Q: Our condominium association recently special assessed the membership for $500,000 for a renovation project. The final cost incurred was only $400,000. What happens to the excess surplus from the special assessment?  Shouldn’t it be returned to the unit owners?

A: Florida Statute §718.116(10) states that: “the funds collected pursuant to a special assessment shall be used only for the specific purpose or purposes set forth in such notice (as required by the governing documents). However, upon completion of such specific purpose or purposes, any excess funds will be considered common surplus, and may, at the discretion of the Board, either be returned to the unit owners or applied as a credit toward future assessments. Therefore, while many unit owners may believe that the Association is required to return all excess surpluses to the membership, and while it may be politically prudent to do so, the ultimate decision rests with the Board of Directors in accordance with Florida Statute.

Q. We received two bids from different accounting firms for our Association’s annual audit. One was for $5,000 and the other was for $1,500. Why is there such a big difference in price?

A. When offering bids to potential clients for services, a public accounting firm generally estimates the time commitment necessary to complete the services requested by the client. Once this estimate is derived the firm will them generate an audit fee based upon the firm’s hourly rates. Therefore, a significantly lower bid means either (i) the firm has a lower hourly billing rate, which likely means less experienced individuals are working on the engagement, or (ii) the firm is spending less time on the engagement and sets its price accordingly. Either way, a significantly lower price should raise certain concerns when evaluating bids.

When a public accounting firm performs an audit, there are certain standards and procedures the firm must perform and follow in order for the audit to be completed in accordance with auditing standards generally accepted in the United States of America.

These standards, which all public accounting firms performing audits are supposed to follow, require the auditors to obtain an understanding of the Association and its environment, including its system of internal control, in order to assess the risk of material misstatement (which is the risk that the financial statements will contain a significant misstatement whether by error or by fraud). The auditor then uses their determined risk, amongst other factors, to determine the procedures and tests it will perform during the audit.

While all public accounting firms are not equal and perform audits in different ways, using different procedures, the Board of Directors, through their own inquiries and observations, should be able to ascertain how comprehensive an audit is being performed. As a Board member ask yourself certain questions, such as: did the auditor interview our Board of Directors? Did the auditor physically show up to our Association at any point during the audit? How much supporting documentation did the auditor request? Did the auditor review any invoices? Did the auditor perform any tests of our internal controls? If the answer to any of these questions is “no” there would be a substantial reduction in the estimated time necessary to perform the audit, which, in turn, would lead to lower audit fees.

Q. Now that I understand the difference in fees, which one should I choose?

A. While on the surface, lower audit fees may sound like a great idea, the Board of Directors must consider this: “what sacrifices are we making in order to get these lower fees?” All members of the Board of Directors, by being elected to office, have a fiduciary responsibility to protect and safeguard the assets of the Association and its members to the best of their ability. Therefore, when determining which public accounting firm to engage as the Association’s auditor, the Board of Directors should evaluate all aspects of the potential firm, instead of simply the cost to the Association.

Given the current economic environment in the United States, there are likely financial pressures influencing many unit owners, homeowners, and employees. An individual with increased financial pressures creates a motive for potential fraud. Once individuals encounter tough times a “survive at any cost” mentality has the potential to develop. This is when an individual rationalizes to themselves the need to steal in order to provide for themselves of their family. An individual may also rationalize fraud by telling themselves, “I’ll pay the money back”, “they will never miss the funds”, or “they don’t pay me enough”. These two factors combined with the opportunity to perform the fraud are the three sides to, what is commonly known as, the fraud triangle. In any Association, the Board of Directors may not be able to control the pressures and/or rationalization sides to the triangle due to the inherent limitations associated with each. However, the Board of Directors is able to minimize the opportunity side of the triangle, by creating an environment and implementing procedures, for example, a thorough audit of the Association’s books and records- therefore, reducing the Association’s fraud risk.

In closing, an Association’s Board of Directors should be cognizant of the fact that they have the authority to minimize the Association’s fraud risk by carefully choosing the Association’s auditor. We suggest meeting and interviewing a potential auditor prior to engaging a firm in order to perform its due diligence and obtain as much information as possible regarding the firm’s: history, reputation in the industry, procedures they perform, expertise within the firm, etc. When it comes to audit fees, like more other services, you get what you pay for.

Answered by:

Charles S. Hafer, CPA

Hafer Company, LLC.

www.hafercpas.com

561-655-6964

Hafer Company, LLC, a Palm Beach and Naples, Florida CPA firm, provides accounting, tax, and financial management services  for community associations including condominiums, cooperatives, homeowners’ associations, property management firms and developers. Their services include audits, reviews, compilations, tax planning and preparation, loss analysis, and advisory and special projects analysis (agreed upon procedures). They also provide tax services for individuals, partnerships (LLCs and LLPs) and corporations, including income tax planning, preparation and reporting; estate and gift taxes; fiduciary tax returns; and taxes on benefit plans.

