Chapter 6 The other than physical property management, financial management plays a very important role as well. Rental income, vacancy loss and delinquency are critical in terms of successful property management. Managing these factors strongly illustrates a property s performance. 6-1
RENT COLLECTION AND PROCESSING Rental receipts and all other collections are to be deposited to the project operating account DAILY. It is to be expressly understood that no employee is permitted to accept cash under any circumstances. Procedures for processing accounts receivable are in further detail. For each deposit, the following must occur: 1. Copies must be made of all daily receipts (i.e. checks, money orders) and filed at each site. Receipts are then added manually and a calculator tape indicating the deposit items and deposit total is attached to the batch of receipts. 2. Enter each check individually into the OneSite program. The conclusion of this process will produce a printout totaling all receipts. Review the printout for accuracy, and ensure that the totals from step #1 and the computer generated printout match. If there are no errors or discrepancies, proceed to close the bank deposit batch in the computer program. 3. Endorse the checks using the "Endorsement Stamp" provided. Then scan all checks by batch. See IMS Form 6.4 Deposit Scanner Procedures. 4. Email a copy of the computer generated deposit listing from Onesite along with the Deposit Summary from Comerica Bank to deposits@imsteam.net. 5. Draw a diagonal line on front of each check and money order once it s been scanned successfully. 6. Mail all scanned checks and money orders by batch with the matching computer generated report and bank report to IMS Corporate weekly. 7. At month end, print the computer generated bank deposit summary and attach to the monthly receipt detail. NOTE: In the event a computerized system is not present or computer failure, a cash receipts log is to be completed, itemizing all payments posted to the resident's ledger card. This would be done in place of step #2 above. The cash receipts log form is found in Form 6.1. All receipts must be deposited or mailed to the bank daily even in the event of a computer failure! A deposit is not considered complete until ALL OF THE ABOVE have been accomplished. CAUTION! We do not accept CASH. Anyone found to be accepting cash may be subject to immediate termination of employment. 6-2
DELINQUENCY, NON-SUFFICIENT FUNDS (NSF) AND COLLECTIONS Any checks that have been returned from the bank for non-sufficient funds, (NSF) are to be entered and posted as soon as you are notified. During this process, charges are to be applied to the resident's account for late payments & NSF fees according to the project's lease agreements. The returned check is to be held on-site and may be replaced by the resident with a money order or cashiers check only. The returned check is not to be re-deposited under any circumstances. 1. On the sixth (6th) day of the month all delinquent residents are to be charged a late charge, according to the property s lease agreement, and posted to the residents account. Payment arrangements with residents require approval from the Property Manager, and are generally not accepted. 2. The residents delinquent in their rental payments are to be sent a "Notice-to-Quit" on a form appropriate for the project's jurisdiction on the sixth (6th) day of the month with a copy retained in the resident's file, and a copy to be forwarded to the project's attorney after the required time stated in the notice has expired. Payments received from residents for amounts less than the balance owed will not be accepted and should be returned to the resident pending payment in full. HELPFUL TOOL: Those sites that have high delinquencies, the Notice-to-Quit may be sent to residents by the second (2 nd ) day of the month. Written approval from an IMS Corporate Officer must be obtained prior to issuing a 30-Day Notice to Quit to Terminate Tenancy. Note that this is NOT the same as Termination of Subsidy, which is a separate function of our recertification requirements as discussed in Chapter 7. A 30-Day Notice to Quit to Terminate Tenancy is to recover possession of a unit because of lease violations, not to be confused with a Non-Payment action, which should occur automatically if rent is not paid on time. 3. Evictions are tracked using OneSite s Legal Tracking System. Separate instructions for using this feature are available. 4. The information entered into OneSite s Legal Tracking System will be used to generate a "Legal Case Summary Report" ( LCS Report ) to track legal actions, termination, and eviction. LCS Report is to be submitted monthly to the central office, and must include the delinquency report produced in step #2 above. 6-3
MONTH END REPORTING On the last business day of each month or as directed by the monthly management calendar, the current month's transactions must be completed to begin the next month's transactions anew. The following process discusses this closing procedure: 1. Confirm that you have received pre-closing approval from IMS Corporate. See preclosing instructions (Form 6.18). 2. Ensure that all receipts have been deposited and posted as discussed on Page 6-2. 3. Ensure that all recertifications, move-in s, move out s, unit transfers are completed for the month. HUD PROCESSING Housing Assistance Payment (HAP) vouchers are to be prepared 30 days in advance and excess income reported for the prior month immediately following the "closing" process discussed in this chapter. HAP Voucher To produce the HAP voucher, use the OneSite program. After ensuring that the billing is accurate, update the schedule. On first business day of the month, process your HAP Voucher, and Special Claims: 1. Scan and email ONLY the cover of the printed FINAL HAP VOUCHER to the IMS Accounting Department. 2. Retain a complete copy of the HAP voucher in your TRIPLECHAM Files. Tenant Rental Assistance Certification System (TRACS) Upon producing the HAP voucher, use the OneSite program to send certification information and assistance schedules. Special Claims Special Claims are an important tool for subsidized properties to keep financial losses to a minimum. The Government set up these different Claims because of the demographics of our Residents, and because of the special screening and lease renewal criteria set up by the U.S. Department of H.U.D. Each of the four types of claims is set up specifically for losses indicative to subsidized housing. Claims must be completed to the standards of your local reporting hub in order to collect on them; failure to do so will cause claims to be denied. Site Managers are required to keep close attention to this process for each moved out resident in order to maximize the return on these claims. 6-4
