Turtle Shores Owners Association, Inc. Financial Statements and Independent Accountant s Review Report For the Year Ended December 31, 2011
Turtle Shores Owners Association, Inc. Financial Statements and Independent Accountant s Review Report December 31, 2011 Table of Contents Page Independent Accountant s Review Report 1 Financial Statements Balance Sheet 2 Statement of Revenues, Expenses, and Changes in Fund Balance 3 Statement of Cash Flows 4 Notes to Financial Statements 5-7
W. H. O CONNELL & ASSOCIATES PA Certified Public Accountants 2825 Lewis Speedway, Suite 104 St. Augustine, FL 32084 Phone (904) 829-0082 Fax 904 829-5030 e-mail: henry@whocpa.com March 8, 2012 To the Board of Directors Turtle Shores Owners Association, Inc., Independent Accountant s Review Report We have reviewed the accompanying balance sheet of Turtle Shores Owners Association, Inc. (the Association) as of December 31, 2011, and the related statements of revenues, expenses and changes in fund balance; and cash flows for the year then ended. A review includes primarily applying analytical procedures to management s financial data and making inquiries of Association management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements. Our responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require us to perform procedures to obtain limited assurance that there are not material modifications that should be made to the financial statements. We believe that the results of our procedures provide a reasonable basis for our report. Accounting principles generally accepted in the United States of America mandate that information about future major repairs and replacements of common property is required to supplement, but not required to be a part of, the basic financial statements. The Association has not presented this supplementary information. W.H. O Connell & Associates, PA Certified Public Accountants 1
TURTLE SHORES OWNERS ASSOCIATION, INC. BALANCE SHEET DECEMBER 31, 2011 ASSETS OPERATING RESERVE FUND FUND TOTAL Cash Checking and Money Market Accounts $ 60,866 $ 188,662 $ 249,528 Certificates of Deposit - 60,433 60,433 Total Cash $ 60,866 $ 249,095 $ 309,961 Other Assets Regular Assessments Receivable $ 28,103 $ - $ 28,103 Utility Deposits 620-620 TOTAL ASSETS $ 89,589 $ 249,095 $ 338,684 LIABILITIES AND FUND BALANCE LIABILITIES Accounts Payable $ 8,776 $ - $ 8,776 Regular Assessments Received in Advance 11,848-11,848 TOTAL LIABILITIES $ 20,624 $ - $ 20,624 FUND BALANCE Fund Balance $ 68,965 $ 249,095 $ 318,060 TOTAL LIABILITIES AND FUND BALANCE $ 89,589 $ 249,095 $ 338,684 See accompanying notes and independent accountant's review report. 2
REVENUES TURTLE SHORES OWNERS ASSOCIATION, INC. STATEMENT OF REVENUES, EXPENSE AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED DECEMBER 31, 2011 OPERATING RESERVE FUND FUND TOTAL Association Fees $ 365,181 $ 24,603 $ 389,784 Interest Income 41 1,450 1,491 Late Fees 1,426-1,426 Other Income 2,924-2,924 TOTAL REVENUES $ 369,572 $ 26,053 $ 395,625 EXPENSES Maintenance Labor $ 61,258 $ - $ 61,258 Landscape Maintenance and Improvements 40,192-40,192 Capital Improvements 11,868-11,868 Major Repairs and Replacements - 57,843 57,843 Irrigation Repair 3,938-3,938 Facilities Maintenance 26,374-26,374 Tree Trimming 5,707-5,707 Fertilizer and Pest Control 2,814-2,814 Pond Maintenance 55-55 Pool and Spa Maintenance and Chemicals 5,839-5,839 Management Fee 36,600-36,600 Office Expenses 9,937-9,937 Insurance 12,380-12,380 Professional Fees 5,543-5,543 Security 85,847-85,847 Other Expenses 1,161-1,161 Uncollected Fees 346-346 Water, Sewer, Trash 11,993-11,993 Clubhouse Utilities 11,450-11,450 Common Area Utilities 19,896-19,896 TOTAL EXPENSES 353,198 57,843 411,041 CHANGES IN FUND BALANCE $ 16,374 $ (31,790) $ (15,416) FUND BALANCE, JANUARY 1, 2011 $ 52,591 $ 280,885 $ 333,476 FUND BALANCE, DECEMBER 31, 2011 $ 68,965 $ 249,095 $ 318,060 See accompanying notes and independent accountant's review report. 3
TURTLE SHORES OWNERS ASSOCIATION, INC. STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2011 CASH FLOWS FROM OPERATING ACTIVITIES OPERATING RESERVE FUND FUND TOTAL Net Income (Loss) $ 16,374 $ (31,790) $ (15,416) Changes in Assets and Liabilities: Accounts Receivable (7,596) - (7,596) Utility Deposits 1,220-1,220 Accounts Payable 5,928-5,928 Income Taxes Payable (1,203) - (1,203) Prepaid Assessments (5,373) (5,373) NET INCREASE (DECREASE) IN CASH $ 9,350 $ (31,790) $ (22,440) CASH JANUARY 1, 2011 $ 51,516 $ 280,885 $ 332,401 CASH DECEMBER 31, 2011 $ 60,866 $ 249,095 $ 309,961 SUPPLEMENTAL DISCLOSURES: No Interest was paid during the period. No Federal or State income taxes were paid during the period See accompanying notes and independent accountant's review report. 4
NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2011 TURTLE SHORES OWNERS ASSOCIATION, INC. NOTE 1 NATURE OF ORGANIZATION: Turtle Shores Owners Association, Inc. (the Association ) was incorporated under the laws of the State of Florida on October 30, 1987 as a not-for-profit corporation for the purposes of administering the operations and management of Turtle Shores, a 298 unit homeowners association located in St. Johns County, Florida. Each homeowner is entitled to automatic membership in the Association. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Presentation The accompanying financial statements have been issued in accordance with the Audit and Accounting Guide for Common Interest Realty Associations issued by the American Institute of Certified Public Accountants, which recommends the use of the accrual basis of accounting. Fund Accounting The Association uses fund accounting, which requires that funds such as maintenance, operating and reserve replacement funds designated for future major repairs and replacements be classified separately for accounting and reporting purposes. Disbursements from the Operating Fund are generally at the discretion of the Board of Directors and are available for the general operations of the Association. The Reserve Fund has been designated by the Board of Directors to be used for capital expenditures and will be used as designated. Reserves The budget of the Association provides for limited voluntary deferred expenditures accounts, including capital expenditures and deferred maintenance, subject to limits on funding contained in the Association s governing documents. Because the owners have not elected to provide for reserve accounts pursuant to Section 720.303(6), Florida Statutes, these funds are not subject to the restrictions on use of such funds set forth in that statute, nor are reserves required to be calculated in accordance with that statute. Recognition of Assets and Depreciation Policy Ownership of the commonly owned assets is vested directly or indirectly in the members and those assets are not deemed to be severable. As a result, commonly owned assets, except for personal property purchased by the Association, are not capitalized in the financial statements. Replacements, major repairs and the purchase of additional commonly owned assets are accounted for as replacement fund expenditures. 5
NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2011 TURTLE SHORES OWNERS ASSOCIATION, INC. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (concluded): Member Assessments Monthly assessments to members included a regular assessment plus an amount for the Reserve Replacement Funds. The annual budget and assessments of owners are determined by the Board of Directors. The Association retains excess operating funds at the end of the year, if any, for use in future periods. Cash and Cash Equivalents The Association considers all checking and money market accounts and certificates of deposit as cash and cash equivalents. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3 ASSESSMENTS Monthly assessments were $109 during 2011. These assessments are used to pay the current year s operating expenses as well as fund a portion of future major repairs and replacements. Delinquent assessments are subject to a late fee and interest on unpaid balances. Those funds designated for future major repairs and replacements are transferred to separate interest-bearing bank accounts and are generally not available for operating purposes. Repair costs may vary from estimated amounts and the variations may be material. Amounts held in the replacement fund may not be adequate to meet future needs. If additional funds are needed, the Association has the right to increase regular assessments or levy special assessments, or it may delay major repairs and replacements until funds are available. 6
NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2011 TURTLE SHORES OWNERS ASSOCIATION, INC. NOTE 4 FEDERAL AND STATE INCOME TAXES: Homeowners associations may elect to be taxed as regular corporations or as condominium associations. The Association elected to be taxed as a condominium association for the year ended December 31, 2011. Under that election, the Association is taxed on all net income from non-membership activities, principally interest income, which is reduced by any directly allocable expenses such as management, bank and tax preparation fees. For the year Ended December 31, 2011 the Association incurred a taxable loss of $339, and consequently not income taxes were owed. 7