South Florida Business Journal
Date: Friday, March 2, 2012, 6:00am EST

The South Florida Business Journal is pleased to present the 2012 Palm Beach Ultimate CEO Awards. Our special section devoted to the most distinguished business leaders in the county shows how these super high achievers and generous supporters of the most worthy charitable causes in our region serve as an inspiration to us all.

MARK WADE
President/CEO, Seacrest Services
www.seacrestservices.com
2400 Centrepark West Drive, Suite 175, West Palm Beach 33409
(561) 697-4990

Education

B.S. degree program in business management, University of Missouri
 

Personal Note
Mark Wade was born in the Bahamas, raised in Ireland, and earned a swimming scholarship to the University of Missouri. He swam for the Bahamian National Team during his senior year of high school and through college. He won eight gold medals in the Caribbean Games and is in the Bahamian Sports Hall of Fame.

From full-service property management services and professional accounting services to complete landscaping and property maintenance needs, Seacrest Services works with commercial properties and community associations. It’s been this way since the company was founded in 1968 as Personalized Services, a large janitorial company, and when it evolved in 1975 into a full-service property management company.

Leading such a diverse company – one which has grown from a company doing $4 million in revenue in 2000 to a projected $30 million in revenue this year – requires staffing well and building the infrastructure to help people succeed, President Mark Wade says. It helps to be backed by the right people and executives.

“My executive team is the best in the business, their commitment is unwavering. Each individual runs their department with the same passion they had on the day they started,” he says. “Being in the service industry means that you are only as good as your customer or client’s perception. With that in mind, this team brings the commitment on a day-to-day basis that we want to be the leaders in our industry through outstanding service.”

It’s no accident that Wade believes successful CEOs have built a team of industry leaders.

“Surround yourself with exceptional people and get them on the bus with you,” he says. “Push yourself to find the best path for your team and enable them to be as successful as possible. Don’t worry about who gets credit. As each individual of your team continues to grow your company will see the benefits.”

http://www.bizjournals.com/southflorida/

"Brad Bethurem, president of Brad’s Bedding Plants near Delray Beach, with the last impatiens at his nursery"

Posted: Feb. 12, 2012

By: The Palm Beach Post

Starting in late October each year, Palm Beach County enters a colorful phase as millions of impatiens are planted to jazz up the entrances of gated communities and add punch at shopping centers, banks and resorts.

But this year there’s trouble with the flowers known for their hues of coral, orange, pink, red, lavender, purple and white. After early January’s damp cold snap, landscapers and their clients began noticing that the impatiens were dying. Now countless plants have been ripped out, costing homeowners associations extra thousands and even bigger money for a multimillion-dollar flower business that blooms when snowbirds visit.

The culprit? The impatiens were the victims of a disease called downy mildew that caused problems elsewhere in the United States last year and has been wiping out impatiens in Europe and South Africa.

The Gardens Mall replaced its impatiens with white begonias.

At BallenIsles, a country club community in Palm Beach Gardens, the 500 or so impatiens in the master areas were replaced with other flowering plants such as begonias, lobelia and osteospermum, said Carol Cloud Bailey, property manager and horticulturist for the community association.

“We had a lot of residents who planted impatiens at their homes. It has been quite devastating for them,” she said.

Valerie Bass, owner of Bass Nursery in suburban Lake Worth, disposed of 8,000 infected plants last month.

“It’s so depressing to have to tell people,” Bass said. “I keep saying it’s the end of an era. None of the nurseries are growing them for next season.”

Plasmopara obducens, the type of downy mildew that’s killing the impatiens, attacks only the Impatiens walleriana, which is most prevalent here. Two less common varieties that are more expensive and aren’t available in as many colors, SunPatiens and New Guinea, are not susceptible.

Impatiens are the nation’s and Florida’s most popular bedding plant, according to the University of Florida.

“Downy mildew has been developing over the last few weeks. It’s a pretty aggressive mover. You will get dieback fairly quickly,” said Bill Schall, Palm Beach County commercial horticulture extension agent. The disease is detected when white spores appear on the underside of a leaf.

High humidity paired with cool nights created the perfect conditions for the disease, Schall said.

With the impatiens’ failure rate estimated at 70 percent, other types of plants are being used.

“It’s devastating because it’s a very easy plant to grow. It’s a huge business to lose,” said Brad Bethurem, owner of Brad’s Bedding Plants Inc. west of Delray Beach. “We’re not going to grow another impatiens until they change the genetics.”

