The proposed Financial Bible for Pag-ibig Citihomes Phase 2 Homeowners’ Association (PICHOA-2) will help meet the following objectives: the exercise of prudence in all PICHOA-2 financial transactions, maintain a healthy financial condition of the association, set up checks and balances in all financial transactions, and protect the general membership from unscrupulous practices of the Board and Officers of the association.
The Financial Management Policy or Financial Transaction Manual provides for the setting up of three separate funds – the Petty Cash Fund, General Reserve Fund, and the Special Reserve Fund. These funds will have their own means and procedures of disbursement and have specific uses.
The Petty Cash Fund (PCF) as we all know will fund the day-to-day expenditures of the association. This will, of course, be funded by the General Reserve Fund.
The General Reserve Fund shall finance the regular or routine activities of the association and be used for the following purposes: to finance Administrative Cost, Maintenance Cost, Project/Program Cost, and Miscellaneous Expenses of the association.
While the Special Reserve Fund shall finance the association special projects and programs. The association shall only use the Special Reserve Fund for the following purposes: to fund rescue and emergency programs or activities, to purchase rescue and emergency tools and equipments, and to provide seed capital for income-generating projects.
The Financial Bible of PICHOA-2 also provides for the distribution of the Annual Net Surplus to the General Reserve Fund (60%) and Special Reserve Fund (40%). This distribution will allow the association to become sustainable.
The policy also emphasizes the use of Budget and the relevance of audit. The association is compelled to present and pass an annual budget during the annual general assembly. This budget will then be used as the basis for the next year’s financial transactions of the association.
The scope of audit activities are also provided in the proposal. The audit activities will determine the following areas: Cash Position of the association, Adherences to and/or deviations from the association’s rules and procedures, Physical audit of properties, accountable forms/documents of the association, and Effectiveness of the association’s financial control systems.
Nonetheless, the frequencies of the preparation of financial reports and the type of financial reports to be presented are also stipulated.
The Bank Account
The proposal expressly recommends that a Checking or Current Account will be used instead of a Savings Account. It would be easier for the members and officers to monitor disbursement or withdrawal of the bank deposits with a check since checks are returned by the bank. The used check can then be used as attachment to expenses or authorized withdrawal or payment.
The Membership Fee
Membership Fee shall be automatically allocated to the Special Reserve Fund. The association officers shall exercise extra care that the collected Membership Fee, since it is reflected in the income statement of the association, will not be used for the other expenditures, except those authorized for Special Reserve Fund.
The Financial Bible Relevance
The financial bible will serve as the starting ground for audit activities. Currently, audit activities are merely concentrated on the issue of whether the money received by the association is accounted for and its disbursement is authorized by the approving authority. Or whether the amount disbursed is equal to the supposed expenditures. It will now include audit of procedures and whether there are enough safety nets that protect the financial resources of the association.
The financial bible also protects the members and the financial resources of the association. Officers of the association are prohibited to use the previous years’ funds to finance the present operation. Present operation shall be funded only by revenues generated for the year.
Without the Financial Bible, officers of the association can pass Resolutions authorizing disbursement of funds and that would make their transactions legal.
The Approval and Amendment
The Financial Bible of the PICHOA-2 can only be amended by the BOARD and 10% of the members in good standing but must be approved by the majority of the members in good standing in a general assembly.
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