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Rancho Santa Fe Association changes assessment allocation to help correct accounting issue

At the Dec. 3 meeting, the Rancho Santa Fe Association board approved the recommendations of the independent auditor and its finance committee, including the approval of a one-year allocation of all 14 cents of Association assessment into the general services fund. The one-time transfer of about $1.1 million of assessment revenue will help bolster the fund balance, allowing for the auditor’s recommended three-month reserve, RSF Association Manager Bill Overton said.

The assessment rate has been established at 14 cents per $100 of assessed valuation with 11.5 cents to go to general services and 2.5 cents into the Covenant Enhancement Fund. Rather than fund the CEF, this year all of the 2015-16 assessment will go into general services to help correct an accounting issue.

During a review of the Association’s accounting department earlier this year, outside consultants found a significant internal reporting error: Both restricted reserves and free reserves for all the entities within the Association were miscalculated by about $1.6 million.

“It’s the fiscally responsible thing to do and we don’t have to raise the assessment,” Overton said. “It’s a seamless, clean way to heal this area of the balance sheet.”

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At the meeting, auditor Gary Porter presented the Association with a management letter with nine recommendations on procedures to help with transparency in its financial statements. The “administrative, housekeeping”-type recommendations included more regular reconciliations, capturing the Osuna fund accounting as part of the account accrual system and using a fixed asset accounting system.

Porter also recommended tightening up the language about the Community Enhancement Fund and what the money could be used for.


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