Five tips for improving the quality of your financial review, and minimizing the chance of bloodshed.

If your HOA or community association is like most, you’ll be holding your annual meeting sometime in the next couple of months. At this point in time, you are (hopefully!) working on your “year in review” presentation to the community. This may include 2017 board accomplishments, property manager updates, committee reports, resident awards, and other useful information.

Since I’m a CPA, the most important component of the annual meeting presentation (of course) is the financial review. Other than board elections, the financial review can also be the most controversial part of the meeting, thanks to conflicting interests and opinions among the board and residents. HOW you present results (both good and bad news) will have a big impact on how those results are perceived, and how neighbors react.

How to present financial results at your annual meeting

Based on my 20 years of experience working with HOAs and serving on my own HOA board, here are five tips to improve the presentation, keeping it relatively brief, productive, and impactful.

1. Tell the story. Just handing out a copy of the budget isn’t enough, and may cause unneeded anxiety. You (preferably the treasurer or property manager) should be prepared to control the communication by presenting results, issues, and opportunities. Consider using PowerPoint, Keynote, or similar presentation tool. Google “Annual HOA Meeting Financial Presentation” to see a number of real HOA examples.

2. Hit the highlights. Presenting results doesn’t necessarily require you to mention every budget line item. Prioritize and discuss the items with the greatest impact, variance, and/or general interest. Here are a few ideas:

  • Revenue highlights – total revenue vs. budget, and reason for any major positive or negative variance, like delinquency rate at 3% vs. 5% budgeted.
  • Expense highlights – total expenses vs. budget, and reason for any major positive or negative variance, like $10,000 of unplanned pool repairs.
  • Reserve fund highlights – improvements funded from the reserve account, and status of the reserve funding vs. reserve study (should be 100%).
  • Audit results – if you commissioned one.
  • Major 2019 initiatives – your chance to brag about next year.

3. Keep it visual. As they say, a picture is worth a thousand words – or 10,000 numbers. In addition to shots of happy neighbors, consider adding charts to help you provide some context for your financial update, show trends over time, and dispel concerns. For example:

  • Chart revenue vs. operating and reserve expenses over time to show a consistent increase in operating costs.
  • Chart the reserve fund balance over time, including applicable variance to the levels mandated in the reserve study.

4. Pre-allocate presentation time. Depending on results, election politics, and moon phase, the financial review may be the most contentious part of your annual meeting. To keep things on track, consider allocating a specific amount of time (e.g., 30 minutes) for the presentation and Q&A. Mention this in advance, and offer to answer all additional questions after the meeting is over. You’re adequately managing expectations, and you may find there are fewer questions after the crowds are gone.

5. Anticipate questions. Spend time as a board reviewing the financial presentation and anticipating potential resident questions. Be prepared with answers to the top 10 or so questions, and this part of the meeting will flow much smoother. Here are a few examples:

  • Why force everyone to pay their dues on-time?
  • Only a few boards are rotting. Can’t we wait a few more years before we paint?
  • Why does tennis court maintenance cost so much?
  • Why do we need to pay for a pool when I don’t use it?
  • Why can’t we just pay for repairs when we need them, rather than funding a reserve account?

Keep it productive, not destructive

Everyone is entitled to their own opinions, even if they are wrong (kidding). It’s important to understand that most who disagree with board or community decisions feel that they have valid reasons for their opinions, just like you do. Treat them with respect, and they are more likely to do the same.

Here’s a tactic that has worked in our community: kill them with kindness. Those who have constructive concerns will appreciate the respect, and those who are there to just cause problems will be exposed to the rest of the community. Also, use disagreement as a way to engage volunteers. If you’re not happy about the way things are being run, serve on the board!

Neal Bach, CPA