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I am interested what are in your co-op standards and procedures about budget. I mean, is there a law that requires that budget must be approved before it is distributed to shareholders? If yes, who approves the budget? A Board, manager or treasurer?
Do you have a discussion about budget?
Where can I find information about budget requirements?
in the co-op i am in, the board is clueless on what their job is, words like due diligence and fiduciary duties are unknown in their vocabulary, They do not know who signs and/or co-signs the checks, the name of the bank that we recently changed out maint deposits to. we were given an account number and a po box in long island, no bank name on the managing company memo. about 4 years ago the budget was off by $27k due to a dropped zero. The managing agent with 20 years experience was doing the budget for the building, and i am sure he was paid extra. The BOD pres refused to discuss the error for more than a few minutes and the next year s annual meeting i brought it up. and the meeting after that. i will always bring it up until my questions are answered properly.
Last year i saw on the auditor report that funds in out bank account were exceeding FDIC insurance at approx 50 to 70 k at a time. i brought that up ast the annual meeting and the BoD pres and managing agent said that was not so. This year on page 19 of the auditors report it said the same thing, and since the Managing agent wrote me and said he was not discussing it anymore with me , i brought it up at the annual meeting , that i was indeed correct, that i had spoken to the auditors, and they said exactly what was printed on the report, the FDIC insurance was exceeded on a number of times a year. In my co-op the MA passes false info to the board members . They do not do their due diligence, in spite of me giving them the written copies with the paragraphs circled, and they still do not question the disparity ans remain spineless. i did infoem a couple that O and D indemnification insurance does nor cover lack of due diligence, self dealing,fiduciary irresponsibility. I never ask a question i do not already know the answer too, i like to document the falsifications. The MA refuses to record the annual meeting, in spite of my non acceptance of minutes years ago. I now record all annual meetings. They dont like it. but it is my building and my hallway. This year the president stated for my microphone that he will self deal whenever he wants to and repeated it for the microphone about 4 times, to make sure i got it. priceless.I was here at conversion 25 years ago and it was about 80% owner occupied, Now it is about 50% or less , yet they tell the new buyers it is 90%
.i need to find a good lawyer in westchester. I think i have enough to have my cost and moving cost covered,
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The Budget is the most important document our Board reviews as it sets the tone for the upcoming year. I am President of a 111 unit co-op. We set aside 5 hours once a year on the first Saturday in December to review financial results from the current year, review budget strategy, set fees, approve any maintenance increases (we didn’t have any this year), review investment strategy and approve any assessments (our first one this year of 2.5% of maintenance). We also use the time to pass on the financial culture to any new Board members: not to stifle any suggestions but to give them a perspective from where the building is coming.
We are not a wealthy population however as of our December 3rd Busget meeting, we had:
• $45k in our operating account;
• $80k in mandatory mortgage reserves;
• And $714k in voluntary reserves and self-escrows.
To put this into perspective, out annual maintenance billings are $855k. We would have never had this level of success unless we planned for it ahead of time.
Who does the Budget? I do. It is done by month so we know how bad the lean times are: how much cash we need to have to which begin the heating season. I feel strongly that the Board is responsible for knowing the details of the finances and then the Board is in a better position to tell the management company what the goals are for the year.
In our building, the Board approves the Budget.
I hope this helps!
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Read the by-laws of your co-op relating cash requirements. This is where you will find out that the Board is responsible for the annual budget or establishing the cash requirements for the building for operations. Also, the paragraph may go on to state that the Board is also responsible for additional cash requirements (assessments).
Obviously, unless a co-op is self-managed, the board will work on the budget. There is no law that requires the budget to be approved or distributed to shareholders. If you own shares of a major corporation, do you get the budget for the corporation?
Some boards may wish to share the budget with shareholders and even have a discussion before approval. In this way, board members feel that they are acting democratically and involving the shareholders. It is also helpful in making shareholders realize the expenses of the building and how they are managing them.
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