 30 year period, there will be innovation; new products will be introduced that are light years ahead of what was originally there.  And that is part of the problem, your reserve study expects “Like-for-Like”.  Anything else is an improvement and is not part of the reserve planning process.

According to many declarations, improvements need to be handled as a separate vote of the owners and should likely have a separate assessment.  The concept is sound; the goal was to keep a board from buying up a lot and putting in a community swimming pool without the community’s buy-in.  To change from high-energy incandescent bulbs to LED on motion-sensor switches?  Still an improvement and yes, should still be subject to the rule.

With this in mind, whenever a committee is looking at a reserve project we help them identify the cost of the actual “Like-for-Like” replacement.  We then identify the costs for the improvement.  The committee report then recommends the entire project to the board, with the understanding that the improvement requires an increase to future reserve assessments to recoup the additional investment.

For example.  Condo Association is planning on replacing the outside lights in the community.  They are 25 years old, are corroded, discolored and burn energy due to all being incandescent bulbs.  The chair formed a committee to study options.

The replacement cost of the outside lighting ‘Like-for-Like” was $18,000. Changing over to motion and photo sensor LED lights, and some rewiring to eliminate the switches, is an improvement calling for a $25,000 investment.  the $18,000 had already been collected in past reserve assessments; the $25,000 had not.

improvement planning a

With this method in place, the association has a plan to address every reserve project which has some level of improvement and innovation which needs to be considered today.  The reserve fund is, in essence, invested in the improvement with an understanding that it will “repay” the reserve in the form of future reserve assessments.  The finance committee, or board, can set a reasonable investment return rate but the important part is that, done properly, the reserve fund is potentially generating a superior return over CD and money market rates today while also maintaining or even possibly increasing market value for the units.

This method does require some thought and planning.  You need to be sure you have the reserve funds available to invest in such a project and that a past board or the owners have not hamstrung such an approach through amending bylaws or declarations.

We also ask that the committee hold at least two open forums for owners to weigh in on the improvement idea.  Sometimes what seems like a grand idea is met with such resistance that the entire project is tossed and restarted.  Not often, but often enough that the value of owner input is proven to be worthwhile.  And we remind the committee that it is not looking for unanimity, it is looking for consensus.  Associations will never please everyone but if you can get most on board then you win.

The goal is to ensure that your association plans for technological improvement and has a means to capitalize on it without having to discuss and plan for a special assessment.  It doesn’t mean that every project should be funded this way and some projects should not be greenlighted no matter the cost.  But if you have a management team that can help you crunch the numbers and evaluate the costs and benefits, then this approach could help your community enhance the units marketability and price, resulting in a win-win opportunity for everyone.

At C.O.R.E. Services, we focus on delivering superior value to boards and owners in condominium projects.  We learn your bylaws and declaration and ensure that all decisions are grounded in these documents.  We help bring order to chaos and provide tools for directors and owners to share their thoughts about how they would like their community to serve them.  You can find out more about C.O.R.E. and our approach on our website.