Special Claims (continued) Site Managers are also responsible for the reporting process as described below. Site Managers are to process all Special Claims by the tenth (10 th ) business day of each month, and forward one complete copy to the Special Claims Coordinator for review. After review, the Special Claims Coordinator will submit them to the appropriate H.U.D. office for approval. A FULL copy of each completed Special Claims Packet submitted is to be retained on site for three years. Refer to the OneSite User Guide for Special Claims Processing and the Special Claim Processing Section found at IMS Online Tools. Recertifications Resident recertifications are to be done timely and according to HUD manual 4350.3. In addition, on the second Monday of each month, the "Next Annual Recertification Report" is to be produced. This Next Annual Recertification Report, can be created using the OneSite program. VENDOR PROCESSING Vendor Intake Database Prior to the date of service, the Site must electronically upload the vendor into the Vendor Intake Database called Vender Insurance Certs located under Purchasing at IMS Online Tools. This Database enables us to monitor the following vendor intake documents: IMS Form 6.35 - New Vendor Setup W-9 Form Certificate of Liability Insurance with the Project and IMS listed as Additional Insureds and Certificate Holders. Certificate of Worker Compensation with IMS listed as the Certificate Holder. Where permitted by state law, vendors may submit a state-approved Affidavit establishing an exemption from coverage. Use IMS Form 6.36 Sole Proprietor Statement Service Agreement, if applicable to the vendor. Independent Contractor Verification All certifications and intake documents must be uploaded into the Database prior to the start of services. Lapses in coverage expose the Project to significant legal and financial liability in case of injury. Lapses in Vendor coverage, or the failure to upload vendors and intake documents to the Database, are unacceptable. 6-5
Vendor Invoice Review For normal trade payables, payments are generated as noted on the internal calendar every month. All vendor invoices are to be sent directly to the site. To ensure timely payments and accurate accounting, the following items must be accomplished weekly: Vendor Invoice Forms must be completed for all payments. If there are no invoices to be processed, then submit a Vendor Invoice Transmittal, Form 6.7 indicating No Invoices. The vendor invoice form must be completed in total, and initialed by the person completing the form. It must also be reviewed and initialed by the Site Manager and/or Property Manager. Each form must be accompanied by original invoices that note the P.O. number and a copy of a purchase order for each purchase. Submit completed forms to the central office. ALL vendor invoices for new subcontractors (i.e. painters, unit cleaners) must include all items listed above under Vendor Intake Database. Any incorrectly processed invoices will be returned to the site for corrections. Vendor Invoice Form When completing a vendor invoice form, it is important that the descriptions accurately reflect the invoice being submitted. A Vendor Invoice Form is found in Form 6.5. Form 6.6 contains the standard "chart of accounts" to use when "coding up" an invoice. Select from this chart, the account number that most accurately reflects the expense category of the invoice and place this account number in the second column of the vendor Invoice Form 6.5. Reserve for Replacement (R&R) 1. When coding the invoices for payment, if the item is a reserve for replacement item, use only Account # 651540 on the Vendor Invoice Form. This allows for easier tracking for future withdrawal requests. It is important to note that reserve for replacement items must be listed individually, and the item and location (unit no.) must be included in the description. 2. In addition, copies of all invoices that are eligible as reserve for replacement expenses, in a separate file labeled "Reserve for Replacement." Listed below are some examples of items that qualify as reserve for replacement items: Appliances Carpet Boilers Roofs Furnaces Floors Tub walls Generators Hot water Tanks Toilets Cabinets Vanities * In general, any major replacement items may qualify. 6-6
3. Vendor Invoice Transmittal Summary Form is to accompany each "batch" of Vendor Invoice Forms. The transmittal will summarize the bills by Vendor Invoice Form, and will serve as the on-site tracking record to use in responding to vendor inquiries regarding payment status. The Transmittal Form is found in Form 6.7. It is extremely important that all vendor invoices are prepared for payment weekly to ensure timely payments to vendors, and to produce accurate financial reports. Every effort must be made at the site level to communicate with vendors re: payment etc. PETTY CASH CONTROL Petty cash reimbursement requests are processed like vendor invoices. They are to be submitted to the central office for payment as part of a batch of Vendor Invoices. In addition, a "Petty Cash Voucher" form (Form 6.8) must be completed by the project's petty-cashier. This form and all the corresponding receipts are