HROA Acquisition Policy

PURPOSE

The purpose of this policy is to describe the different methods for goods and services expenditures and identify when these methods should be used.

GENERAL

The Board of Directors oversees all matters related to the Association and maintains absolute authority in regards to any responsibilities delegated to others to act in the Board of Director’s behalf. The Association’s Bylaws specify authority given to the Finance Committee, and the Treasurer and General Manager, who are both ex-officio members of the Finance Committee to generally oversee the financial affairs of the Association on behalf of the Board of Directors. The Association contracts with the General Manager to perform specified tasks regarding administrative management, budgets, audits, etc. and also employees a bookkeeper and other accounting assistants in this regard.

The Association maintains two (2) accounts from which expenditures for goods and services are disbursed, which are: an Operating Fund and a Reserve Fund.

Operating Fund: The General Manager has the authority to make normal and usual acquisitions as prescribed by the Board of Directors and/or by the Association’s approved operating budget. The Association causes to be paid the expenses for the operation of the Association as prescribed by the Board of Directors and/or in accordance with the approved budget, which generally requires that all expenses are to be reviewed and initialed by the General Manager, except for expenses purchased and acquired by the General Manager which require approval by other than the General Manager.

The General Manager is authorized to make any non-budgeted operating expenditures at its own discretion up to $1,000.00. The Finance Committee approves, through it’s Chairperson or Co-Chairperson, payment of all budgeted and unbudgeted expenditures and accounts of the Association, and summarizes for the Board of Directors quarterly all expenditures requested or incurred in excess of the adopted budget.

Emergency repairs involving the imminent danger to life or property, or is immediately necessary for the preservation and/or safety of the property, or for the safety of the members, or required to avoid the suspension of any necessary service, may be made by the General Manager irrespective of the cost limitation imposed by this section.

All new capital purchases are paid for out of the Operating Fund and require the approval of the Board of Directors whether budgeted or unbudgeted, and regardless of the amount. The approval of the Board of Directors shall be at a duly held meeting where the item is agendized and approved. The approval process may initially include the concept or agreement to seek bids for the expenditure. In any case the Board of Directors is responsible to award any bid for purchase.

To facilitate the purchase of small dollar items, the Association may use the Petty Cash account. Examples of Petty Cash purchases include: food items, gas reimbursement, maintenance or office supplies of less than $50.00, etc. Payments made from Petty Cash follow the same guidelines for all operating expenditures, including proper authorization and original receipts.

The Finance Committee oversees the appropriate accounting procedures and handling of cash transactions and deposits, and makes recommended changes, subject to approval of the Board of Directors if policy changes are recommended. The Finance Committee causes the conduction of any such investigation into suspicious or fraudulent activity regarding the same and reports any findings to the Board of
Directors.

All Operating Fund checks are to be signed by the Board Members and/or Officers.

Reserve Fund: The Board of Directors initiates and approves all expenditures to be made from the Reserve Fund, whether budgeted or unbudgeted, and regardless of the amount. The process must initially include the Board of Directors approval for the expenditure by the awarding of any bid for purchase. The Board of Directors is then also required to approve, by resolution signed by the President and Secretary of the Board, the actual payment of the expenditure from the Reserve Fund.

All Reserve Fund checks are to be signed by the Board Members.

BIDS FOR PURCHASE

General: The General Manager shall present to the Board of Directors bids received from insured vendors who are on the Finance Committee’s approved vendor list, and/or qualify within the specifications of any adopted Association Policies and Procedures as a new proposed vendor. The General Manager shall present the bids for acceptance to the Board of Directors, with the understanding that the final decision in establishing standards, specifications and criteria shall be the Board of Directors. It is assumed that absent any revision or request of the Board of Directors in this regard, any bid presented that is approved is deemed accepted under the terms in which it was submitted. It is the General Manager’s responsibility to assure the goods and services are obtained within the standards, specifications and criteria approved by the Board of Directors.

The Association shall make every effort to seek out a minimum of three (3) bids for each item to be purchased noting that it is assumed there is a competitive marketplace from which goods, services, professionals and consultants can be obtained. Acquisitions for which there may be no competitive marketplace, or where there is a unique relationship with the contractor, the Board of Directors may at their sole discretion accept or deny any bid presented to them requiring their approval.

The Finance Committee shall have the general oversight for obtaining competitive bids for goods and services and make recommendations to the Board of Directors regarding changes in all Association Policies and Procedures regarding the method of securing and processing the same.

Major Acquisitions: For purposes of this Policy, acquisitions of goods and services involving the total cumulative commitment of $10,000.00 or more shall be deemed as major. This definition also includes acquisitions that involve multiple deliveries and/or payments over the life of the contract. The Finance Committee shall review all major contracts at least on a quarterly basis to evaluate the fairness in said bidding process, to assure that appropriate licensing and insurance requirements are met and to assure that the Association’s Policies and Procedures are being followed. The Finance Committee shall cause the conduction of any such investigation regarding the same and report any findings to the Board of Directors.

Any additions or modifications that are made to a major contract subsequent to the signing of the original contract, whether out of the Operating Fund or the Reserve Fund will require a subsequent approval from the Board of Directors if the addition or modification is over $1,000.00.

The Finance Committee may request of the Board of Directors that they specifically oversee the bidding process for any specific major goods or services purchased. The decision to utilize the Finance Committee shall be at the discretion of the Board of Directors.