CCM CCM Financial Management & Budgeting 2 — Questions and Answers
Question 1: A community association wants to levy a special assessment to fund an emergency roof replacement. Which action is typically required FIRST?
- Mail ballots to all members for a vote
- Obtain board approval per the governing documents (Correct answer)
- File an amended budget with the state
- Notify the lender of the special assessment
Correct answer: Obtain board approval per the governing documents
Governing documents typically require board approval—and sometimes a member vote—before levying a special assessment; the board must act first.
Question 2: Which financial statement shows an association's assets, liabilities, and equity at a specific point in time?
- Income statement
- Statement of cash flows
- Balance sheet (Correct answer)
- Accounts receivable aging report
Correct answer: Balance sheet
The balance sheet (statement of financial position) is a snapshot of assets, liabilities, and net assets on a given date.
Question 3: What does an accounts receivable aging report help a community manager monitor?
- Vendor payment schedules
- Delinquent assessment collections by how overdue they are (Correct answer)
- Budget vs. actual comparisons
- Reserve fund investment performance
Correct answer: Delinquent assessment collections by how overdue they are
An AR aging report categorizes outstanding balances by how long they have been unpaid, helping managers prioritize collection efforts.
Question 4: When preparing a bid comparison for a major landscaping contract, a community manager should ensure bids are evaluated on the basis of:
- Lowest price only
- Equivalent scope of work across all vendors (Correct answer)
- The vendor's geographic proximity
- The longest contract term available
Correct answer: Equivalent scope of work across all vendors
Comparing bids is only meaningful when all vendors price identical scopes of work; otherwise cost differences reflect scope differences, not vendor efficiency.
Question 5: Which internal financial control best prevents unauthorized disbursements in a community association?
- Single signatory on all checks
- Dual-signature requirement on checks above a threshold (Correct answer)
- Allowing the manager to approve all invoices independently
- Storing blank signed checks for convenience
Correct answer: Dual-signature requirement on checks above a threshold
Requiring two signatures on checks above a set dollar amount ensures no single individual can authorize large disbursements alone.
Question 6: A community association invests reserve funds in a certificate of deposit. This is best described as which type of investment strategy?
- Aggressive growth
- Speculative trading
- Conservative capital preservation (Correct answer)
- Equity diversification
Correct answer: Conservative capital preservation
CDs are low-risk, FDIC-insured instruments that preserve capital—appropriate for reserve funds that must be available for planned expenditures.
CCM CCM Financial Management & Budgeting 2
A community association wants to levy a special assessment to fund an emergency roof replacement.
Which action is typically required FIRST?