The Finance Officer Board Treasurer -- Backbone of the Board

A good treasurer is crucial to the well-being of any co-op or condo. Unfortunately, the position is, without a doubt, one of the most challenging offices to hold. Carl M. Cesarano, CPA, a partner with Cesarano & Khan PC in Rego Park, Queens, says treasurers are the eyes and ears of the co-op or condo. "The treasurer should be the watchdog of the entity that collects cash and pays bills." They should be familiar with the expenses of their building, in addition to any miscellaneous expenses that arise and should keep watch over how the managing agent spends the residents’ money. In turn, the treasurer organizes the information and must keep the board informed as to the building’s financial standing so that this information can be disseminated to the shareholders or owners when necessary.

What it Takes

Does a prospective treasurer need a background in finance to be successful in the position? "Not necessarily," says Cesarano, "although a financial background can prove very useful." A working knowledge of finance will enable a treasurer to view financial documents, such as reports and budgets, without much effort. Cesarano believes someone with little or no financial knowledge can be a successful treasurer provided they make the effort to study the information put before them. He adds that those with no financial background must be fast learners so that they can get up to speed quickly on financial matters. "If they strive to get an understanding, it becomes second nature." He admits that he spends a substantial amount of time explaining and clarifying financial information to treasurers.

Prior financial knowledge provides treasurers with an inherent understanding of the financial affairs of the co-op or condo. Seth Frank, the treasurer of his East 86th Street co-op for the past three years, feels that his financial background is important to the position. Much of the information contained in the reports treasurers review can seem very complex to a novice. "Those with a finance background are simply more knowledgeable," says Frank. The individual with prior experience in finance will have an easier time understanding and relaying financial information from management and accountants to the other board members, which is an essential duty of the job.

The Fundamentals

There are some basic tasks that the treasurer must perform in order to stay on top of co-op business. He or she should review the annual budget, annual audit, tax information relating to the co-op or condo, review management reports, cash balances and bank reconciliations. In addition, it is crucial that the treasurer look at arrears and formulate ways of eliminating them.

The treasurer should also keep tabs on the building’s management. Frank meets with his co-op’s accountant a few times annually but he interacts with the building managing agent once or twice per month. Because his apartment building (100+ units) operates on a budget of over $200,000 monthly, he is very active in monitoring the building’s cash flow. When a special situation arises that requires an unexpected use of cash, he and the manager meet with the other board members to resolve the situation. The treasurer must provide the information to help the board decide whether to make an assessment, pay cash, make payments over time, or resolve the expense by some other method.

One safeguard that many boards have in place is requiring management to come to the board when financial emergencies arise. "Many boards require the treasurer’s approval on expenses over $1,000," states Baron. Implementing this protection provides the treasurer with control over how the building’s funds are spent and keep unnecessary expenditures to a minimum.

Baron believes that treasurers should maintain an ongoing relationship with the their managing agents. The treasurer should be working with the manager on approving invoices and meeting with the buildings attorney when necessary. The treasurer should ask questions and listen to suggestions made by management and accountants, as well as read periodicals relevant to their position.

Marc Taub, an accountant with Ellenbogen, Rubenstein, & Eisdorfer LLP in Manhattan believes that in addition to fiscal responsibilities, the board treasurer should concentrate on budget control; specifically costs that are out of control. Taub believes that the treasurer needs to analyze the expenses and formulate ways to cut or reduce them. The treasurer should also have a hand in the co-op’s investment accounts.

Most co-ops and condos have two budgets: an operating budget and a capital improvements budget. The operating budget consists of the funds used to pay the monthly expenses of the complex, such as mortgage, insurance, utilities, and upkeep of the property. The capital improvements budget is the fund set aside for large projects, such as elevator repairs, rebuilding infrastructure, and other renovations, repairs and improvements to common areas. "The treasurer should take an active role in planning for and monitoring these expenses. The treasurer should ensure that the building revenue is sufficient to pay the expenses of the co-op and create a reserve in case of an emergency," says Taub.

The Financial Voice

The treasurer’s role as communicator cannot be emphasized enough. Taub says that most treasurers he deals with are liaisons between the accountant and the board. He believes that the job of the treasurer has been simplified due to the fact that many co-ops and condos have been in existence for over ten years and have worked out many of the kinks. "A lot of the difficult questions have already been answered," says Taub. Although it is imperative for a treasurer to review financial documents on a regular basis, co-ops and condos are not facing as many difficulties as they were during their formative years.

"Every board has their own dynamic," says David Baron, a managing agent with Metro Development Inc. in Long Island City. He has found that over the years the role of treasurer has become blurred. In active boards all members take an equal interest in all aspects of running the building or complex. When special circumstances arise, oftentimes special committees are formed within the board to solve the problem. This is a definite help to the treasurer. Sometimes, the managing agent acts as a surrogate treasurer when needed.

On top of it all, as co-ops and condos become savvier, most of the board members share duties. "They’re becoming a more educated group," Baron says. Board members are coming to the table with more knowledge than ever before. He believes that this newfound knowledge is due to the recent availability of seminars, trade shows and other resources. "Today’s board members are simply more involved," he says.

Stay on Top of Trends

Richard Montanye, an accountant with Marin & Montanye, LLC in Roslyn, New York concurs with Taub and suggests creating reserves for emergencies. For one, over the past few years, the price of fuel oil has skyrocketed. This has presented many co-ops and condos with astronomical fuel expenses. Since most consumers could not see these increases coming, many treasurers did not increase their operating budgets. Baron has found that many boards and management have had to make assessments in order to cover the rising fuel expenses.

Coupled with rising fuel costs are the enormous expenses associated with New York City’s Local Law 11, explains Montanye. Repairs that may have originally seemed minor can lead to more extensive work. Montanye has seen many co-ops and condos run significantly over their original budgets due to unanticipated Local Law 11 exterior work. "It’s essential to plan for contingencies," Montanye says.

Beyond their basic duties to reign in expenses, treasurers can take the extra step and possibly look for additional sources of income for their buildings. Some ways to raise additional income could be reducing existing fees if that is feasible or perhaps charging sublet fees.

Since the office of treasurer is a highly time-consuming position, it is difficult to find individuals willing to fill it. Add to that the fact that being treasurer is one of the more challenging positions, requiring it’s officer to understand financial reports, budget planning, and acting as liaison between accountant, managing agent, attorney, and board, and it may seem impossible to find a volunteer.

Fortunately there are residents who are concerned and want to have an active role in running their buildings and complexes. They have the time and desire to safeguard one of their most important investments: their homes. Today’s board treasurers come from all walks of life; schoolteachers, retirees, and others with business and/or finance backgrounds often find their way onto boards.

Ms. Terrell-Ernest is a freelance writer living in Queens.

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  • i need information about finance officer
  • A very helpful overview article. Thank you.
  • Our condo association has the Mgmt Co write and signs the check for Contractors. All checks require two signatures. Our treasurer then signs and mails the check. My question, how long may a treasurer hold these checks before sending to the Contractor? Is there a standard holding time for a job that has been approved and completed? Thank you, Colleen