Industry giants Ball Horticultural and Syngenta, which produce seeds, have assured Bethurem and other growers that they are researching how to prevent downy mildew, which has been reported by growers statewide.

Denise Feiber, a spokeswoman for the Florida Department of Agriculture and Consumer Services, said the state issued a pest alert Thursday. Inspectors are being sent to bedding plant nurseries and big-box stores to check plants.

Brad’s Bedding Plants normally sells nearly 3 million impatiens a year in 13 colors, as well as begonias, marigolds, petunias and geraniums. He has had to throw out about 150,000 impatiens.

The Home Depot is still selling the walleriana variety; plants are available in the starter size for 99 cents. Company spokesman Craig Fishel said the stores have not had any impatiens with the disease and that the one-year plant guarantee will apply if a plant turns out to have downy mildew.

“We are keeping an eye out,” Fishel said.

Communities whose impatiens had to be removed are replacing them with other flowering plants such as begonias, or in some cases just mulching the areas. A single planting can easily cost $15,000, and an extra one isn’t in the property owners association’s budget, landscape companies say.

“The key thing is everybody made the purchase decision in advance of the disease,” said Tedd Annis, president of Annco Services of Delray Beach, which maintains communities such as Woodfield Country Club, Addison Reserve, Broken Sound and Valencia. “That is the crippling issue. Financially, it was a prudent decision that has now turned into a costly decision.”

Annis said a few communities have replanted but most “are waiting for spring and reviewing their decision for the fall.”

The  e4 Sustainability Summit will be a family friendly festival held on the Waterfront Commons in West Palm Beach. Activities will include:

• Eco-Exhibitors/Vendors
• Family and Kid friendly activities
• Recycled fashion show
• Movies, Workshops & More!

 Save the date!

Feb. 10-25th, 2012

Check out http://www.wpb.org/e4/?page_id=466 for a detailed list of events, parking & directions, and sponsorship opportunities!

By: Melissa L. Nash, President of ARI

The answer is simple — Results and communication.  Not all collection agencies are the same.  Checking with your local Better Business Bureau is recommended.  Additionally, selecting a firm with experience in real estate is equally as important.

As a full service collection agency, our primary success comes from two separate but distinct approaches.  Our first focused approach is to be proactive rather than reactive.  Our second focused approach is pursue the owner individually for recovery, whenever practical — skip the foreclosure route all together and seek a “money judgment.”

Collection agencies can do just that.  Provide results.  To use a familiar phrase, it’s “Show me the money.”  Not to compete with law practices, but rather to compliment their services, when necessary, collection agencies utilize a lawsuit as a means to get to the desired result – payment. 

Asking these questions and having a collection plan when a file first becomes delinquent can result in positive cash flow back to the association.  You too can implement these processes to increase your cash flow and decrease your outstanding accounts receivable.

The results will vary from file to file and association to association, but the steps are almost always the same.  There are key indicators, that when reviewed can determine the overall collection processes to be followed to recovery.

• Is the property protected by homestead exemption? 
• Is the property currently occupied by the owner, a rental tenant or empty?
• Has a Lis Pendens been filed on the property?
• Is the property mortgaged for more than the current appraised value?  If yes, what is the difference?
• Is the homeowner paying their other bills? i.e. credit cards

In reviewing these answers, a targeted collection approach can be designed. In most cases, it’s a matter of educating the homeowner of their obligations as well as to the options of the association. 

The biggest misnomer from homeowners is that they are in bank foreclosure and do not believe they are responsible for association fees – even if still residing in their home.  Banks are not foreclosing and associations are stuck holding the bag. 

Let’s talk about the cost of collection without the use of a lawsuit.  Most collection agencies will work on a contingency fee basis.  No recovery, no fee.  It really is that simple. 

If you have a recorded Claim of Lien, turn it over to a collection agency.  The association really has nothing to lose. 

The biggest obstacle to overcome with boards and property managers is the cost of collection vs. the result.  Most collection agencies will provide all the services on a contingency fee basis. 

Communication is the next tool.  Collection is a process.  In every case, it’s methodical and detailed.  The same steps have to be repeated file by file.  Based on the availability of information, research time can take hours for each file, then the files have to be reviewed by a collections expert and a specific plan determined for each file.

Collection agencies manage a collection process.  Law firms manage a legal process.  The two can work very well together to reach the desired result – putting the “check” into your association.

