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Your job will be so much easier if you learn how the financials tie into your building’s operations.
AUTHORMichael Berenson, President
PAGE #p. 20
It’s vital for a new board member to understand the financial report prepared by management.
THE BIG PICTURE
It’s of the utmost importance for a new board member to understand the financials and the operational components of his or her cooperative or condominium.
So what are the steps to accomplish this? First, he or she has to learn how the monthly financial report is prepared by the management company and understand the flow of the information. The new member should meet with the property manager and understand how income line items are classified and how expenses are coded throughout the report. It is also important to know what the budget allocations are annually for each line item before approving expenses. For certain line items, such as supplies or repairs and maintenance, you want to make sure that large variances are accounted for and explanations of the costs are given to you regularly by your management firm.
On the operations side, it’s important for the new board member to understand the nuances of the building’s operation. We recommend an annual roof-to-basement walk-through where the new member can learn about the operations of the various building systems from the roof tank to the basement compactor and the boiler. That way, if there are discussions about maintenance and repairs or replacements of these building components, the new board member will understand the building-wide systems and be able to contribute to the decision-making process in a productive manner.
Taking the time to understand the financials and the operational components of the building along with familiarizing yourself with the factors involved in running the property will make you a much more effective board member. In order to maintain lower maintenance or common charges, focusing on the financial and operational aspects is vital. This holds true for all board members, old and new.