top of page
EHFJR

Magnum Opus, Part I

Updated: Jul 2

This is a discussion of the LLC Financials, recently released, and the accompanying documentation, lovingly referred to as someone's Magnum Opus. The documentation has no title and has no author. The document is so full of half-truths, miscalculations, and misinformation, that I don't blame someone for not signing their name. I certainly would not want to put my name on the document.


I would like to first apologize. According to the document there are rumors and misinformation that "...are actions designed to intimidate members of the HOA Board and LLC Board." Intimidated by rumors?


I, as a resident, receive financial documents from management. I examine, I evaluate and I conclude, according to normal practices of companies adhering to GAAP Standards and acceptable levels of Corporate Governance. I do not understand why grown men in positions of responsibility, would be intimidated by an analysis and opinion or even rumors and misinformation? Unless of course, if there were some intent to deceive and they've been caught with their hand in the cookie jar?


My analysis is intended to educate. Intimidation defeats the purpose.


The document starts with an Executive Summary stating, "The Golf Courses are an important part of our community". This is not true. To the majority of the residents, the Golf Courses have no meaning whatsoever, and most admit the community should have never purchased the courses. They have been a terrible investment, loosing millions of dollars and have drained our community of financial resources that could have been put to better uses. Instead of the millions sunk into renovating a course, think of how those funds could have been used to renovate the restaurant.


It is recognized that only 8% - 10% of the residential population are golfers. The only reason decisions are being made in favor of financially supporting the golf courses, is because the Board is controlled by golfers. The majority of residents favor closing 18 of the 36 holes.


The document continues, and more than once, states no funds were transferred from the HOA to the LLC during the first quarter. The document continues stating that SPA 2, has assets that are solely for the purpose of financially supporting the LLC. Furthermore, the document assures us the accounting is correct.


Lets take a closer look:

The above displays the assets associated with SPA 2. As of 12/31/2023, Assets totaled $389,819 and just three months later totaled $227,802, a reduction of $162,017. Additionally, just a month later, SPA 2 assets were reduced by a further $111,691.


We were assured the accounting was correct and we were also informed that the only purpose and stated use of SPA 2 assets is to financially support the LLC.


Therefore, we must conclude, the author of the document is incorrect, that during the first quarter of 2024, $162,017 was transferred from SPA 2 to the LLC and just one month later an additional $111,691 was transferred for a four month total of $273,708 from SPA 2.


The quality of accounting is highly suspect. Our treasurer informed us that many residents paid their SPA 2 obligation in advance, leaving approximately $73,000 to be collected at the end of 2023. Yet readers can see that listed on the Balance Sheet, dated 12/31/2023 is an UNBILLED SPECIAL ASSESSMENT Receivable of $211,500. This is the full payment and indicates no one had prepaid their obligation.


Please recall, the first part of SPA 2 was a total of $423,000 which was due our landscaping company and was paid on September 30, 2023. SPA 2 totaled $634,500. If $423,000 was successfully paid on 09/30/2023, how can there be $389,819 of assets still on the Balance Sheet as of 12/31/2023? This would indicate that SPA 2 totaled $812,819.


Also, if $423,000 was paid to our landscaping company and as of 3/31/2024, there remained $227,802 of assets, for a total of $650,450, exceeding SPA 2 by $15,950, how was the $100,000 Unsecured Loan paid off? Perhaps a little "COMINGLING"? Perhaps with a little help from the HOA Operating Fund?


The document also announces that there is plenty of cash left in SPA 2 to assist the LLC in surviving the off-season. As readers can see, there is only approximately $76,660 in cash. $39,450 is a receivable, indicating amounts due from residents unable to pay the assessment.


The LLC's Financials for April 2024 show $69,146 in cash with $25,000 misclassified. Removing the misclassified funds leaves $44,146. Combine this with SPA 2 cash and only $120,806 remains. The courses will burn through this in a month. The courses are far from having the necessary liquidity to weather a four month off-season.


The author of the document once again assures us that everything is on the "up and up" citing the LLC and the HOA accounting is audited by an independent auditor. Did someone forget to send the author the memo? Our accounting failed it's 2022 audit, citing among many problems the lack of documentation and evidence of interfund transfers. Meaning, a lot of cash went from HOA to LLC but it was not documented to acceptable standards and our auditors "...Were not able to obtain sufficient appropriate audit evidence to provide the basis for an audit opinion..."


It appears, that it is actually the author of the document, who is providing the misinformation. Does anyone feel intimidated?


I think this is a good place to take a break. Lets adjourn for a few, and I will start shortly with Part II.


Keep the faith, and keep your head down.








64 views0 comments

Recent Posts

See All

It Won't Be Enough...

The blog demonstrates that $15 monthly per household is far short of what will be needed to keep the courses' operating.

Comments

Rated 0 out of 5 stars.
No ratings yet

Add a rating
bottom of page