used as the backup for a Vendor Invoice Form when being submitted. It is recommended that the petty cash fund not be completely depleted before requesting reimbursement. This could leave the project without any available petty cash for an extended period. Any requests for increases to the petty cash fund must be directed to the Corporate Office for approval. In the event that the petty cash is surrendered, it must be reconciled on that same day. It s then closed out and a new petty cash fund is requested on a Petty Cash Voucher for approval by the Corporate Office. The check request will be made payable to the new person responsible. It s also important for the property manager to notify the financial department immediately to change the vendor on any outstanding petty cash checks to former employees. BUDGETING Property Managers are expected to participate in the development of annual capital improvement budgets, which must be completed 90 days ahead of the fiscal year-end. Property Managers are provided with monthly operating statements to review. These monthly reports are to be used by Property Managers only for monitoring collections, expenses, and occupancy performance. During budget preparation, consideration should be given to any needed staffing changes, annual and seasonal contract bids, deferred maintenance items, capital improvements, special projects, and normal inflationary cost increases. Once a budget has been established and approved, the Site Manager plays the most important role in achieving budget goals, from both an income and expense standpoint. Accordingly, Site Managers are expected to become "intimately acquainted" with monthly financial reports, particularly in budget to performance comparisons. Since the Site Manager must approve all operating expenses, the burden of prudent fiscal management rests primarily with the Site Manager. The Site Manager is to shop around for most favorable pricing when purchasing normal operating supplies, and overstocking of inventory is not permitted. The central office prior to incurring the expense must approve all purchases. 6-7
In addition, Property Managers are also expected to develop long term improvement plans establishing a 5-year plan for improving the appearance, structural components and overall viability of the project. ASSESSING RESIDENT DAMAGES Site Managers are responsible for ensuring that the damages caused by residents or the guests of residents are charged to the resident and posted on the resident's account in the OneSite program. These damages must be those in excess of "normal wear and tear." To ensure that charges for damages are consistent and not excessive, a list of common repair and replacement costs are listed on IMS Form 2.13. If the damages are being assessed as part of a move-out inspection, the items must be noted on the Move-In/Move-Out Checklist Form 2.1 and a Security Deposit Disposition Form 6.11. ADJUSTMENTS TO A RESIDENT'S ACCOUNT Prior to adjusting resident's account on the computer including "Charge Adjustments", "Credit Adjustments", and "Tenant Concessions", authorization must be obtained from the central office with a Rent Adjustment/Bad Debt Write off Authorization Form found in Form 6.10. Note that adjusting a rental account without prior corporate approval is grounds for immediate dismissal. It is imperative, however, that efforts are made to collect any balances owed by former residents. Each property must use an approved collection agency to help this process. Once a resident's account has been cleared during the move-out processing discussed in Chapter 4; any receipts from the former resident must be submitted to IMS Corporate with a copy of the former tenant s ledger. All bad debt transactions are recorded to the former account, not the current residents account. 6-8
SECURITY DEPOSIT PROCESSING Upon completion of the move-out process as specified in Chapter 4, the following items must occur: 1. The "Security Deposit Disposition Form" (Form 6.11), and a formal letter (Form 6.11A), must be mailed within five (5) days of move-out to the resident s forwarding address or last known address if no forwarding address is available. A copy of these forms are placed in the prior resident's file and a copy is sent to the central office along with the resident's account history, "Move-in/Move-out Inspection Form", Notice of Intent to Vacate (form 4.10), and Final Account Statement generated by the OneSite program. 2. If a Security Deposit refund is required, the amount is to be "coded up" on a "Vendor Invoice Form" as detailed in Page 6-5 of this chapter. The forms noted in step 1 of this process are then included as "backup documentation" for the "Vendor Invoice Form". The Site Manager is responsible for ensuring timely submission (five (5) business days) of security deposit refund information to IMS as damage awards for improperly processed security deposits will be noted in the site manager s employee file. 3. When a resident's lease requires interest be paid on the security deposit balance, a copy of the lease page referencing such interest must be included with the above documentation. In addition, the "Interest Calculation" program is to be used to ensure proper calculation of the amount. REPORTING AND CONTROLS Financial reports are to be produced monthly and distributed by the 15th of each month following the reporting month. The reports include: 1. Schedule "A" 2. Schedule of Disbursements 3. Schedule of Accounts Payable 4. Profit and Loss Budget Performance 5. Schedule of Reserve balances. Bank accounts and reserve escrows are reconciled monthly and any adjusting journal entries are recorded and available for review by the Controller and C.F.O. Disbursements are made primarily with computer generated checks. The review process requires the comparison of all backup documentation. The checks are printed and reviewed weekly with supporting documents again, which are then signed when approved. 6-9
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