Special Assessment Payments missing from the Reported Revenue of the Annual Statements from 2005 to Present

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June 26, 2013 UPDATE:

A meeting was held by Associa Mid-Atlantic Management Corporation's Ms Gail Van Dyke, CEO, and Ms Patty Mullen-Smith, COO on June 26, 2013 at 7:30 PM at the Willistown Methodist Church. Instead of explaining the missing funds, Ms Mullen-Smith spoke in generalities of how operating and reserve funds are handled. Both executives urged that we move on as an Association without explaining what happened to the Special Assessments that were paid by homeowners for stucco repairs. The Board member who acted as treasurer for most of the years in question stayed silent. At this point, what is known is that:

  • specific homeowners were required to make special assessments at Mid-Atlantic's request
  • the money paid by these specific homeonwers were deposited in the checking account managed by Mid-Atlantic Management
  • the money has never been reported as having been received into any fund of the Association (neither Operating or Reserve Funds)
  • it is established that the money WAS NOT used to repay the fund from which the vendor was paid and Ms Van Dyke has previously acknowledged this was done intentionally for at least a five year period.
  • Mid-Atlantic Management and Ms Marian Derr, Board President, have been reticent on where the money went

Reviews of the annual reports for the Willistown Knoll Homeowner Association show no revenue received from Special Assessments for Stucco Repairs nor Special Assessments charged for Delinquency Services of Attorneys from 2005 to the present.

If you have paid for stucco repairs to your home, have paid delinquency fees for an attorney to become involved at Associa's request, or or have paid for other special assessments other than snow, you should ask the Association Board why your money is not reported as revenue in the any annual reports since 2005 to present and where your money went. You should also ask for verification that the amounts you paid represent the actual charges to the association.

Want to help? Please review the annual reports to see if you can find the Special Assessments. You can find the annual reports here on the Annual Reports page. On the left hand side of the table on this page are links where you can open up or download the annual reports by year.

Click on the example analysis of: 2009 Expenses & Revenues.

Justification of the Stucco Assessments can be found here: Legal Justification for Stucco Assessments. The argument may be flawed - see this page for more information: Stucco Assessments.

An example of the form letter for Stucco Special Assessment Collections can be found here: Stucco Special Assessment Collection Letter.

Special Assessments for delinquency collection activities by attorneys are added to the monthly bill of affected members, without showing the original invoices of the attorneys to the Association.

Several Homeowners with accounting backgrounds have reviewed this the annual statements and been unable to identify where that the revenue from the Special Assessments for Stucco Repairs and Recoverable Legal Expenses are located.

Normally, the accounting equation is defined as: Assets - Liabilities = Equity + (Income - Expenses)

Hi Marian!

If there are unreported revenues (funds paid in but not reported as revenue), then those funds have been diverted for unreported expenses and are not in the asset accounts of the corporation.

In other words, could the funds paid by the homeowners have been possibly diverted for expenses that are unexplained? What legitimate reason exists for keeping a homeowner association's books in this manner?

Basics Account Relationships NOT.png

If the stucco repair bills were paid in full out of the normal expenses, where did the diverted income go? What are the undocumented expenses that were paid?

Is this a Generally Accepted Accounting Principle (GAAP)?

A laypersons reading of FASB ASC 972, Real Estate—Common Interest Realty Associations would say not.

972 Real Estate—Common Interest Realty Associations
605 Revenue Recognition
25 Recognition
972-605-25-1 Special assessments shall be reported as revenue, unless they are deferred in accordance with the guidance in paragraph 972-430-25-1. See Section 972-430-25 for guidance concerning recognition of deferred revenue from special assessments.
972 Real Estate—Common Interest Realty Associations
430 Deferred Revenue
25 Recognition
972-430-25-1 Deferred revenue may include items such as special assessments designated for specific costs that have not yet been incurred. Such amounts shall be reported as revenues when the corresponding liabilities and expenses are reported.

ADDITIONAL DISCLAIMER: This page is not meant to provide legal or accounting advice, the intent of the page is to raise the legal and accounting questions of whether the Association's Special Assessments are being handled correctly. The issue needs to be reviewed by qualified professional able to provide an explanation in accordance with GAAP. The author of this page claims no special expertise in either law or accounting.