BCC requires security deposits for each unit rented ($300 - $1,000) and for each boat at our docks (three months dockage fee). These deposits are supposed to be kept in separate, non-interest bearing accounts and, absent damage, returned to the renter or boat owner on termination of the lease.Standard accounting practice requires that these deposits be shown on the books as an Asset (under cash) and as a Liability (because they will have to be repaid). The Assets and Liabilities should be equal with, perhaps, some minor difference caused by transaction timing on individual deposits.
Our “Audited” 2008 Financial Report is not close to balancing deposit Assets and Liabilities. [Total Cash Deposits (Assets) of $141,673 ($120,308 Rental + $21,365 Docks). Total Deposits Liability of $127,317.] Last year’s 2007 Financial Report had Deposit Cash and Liabilities balanced with a minor difference. The 2008 imbalance, therefore, developed during this BOD’s 2008 term.
The amount of cash in Dock deposits makes absolutely no sense. The “Audited” 2008 Financials as well as the accountant’s Monthly Financial shows $21,365 Dock Deposit Cash. Our Accountant’s Monthly Financials for 12/31/08 has the offsetting Docks Liability at $8,726. Dock Cash and Liability amounts are not close to balanced. (The “Auditors” report does not break out Security Deposit Liability into Rental and Dock, but presumably the total liability of $127,317 shown includes $8,726 Dock Liability.)
1. The security deposit for each boater is equal to three months of his dock fee.
2. Total dock security deposits should be three times the total monthly dock fees.
3. Monthly dock income was budgeted at $3,000 a month and has actually been less.
4. Dock security deposit cash should not be more than $9,000 (3 X $3,000).
5. Dock Deposit Cash cannot logically be $21,365. Where did that number come from?
6. As of 10/31/08 Dock Deposit cash was $52,412. On 11/30/08 Dock Deposit Cash was $21,360. Where did the $30,000+ go?
A cursory look at BCC financials reveals obvious discrepancies within the reports themselves. In his report, our “Auditor” made no comment on the mess in the Deposits accounting nor did he suggest a closer investigation or a remedy. If such an obvious discrepancy was allowed to exist, what might be buried in more obscure areas?
UPDATE 8/12/09: ADDITIONAL AREAS OF QUESTIONABLE ACCOUNTING HAVE BEEN DETECTED. FOR DETAILS, PLEASE CLICK ON COMMENTS BELOW.
4 comments:
One of the BIGGEST problems with the dockage accounts is when you sell your boat and want your deposit back. The Board insists on seeing a copy of your original check. Ha! Like I'm going to save a check for like sixteen years??? If they don't know the amount to make out the refund for, all they have to do is check the original signed lease - it's right in there! The dockage fees haven't changed since time immemorial. Duh! No-brainer! Probably the figures don't match because some poor SOBs are still waiting for their refunds!
Well, abandoned deposits is one way to explain it. Are they held forever, or are they utilized for another SRD party?
Is it possible that these funds are NOT in a NON-interest-bearing account and that these funds are (secretly) drawing interest on the side? Just curious. I have heard that this BOD has lied about other things; when the rentals exceeded the number (128) the banks are happy with for mortgage purposes, I heard the banks were told that "we're close, but there are leases that are up within a week or two". If they'll lie about ONE thing, they'll lie about others.
The BCC Monthly Financial Statements have been prepared every month by our accountant, Donna Seidenberg, CPA. It is my understanding that they are sent to the BCC office about two weeks (at the latest) after the close of the month. I know that the office staff has been ordered not to release them until they have been reviewed and approved by the BOD. This has historically taken a month or a month and a half!
This report, prominently stamped "Received Aug 07 2009" was probably received by the BCC office no later than July 15!
Since these reports seem to have generated some interest, a new "Financial Reports" article will be opened in "Rants & Raves" and the appropriate comments will be transferred there.
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