Cmca Test - Compound Principles

Front 1

What are the characteristics of a community association?

Back 1

1. Mandatory Membership
2. Mutually binding contract
3. Lien based assessments

Front 2

What is the calculation for assessments?

Back 2

Total annual assessments x % of interest / # payments per year

Front 3

Name the three accounting basis and describe how they record budget items.

Back 3

1. Cash - Income when received, expenses when paid
2. Accrual - Income when earned, expenses when incurred
3. Modified cash - Select items on accrual. Most common records income when accrued and expenses when paid.

Front 4

What is the balance sheet calculation?

Back 4

Assets = Liabilities + Member's Equity, or
Assets - Liabilities = Member's Equity

Front 5

Name and describe the types of reserve accounts

Back 5

1. Baseline - sets balance near $0, relies on special assessments or loan funding.
2. Threshold - a type of baseline funding that relies on a set # or percentage (minimal funding)
3. Statutory - Amount set by state statute
4. Full funding - reflects 100% of the funding as recommended by reserve study

Front 6

Name the major components of a statement of revenue and expenses

Back 6

1. Revenue
2. Expenses
3. Excess revenue over expense (income or loss)

Front 7

What are the opinion letter result options from an audit?

Back 7

1. Unqualified or "clean" - Items are in order
2. Qualified - statements are fairly preented with exceptions
3. Explanatory paragraphs
4. "Disclaims" or refuses opinion - due to insufficient evidence
5. Adverse or negative opinion

Hint 7

5 types

Front 8

What are the tax filing options for a community association?

Back 8

1. Regular corporation - IRS form 1120
2. HOA - IRS form 1120H

Front 9

Name and describe the two types of budget reporting options.

Back 9

1. Commercial - Operating and reserve accounts are in same column

2. Fund - Separate columns for operating, reserve and special funds

Hint 9

Accounts in same column

Accounts in separate column

Front 10

Name and describe the four ways to control property exposure risk

Back 10

1. Exposure avoidance - control variables such as alcohol in clubhouse
2. Loss prevention and reduction - through safety inspections and installations like fire sprinkler systems
3. Segregation of exposure - Duplication or separation of exposures to loss - such as data backups
4. Contractual transfer - Transfers community association's legal responsibility for loss (through contracts)

Hint 10

SLEC

Front 11

Name the sources of insurance requirements for community associations.

Back 11

1. State statutes and regulations
2. Association governing documents
3. Local/state/federal laws
4. Secondary mortgage market, agency and lender requirements
5. Contractual obligations
6. Good business judgment

Hint 11

total of 6

Front 12

Name the three forms identifying covered causes of loss

Back 12

1. Special - most comprehensive, covers everything not included (claim denial is by insurance company)
2. Broad - Only insures specific perils (burden of coverage is on assn)
3. Basic - Least coverage (burden on association)

Front 13

Name the 5 most common property insurance coverages

Back 13

1. Commercial Package Plan (CPP) - includes property and liability
2. Mechanical/equipment breakdown - for elevators, security system, etc.
3. Ordinance/Law - CPP endorsements to cover:
a) Contingent liability
b) Extra demolition
c) Increased cost of construction
4. Flood - Only available through NFIP
5. Electronic Data Processing (EDP)

Front 14

Name the 2 types of personnel insurance coverage

Back 14

1. Workers Comp - Loss of services due to employment related injuries

2. Employers' Liability - Injured employee claims

Front 15

List the four types of income insurance coverage

Back 15

1. Fidelity - covers employee dishonesty
2. Business Income - Covers rental/clubhouse inclome
3. Assessments receivable - Covers assessment income only after a covered loss (not delinquencies)
4. Extra expense - Covers cost of temporary office, etc., after loss

Hint 15

BAFE

Front 16

List the four types of liability claims

Back 16

1. Property damage
2. Bodily injury
3. Personal injury
4. Advertising injury

Hint 16

PBPA

Front 17

List the four types of liability coverage

Back 17

1. Commercial general
2. Hired and non-owned auto liability
3. Commercial umbrella - extends amount of coverage
4. Directors and Officers - involves "claims made" coverage

Front 18

List the four types of exposure to loss

Back 18

1. Property - real or personal
2. Liability - 3rd party claim against association
3. Income - for loss of income or increased expense
4. Personnel - usually employee claims

Hint 18

PLIP

Front 19

List the sources of legal obligations for a community association

Back 19

1. Federal/state/local statutes, regulations and laws
2. Legal documents unique to community association
3. Lender requirements (FNMA/FHA)
4. Standards by professional bodies (GAAP)

Front 20

Name the six types of legally binding contract provisions

Back 20

1. Assignability
2. Modification
3. Waiver
4. Governing Law
5. Severability
6. Entire Obligation

Hint 20

AMWeGS

Front 21

What two financial reports required to meet minimum standards?

Back 21

1. Statement of revenue and expense
2. Balance sheet

Front 22

What are the four types of letters used with accounting audit/review?

Back 22

1. Management
2. Opinion
3. Representation
4. Engagement

Hint 22

MORE

Front 23

What are the three types of accounting examination?

Back 23

1. Audit - most thorough & costly
2. Review - Less thorough
3. Compilation - no assurance that it conforms to GAAP

Front 24

What are the five types of maintenance?

Back 24

1. Routine
2. Preventive
3. Emergency Services
4. Requested/Corrective
5. Reserve replacement

Hint 24

PERRR

Front 25

List four designations for the insurance industry

Back 25

1. CPCU - Chartered Property Casualty Underwriter
2. ARM - Associate in Risk Management
3. CIC - Certified Insurance Counselor
4. CIRMS - Community Insurance & Risk Management Specialist

Front 26

What are the five components of an insurance policy?

Back 26

1. Declarations - who/what/how long
2. Policy Conditions - common language RE: filing claims, premium defaults, etc
3. Forms - Notes type of insurance
4. Endorsements - add or subtract items covered & causes
5. Glossary

Hint 26

DPFEG

Front 27

What are the four types of resolutions?

Back 27

1. General - Routine events
2. Administrative - Internal operations
3. Policy - Owner's rights & responsibilities
4. Specific - apply to individual situation

Hint 27

GAPS

Front 28

What is the format for a resolution?

Back 28

1. Purpose
2. Authority
3. Scope and intent
4. Specifications

Hint 28

PASS

Front 29

What is the primary purpose of a community association?

Back 29

To provide for the governance, business and communal aspects of the association.

Hint 29

3 aspects

Front 30

What are the most important sources of a community's authority to make and enforce rules?

Back 30

1. State statutes & court decisions
2. Governing documents

Hint 30

2 sources

Front 31

Name the Criteria for valid rules

Back 31

1. Must not violate constitutional rights
2. Must be consistent with laws, statutes & governing docs
3. Must relate to purpose of community
4. Must be reasonable and fair
5. Must be capable of uniform enforcement
6. Must be necessary

Hint 31

5 criteria

Front 32

What are the 6 steps in a due process procedure for rule violations?

Back 32

1. Courtesy call or letter to resolve.
2. Issue "cease & desist" letter
3. Issue hearing notice
4. Hold hearing
5. Issue decision
6. Allow for an appeal

Front 33

List the internal resources for rule enforcement.

Back 33

1. Suspend voting rights
2. Suspend use of amenities
3. Fines
4. Eviction
5. Self help corrections

Hint 33

5

Front 34

List the external resources for rule enforcement

Back 34

1. Health department
2. Zoning department
3. Police
4. Fire department
5. Building/planning department
6. Animal control

Hint 34

6