Budgetary Responsibilities

Board of Directors

Most boards of directors are responsible for establishing, approving, and monitoring the community’s budget. Although they have the power to establish a budget, most will delegate preparation authority to their manager or accountant. When directors review a proposed budget, they should consider the following:

• State statutes and requirements established in the association’s governing documents.
• Owners’ needs and expectations (the balance between mandatory and discretionary items).
• Committee and owner feedback.
• The need to reconcile income and expenses, otherwise known as balancing the budget.
• Financial forecasts (e.g. budgets) and analyses of past financial activities prepared by the manager or accountant.
• Capital budget and reserve study requirements. If the board has the power to approve the budget, the manager should provide all owners with a summary copy of the proposed budget before the board officially adopts it. Owner input is a key component of the budgeting process. Owner input regarding the budget leads to less animosity over budget priorities and the opportunity for increased resident involvement in other aspects of the community—thus, building a sense of community.