Melissa Nash is the Founder of ARI, a full-service collection agency in West Palm Beach, Florida author of How To Get Paid On-Time Every Time and host for Cashflow Matters, a weekly business internet television show.  For more information on ARI please call (561) 697-4911.

http://4arionline.com/

In a drive to minimize the possibility of future building failures and be better prepared for hurricane winds, Broward County created the “40 Year and Older Building Safety Inspection Program” to take effect in January 2006. The program calls for structural and electrical safety inspections for buildings 40 years old or older and every ten years thereafter.

 What follows comes from the Broward County Code Appeals website:

“Each January a list of buildings meeting the program requirements are provided to Building Officials from a database that the Board of Rules and Appeals obtains from the County Property Appraiser’s Office. The program is then to be administrated by the City Building Department or the County Building Department and a notification letter is sent. The owner of a building or structure shall then furnish within 90 days the required Safety Inspection forms to the Building Official prepared by an engineer or architect. In the event that repairs are necessary, the owner has 180 days from the date of the building inspection report in which to correct the structural and electrical deficiencies that pose an immediate threat to life safety. Repairs that are incidental and non life threatening can be completed at a later date.”

The structural and electrical inspections are extensive. Seacrest Services has checked with various engineering firms and are told they will need to access the interiors of some percentage of the residences in any given building to comply with the electrical safety inspection.

For further information, copies of the necessary forms and a scope of the inspection items please check out the Broward County link: http://www.broward.org/CodeAppeals/Documents/bsi2009.pdf

As we enter the Fall season in Florida, the slightly cooler temperatures create an inviting environment for mice and rats.  Rodents such as the House mouse, Roof rat, and Norway rat are always looking for a dry, hidden spot to feed and breed. Make sure your home is protected and be aware of any signs of infestation. 

Start by identifying rat and mouse signs. You can easily recognize rodent problems by finding droppings around your house. Old droppings are gray, dusty, and will crumble. Fresh droppings are black, shiny, and puttylike. Check building material, windows, doors, and screens for holes or gnaw marks. Along baseboards you may notice dark greasy rubmarks appearing from contact with the rodent’s body. You may also notice sounds in the walls or attic.

Seacrest Services Pest Control division takes the necessary steps to control and eliminate rodent problems in your home. Here is just a few examples of how we can help control rats or mice in your home:

-Seal any openings larger than ¼ inch and repair any holes in building material, windows, doors, and screens.

-Set up professional trap stations to control pests without having to resort to the use of poisons.

-Trim bushes and tree branches away from the home so they do not touch the building’s exterior.

Call our professionals at 1-888-828-6464 to arrange a FREE pest control estimate!

Palm Beach State College’s Green Institute is offering many new exciting courses to assist with your green job training. Whether you’re looking for new career opportunities or needing to keep up with your current career, Palm Beach State College’s Green Institute can help you!

Join the next course, Carbon Management – Issues and Concerns.  You will have the opportunity to learn about the global energy infrastructure and practical plans / actions for Green House Gasses control and reduction, including review of career opportunities (e.g. Recycling & Waste Management, Environmental Engineers, Energy Traders, and Sustainability Planners). 

Thursday, September 22nd & 29th, 2011 – 6:00 pm – 9:00 pm 

Cost is only $60.

South Florida Business Journal Ranks Seacrest Services
In the Top 25 Largest Landscapers in South Florida

Fort Lauderdale, Florida  (August, 2011) – - – South Florida’s leader in full-service property management is also one of the area’s top landscape companies, according to the South Florida Business Journal. West Palm Beach-based Seacrest Services, Inc. was ranked as the fifth largest landscaping company in the region in the August 26, 2011, edition of the newspaper.

Published annually, the list ranks businesses by the previous year’s revenues. Seacrest was ranked fifth based on the company’s 2010 landscaping revenues of $11.3 million.

“For years we have been proud to be a leader in the property management industry in South Florida,” says Paul Licata, sales and marketing manager with Seacrest. “And, now to have one division of Seacrest – the landscape division – earn the distinction as a leader in its own right is a testimony to our company’s commitment to excellence in all areas.”

The Business Journal’s list was based on each company’s combined annual revenues of both residential and commercial landscaping. According to Licata, had the list been solely comprised of residential landscaping, Seacrest would have held the number one spot.

Seacrest Services, Inc. is the state’s most rapidly expanding full-service property management company. With the company’s new hires this summer nearing 50 positions, Seacrest is expected to move up to No. 13 on the Palm Beach County Business Development Board’s list of largest employers in the county.

In addition to its property management and landscape division, Seacrest Services also operates janitorial, construction services, accounting and financial services, and pest control divisions servicing residential developments throughout South Florida. Seacrest’s unique TQM (Total Quality Management) program has helped the company become a leader in all areas of its operations.

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