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If Records Separate, Funds May Be Combined

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By RICHARD WHITE, Tribune correspondent

Published: September 8, 2007

Can you explain what distinguishes a reserve account, a savings account and the assessment account?

We have one savings account to pay the insurance, and it is combined to draw

the best interest.

B.S.

Sebring

First understand that the budget is in three parts: the expense budget, the reserve budget and the income budget.

The expense budget covers expected expenses for the coming year. The reserve budget is to cover expenses in future years (mostly mandated by statute), and the income budget is the projected income to meet the expenses and reserves.

While each budget must have separate accounting records, sometimes the warehousing of the funds can be in the same account to receive better income.

The key is that the association must maintain good accounting records.

If your board has established an insurance account, it is only because insurance payments are annual and it is trying to collect the necessary payments and gain interest during the time it is collected until it is paid.

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