Risk Management
_________ forms define the type of insurance coverage provided, for example, property, liability and boiler and machinery.
The forms also define how comprehensive each type of coverage is—what is included and what is excluded.
Policy forms
Public liability insurance.
Commercial general liability insurance (CGL):
A request for a review of a case by a higher authority—if permitted by the governing documents or statute.
Appeal
The goal of this funding strategy is to keep the reserve cash balance above zero.
Baseline funding
This is a summary of the flow of funds into and out of the community association. Summaries are prepared for normal operations, investment activities, and any borrowing activities.
Statement of cash flows:
This involves avoiding the circumstances that would expose the community association to certain type of loss.
Exposure Avoidance
This act addresses minimum wage requirements, maximum hours of work and overtime pay.
FLSA: Fair Labor Standards Act.
The governing documents that dictate how the homeowners association operates and what rules the owners—and their tenants and guests —must obey.
Declaration (used interchangeably with CC&R's)
This method records income when it is earned (or assessed to owners) and expenses when they are incurred or acquired.
Accrual basis of accounting:
Inventory, furniture, fine arts, equipment, supplies, machinery, electronic data processing (EDP), and valuable papers and records.
Personal property:
______________is a standard element in most property policies that obligates the insured to maintain certain limit of property insurance based on a stated percentage.
Coinsurance
This act requires employers and employees to make matching contributions to Social Security. The employer must withhold the employee’s share of the tax from his or her wages or salary.
FICA: Federal Insurance Contributions Act.
__________a formal process designed to protect the rights of all parties involved.
Due process procedure.
The collection of all assessments due through the end of the fiscal year. For example, if an owner’s payments on the annual assessment are due monthly and become delinquent at the end of March, all monthly payments through December of that year are due immediately.
Acceleration
This provision states that the contract may not be modified in any way unless such modification is written and signed by both parties.
Modification provision:
_______________ allows an owner to bring a claim against his or her community association. This coverage is in the owner’s interest. I
Cross liability
Regulates and influences such items as the amount of insurance a community association must carry, procedures for financial operations and requirements for the upkeep of property.
FHA: Federal Housing Administration.
If a board has exercised _____________________in making a decision, the court will generally not consider the board negligent in its fiduciary duty, nor will the court substitute its judgment for that of the board. However, the board must demonstrate how it has taken care in reaching a decision.
Business judgment rule
Combines operating and reserve activities in the same column, as opposed to fund reporting, which consists of preparing separate columns for operating, reserve and any special funds.
Commercial reporting method:
It equals the difference between the community association’s assets and liabilities.
Members Equity
The depreciated value of an item.
Actual cash value (ACV)
________a government agency that guarantees investors’ deposits in member institutions.
FDIC: Federal Deposit Insurance Corporation,
Requires directors to act in the best interests and for the benefit of the corporation, thus the community as a whole.
Fiduciary Duty
(Has two components: one, the members are required to avoid conflicts of interest and acting out of self-interest; and two the members are also required to act as reasonable people in managing the association’s affairs.)
________________ is used to reorganize personal or non-corporate debt. A plan is submitted to a judge for paying off all or nearly all of the debt over a specified period of time.
Chapter 13 bankruptcy:
This provision states that neither party may assign its obligations under the contract to any other person without the express written consent of the other party.
Assignability provision: