They announced that they would only complete a "cash receipts and expenditure report".

June 30, 2009

By Woodie

When you have a chance would you review and comment on the following:

The board of directors announced in a meeting last week that they were asking the homeowners in attendance to waive the $400,000 annual budget audit requirement for the fiscal years 2007 and 2008.

There was not a majority of the homeowners present.

The dates have long since past that require the association to produce the audited financial statements under Florida Statutes 720.

They announced that they would only complete a "cash receipts and expenditure report".

There are two questions:

1.) The first question is whether its too late to vote on changing the statutory requirements to audit the association financial records for 2007 and 2008 after the budget due dates have past.

2.) The second question is whether a quorum of homeowners is required which is a majority of homeowners under our association governing documents before a majority vote of the homeowners present at the association meeting may vote on whether or not to reduce the standard of review.

Florida Statute 720.303 (7) (d) If approved by a majority of the voting interests present at a properly called meeting of the association, an association may prepare or cause to be prepared:

1. A report of cash receipts and expenditures in lieu of a compiled, reviewed, or audited financial statement;

2. A report of cash receipts and expenditures or a compiled financial statement in lieu of a reviewed or audited financial statement; or

3. A report of cash receipts and expenditures, a compiled financial statement, or a reviewed financial statement in lieu of an audited financial statement.

720.303(9) "Homeowners' association" or "association" means a Florida corporation responsible for the operation of a community or a mobile home subdivision in which the voting membership is made up of parcel owners or their agents, or a combination thereof, and in which membership is a mandatory condition of parcel ownership, and which is authorized to impose assessments that, if unpaid, may become a lien on the parcel.

By-Laws: Vision I Homeowners Association, Inc., Article II D. "Quorum at a members' meeting shall consist of persons entitled to cast a majority of the votes of the entire membership. The acts approved by a majority of the votes present at a meeting at which a quorum is present shall constitute the acts of the members, except when approval by a greater number of members is required by the Articles of incorporation or these by-laws."

In my view, not only is it to late for a vote on a lesser review than an audited annual financial statement, but under 720.303(7)(d) an association meeting for the purpose of waiving the full audit requires a meeting with a quorum of homeowners under the association By-Laws not just a board of directors meeting without a quorum of homeowners.

An association meeting with a quorum, that is, a majority vote of homeowners present, requires a majority of voting interests present to vote for a financial report less than a full audit which is required with a $400,000 budget at Vision for 2007 and 2008.

Under their first theory they can vote at anytime to reduce requirements for financial reporting.

Under their second theory they could have 3 homeowners present and if 2 out of 3 homeowners voted to waive the audit there would be no full audit which is not what was intended by the statute and by-laws.

What are your thoughts?

Thanks,

Woodie