Article VII, Section 5. An Audit Committee of three members, a majority of whom shall not be directors, shall be appointed by the President each year, shall audit the Treasurer’s accounts at the close of the fiscal year, and shall present its report at the regular meeting in September.

Fairfax Federation Audit

1. Establish a Finance Committee to draft an operating budget for FY27.
• Approve membership at August Board meeting.
• Review board member budget inputs and review past budgets.
• Present budget for membership vote.

Other Treasurer’s Actions

1. The new Treasurer will serve as the Audit Committee chair and will recommend two audit committee members to the President.
2. The President will present the members to the Board at the August meeting per the Policies and Procedures.
3. The Audit committee will review financial records, identify trends, and develop a final report for presentation at the September meeting.

Next Steps with Audit

Article VII, Section 5. An Audit Committee of three members, a majority of whom shall not be directors, shall be appointed by the President each year, shall audit the Treasurer’s accounts at the close of the fiscal year, and shall present its report at the regular meeting in September.

Fairfax Federation Audit

1. Ken Balbuena (Chair)

North Springfield CA – Braddock

2. Jason Thomas

Bren Pointe HOA – Mason

3. Kristoffer Hull

Ravensworth Farm CA – Braddock

Audit Committee Members

Establish a Finance Committee to draft an operating budget for FY27.

• Approve membership at September Board meeting.
• Review board member budget inputs and review past budgets.
• Present budget for membership vote.

Planned Treasurer Actions

Article VII, Section 5. An Audit Committee of three members, a majority of whom shall not be directors, shall be appointed by the President each year, shall audit the Treasurer’s accounts at the close of the fiscal year, and shall present its report at the regular meeting in September.

Fairfax Federation Audit

1. Ken Balbuena (Chair)

North Springfield CA – Braddock

2. Jason Thomas

Bren Pointe HOA – Mason

3. Kristoffer Hull

Ravensworth Farm CA – Braddock

Audit Committee Members

Establish a Finance Committee to draft an operating budget for FY27.

• President appoints members.
• Review board member budget inputs and review past budgets.
• Present budget for membership vote.

Planned Treasurer Actions

• Compare QuickBooks entries against the bank statements to see what’s missing.
• Analyze for large variances.
• Lead drafting the final report

PERSON 1

• Compare revenues against membership list
• Analyze member turnover from lengthier audit period to gauge fiscal health
• Confirm IRS payments and SCC registrations were completed in a timely manner to avoid any legal penalties.

PERSON 3

• Look at expenses compared to supporting documentation (e.g., receipts, emails, etc.)
• Review budget amendment restrictions in the bylaws, and budget amendment documentation in the minutes (including checking to see if the minutes referenced that quorum was met during meetings where financial transactions occurred)

PERSON 2

Article VII, Section 5. An Audit Committee of three members, a majority of whom shall not be directors, shall be appointed by the President each year, shall audit the Treasurer’s accounts at the close of the fiscal year, and shall present its report at the regular meeting in September.

Fairfax Federation Audit

1. The committee discovered a $540.64 discrepancy but was able to account for the transactions causing it.
2. Deficit spending has resulted in the Federation’s financial position dropping by 59.8% or $7,452.30.
3. Large variances in revenue from membership dues make it difficult to create annual budgets.
4. COY banquet revenue covered between 38.7% and 65.5% of the cost to host the banquet, which accounted for 78% - 90.5% of the Federation’s expenditures in the years that banquets were held.
5. Variances in website expenses (including exceeding the allocated budget in FY25 by $950) are because of website redesign and hosting fees that are not incurred every year.
6. The Audit Committee anticipates the Virginia State Corporation Commission (SCC) paperwork for FY26 will be submitted in September 2026 , and all 990-Ns are current.
7. There were no recommendations in the FY20 audit for the committee to review against current practices.

Summary of Findings

1. Correct the entries in QuickBooks causing the discrepancy, so the transactions log accurately reflects monthly bank statements.
2. Cancel the current accounts receivable entry for a community that rescinded their membership last year.
3. Cancel or reissue an uncashed check from May 2024 in the amount of $80.00.
4. Establish a timeline for following up with payees to ensure checks are cashed in a more timely manner.
5. Follow up with accounts receivables.
6. Establish a policy for payments to be made by check, card, or a payment processing platform such as PayPal only (i.e., no cash payments) for a best practice in recordkeeping.

Recommendations for Cash Management

1. Produce annual budgets.
2. Utilize appropriate and consistent budget codes for expenditures.
3. Consider reviewing budget codes to eliminate unused codes.
4. Include a comparison of actual expenses to date vs. the approved budget in the Treasurer’s Reports.
5. Implement greater controls and documentation for expense approvals, especially when members of the board and committee chairs are reimbursed.
6. Pay expenses with the Federation’s debit card whenever possible.
7. Log PayPal gross amount with a corresponding entry for fees.
8. Clarify whether the method for determining when memberships expire aligns with the bylaws.
9. Establish a joint recordkeeping system between the 1st Vice President and the Treasurer for greater collaboration and a single source of truth for membership lists.

Recommendations for Accounting Procedures