Our Auditor

BCC budgets $6,000 for our audit. While the BOD may be happy with the auditor’s performance, BCC owners should demand more than the lame audit we got. “Audited” and “Auditor” is in quotes throughout this blog because of the quality of the product we received.

The purpose of the audit is to protect BCC owners whose money is being reported on. It is supposed to assure us that the BCC Board of Directors are properly controlling and accounting for our $2 million+ in annual maintenance fees.

This 2008 “Audit” doesn’t do it! It’s time to insist the BOD engages an auditor who realizes his responsibility is to BCC owners, not the BOD. Owners need and deserve an audit that highlights problems and suggests solutions, not one that glosses over mistakes and attempts to bury them with “prior period adjustments”.

Bernie Madoff’s outfit was "audited" too!

64 DAYS LATE AND $31,669 SHORT

The Board of Directors’ explanation for delay in releasing 2008 audited year-end Financial Reports was puzzling. In his July 1, 2009 Affidavit to the Florida State Department of Business and Professional Regulation, board V.P. George Lauth claimed that:

1. The “Audited” Financial Report was received too late to make the state-required April 30 deadline for release to BCC owners; and,
2. On receipt, “errors were noted by the Association’s accountant” and investigation and correction was required.

The facts are:

A. The report was available for review April 13 and, despite numerous reminders and promptings from various sources, was not included on the April 23 BOD meeting agenda or even reviewed by BCC’s Treasurer until early June.
B. “Errors …noted” were confined to rental and dock deposit accounting. (More on deposit accounting follows.) These problems were certainly apparent in the September 2008 (if not earlier) monthly Financial Reports. Why wasn’t a correction made earlier in the year?
C. Delay in releasing year-end financials was caused by BOARD failure to do their job. An identical failure in 2003 (made by mostly the same people) resulted in a $4,800 fine from Florida State.

IT'S ONLY MONEY, RIGHT?

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.

June 10 Board Meeting

Following is a brief description of the most questionable or noteworthy actions taken at the June 10 BOD (Board of Directors) meeting that might interest BCC owners. My thoughts are in bold italics. Please pass the web address on to any BCC owner, resident non-owner or employee you think might be interested in news and views about BCC: http://baycolonyclubcondo.blogspot.com/

Manager's Report - Cancelled because the BOD didn't want to allow compensatory time off for the manager. By having the manager's report first on the agenda, any compensatory time certainly wouldn't go beyond an hour. Couldn't we spare the manager for one hour during the work week? This seems to be another BOD move to keep owners in the dark. See the Confidentiality and Duty of Loyalty items below.

Finance Report – Audit 2008 - Usual monthly financial report not discussed due to incomplete data. President Slota then attempted to move on to next agenda item. Asked by an audience member why the audited 2008 financial report was not released by its April 30 legally required due date, the BOD gave the following reasons:

1. Jason Katz thought Pete Shelton was reviewing the audit and Shelton thought Katz was reviewing it, so neither reviewed it, and;
   
2. A multi-thousand dollar accounting abnormality exists which has not yet been resolved.
   

This is a violation of Florida law. Numerous complaints from BCC residents have been filed with the Florida Department of Business and Professional Regulation regarding the delay in releasing the 2008 financial report as well as prior reports. BCC has been fined for past similar violations. If the board responsible for spending our $2+ million annual budget is unable to release an audited financial within four months of year's end, they are incompetent.

New Towing Rule –This agenda item was ignored.

Not discussed or voted on, yet a towing sign is now located at the first turn of the entrance road. Is it legal? Will BCC face more legal fees because of it? Was any consideration from the tow company involved in this action? Are we over-run with illegally parked cars? Are we willing to allow our board to do whatever they want without any discussion or vote?

Confidentiality Agreement for Employees - Ratified. For- Bisaillon, Katz, Lauth, Shelton, Slota. Against- Bullock, Brady.

BCC employees have a fiduciary duty to owners, NOT to the BOD. I believe there are two reasons for forcing this on BCC workers: To keep owners in the dark and to advance the effort by some board members to get rid of our manager and service agent. Those of us who were here in 2004 will recall the serious problems after Slota and associates forced out a manager.

Board Members Duty of Loyalty - An agenda item included by Pete Shelton to protest Wilbur Bullock's "unauthorized" release of the Secrecy Agreement to BCC owners not on the BOD.

Shelton accused Bullock of "unprofessional" and "disloyal" behavior. Shelton is apparently unaware that Florida law requires all condo activity (outside of legal matters in litigation) to be open and transparent. Every Board member's duty is to BCC owners and part of that duty is to be sure that we all know what's going on. Bravo Wilbur.

HELP WANTED

Edited and re-released 10/14/09. Originally posted 6/1/09.

In order for these blogs to be interesting, useful and widely read, they have to do more than just gripe about our Board of Directors. (Who knows, some day we may just vote in a competent board again.)

I don't have the time or the expertize to do it all, so we need help to make better blogs:

REALTOR - To author a monthly BCC Realty article. Statistics: Number For Sale, Number Sold, High, Low, Median and Average Prices, Average Days on Market, etc. Plus a brief (one paragraph) analysis of BCC realty trends, Updated monthly. No sales pitches please, but good PR, so take credit for it. We need a June report NOW!

ACCOUNTANT/CPA - To author a monthly, brief (one or two paragraph), number cruncher's look at BCC. Comments (point with pride, view with alarm) on the latest BCC monthly financials. Plus brief opinions on whatever gets your attention... audits, accounting system and controls, etc. What do YOU think of the 2008 Audited Financials? Needs to be in layman's language. To be understood by the dimmest bulb on the present BOD. A signed article bears more weight.

ENGINEER/CONTRACTOR - To author irregular, short, punchy opinions on BCC maintenance and construction policies, practices and progress. (I know you're out there.)

UNDERCOVER OPERATOR - Feed us info about what doesn't look, feel or smell right by adding a comment to "Undercover Ops" (U-Op) Section. We need verifiable facts, not just opinion or rumors. Specifically what has to be looked at and where to start? Your comment will NEVER be published. All tips should be made by "Anonymous".

INVESTIGATOR - To check facts, obtain documentation and write, or contribute to an investigative blog when a U-Ops tip looks like pay dirt. You will not be put in contact with or provided the name of the tipster. Your work can be anonymous or credited as you wish.

PLANT PERSON - Author an irregular article about BCC landscaping. What's in bloom and beautiful? What's dead or dying? How about Xeroscaping, etc.? Save that tree?

Questions? Comments? Suggestions? Want the job? E-mail: cpukit@gmail.com