5 Year Deficit Reduction Plan Fails in 1st Year

Was the non-compliant 5 Year Deficit Reduction Plan to eliminate the Condo 1 deficit by $30K per year for 5 years a success for 2022? Consider the following facts:

The equity for Condo 1 reported in the December 2021 financial  report is minus $156,376.77.  $30K times 5 only comes to $150K. Oops!

The 2021 audit done in 2022 required financial adjustments that showed Condo 1's equity at the end of 2021 to actually be $170,235. Bigger oops!! By the way, if you think we should unquestioningly obey our "professionals" it will interest you to look at these pages of the audit report (14-17 based on page numbers, pages 21-24 based on Acrobat counting the pages because of other documents before the report). Pages 14 and 15 are duplicates of pages 16 and 17. This is not a huge deal, but it tells us two things. 1) Even "professionals" can make stupid mistakes. 2) No Association officer read the report before it was accepted. The audit was never formally presented to the board at a meeting and approved by a board vote either.

The December 2022 financial statement shows Condo 1 with a year end deficit of only $95,823.39. Wow, that looks great! Oops, we forgot that $90K of the money was supposed to be held separately to pay Condo 1 insurance expenses for 2023. That means it should not be included in equity until 2023, so that causes the deficit to be $185,823.39 if the money is correctly accounted for at the end of 2022.

The deficit reduction plan which was supposed to reduce the deficit by $30K in 2022 resulted in an increase in the correctly computed deficit by $15K even with $90K in special assessments for 2022 insurance expenses.

In contrast, following the law and by-laws with a budget that collected a total of $15K from all 256 Condo 1 owners (under $60 each on average) and waived reserves would have resulted in a lower accounting deficit with no special assessments. This helps explains why we have laws and by-laws that are supposed to limit how much business discretion boards are allowed to exercise.

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