FREE CMCA Knowledge Questions and Answers Flashcards

A professional reserve study typically consists of which two main components?

Answer: Physical analysis and financial analysis

A reserve study pairs a physical analysis of components (condition, useful life, cost) with a financial analysis of fund status and a funding plan.

A board member's duty of loyalty primarily requires the director to:

Answer: Place the association's interests ahead of personal interests and disclose conflicts

The duty of loyalty obligates directors to act in the association's best interest and avoid or disclose conflicts of interest.

The business judgment rule generally protects board members from personal liability when they:

Answer: Act in good faith, with reasonable information, and within their authority

Courts defer to board decisions made in good faith, on an informed basis, and within the scope of the board's authority.

In the typical hierarchy of community association governing documents, which document generally takes precedence over the bylaws?

Answer: The recorded declaration (CC&Rs)

After applicable law, the recorded declaration generally controls over the articles, bylaws, and rules.

Quorum for an association meeting refers to:

Answer: The minimum number of members or directors who must be present for business to be conducted

Quorum is the minimum attendance, set by the governing documents or statute, needed to transact business validly.

Under the accrual basis of accounting, an association records revenue when it is:

Answer: Earned, such as when assessments become due

Accrual accounting recognizes revenue when earned and expenses when incurred, regardless of when cash changes hands.

Which insurance coverage protects the association against theft of funds by directors, employees, or the management company?

Answer: Fidelity/crime insurance

Fidelity (crime) coverage reimburses the association for losses from dishonest acts such as embezzlement.