QHRRP 9000-310

Expense Policy

 

Review/update responsibility
 Finance
Revision
 14 Oct 2024
Reference
 CCRE Article II Section 2.1(c)
Policy
 Capitalization guidelines issued by the American Institute of Certified Public Accounts (AICPA) for Common Interest Realty Associations (CIRAs) will be used to determine when community common property and equipment will be capitalized and when it will be expensed.
Real property directly associated
 For “Real Property” that is directly associated with the Unit [where the Unit is defined as lots owned by individual property owners within the Association]:

  • Expense Common Property without which the home could not be occupied.  Examples include:
    • Land
    • land improvements including perimeter fences and walls.
    • Roads and paving
    • Streetlights
    • Lock and lagoon system including bulkheads and dredging.
  • Restrictive covenants severely limit the ability of the Association to dispose of or change the use of these common properties.  The property provides no future economic benefits to the Association.  Instead, the common property is considered to increase the value of the property owned by the homeowners and thus benefit the homeowners, not the Association.
Real property NOT directly associated
 For “Real Property” that is NOT directly associated with the Unit (Association property that is not necessary for the use of the home, although individual lot owners may benefit from its use (e.g., swimming pool, recreational facilities, and access control facilities):

  • Expense Common Property that CANNOT be disposed of by the Board of Directors (BOD) for cash or claims to cash and that does not generate significant cash from members on the basis of usage or from non-members:
    • The access control building and associated security equipment is an example of such property.  Due to the location of the access control building it is highly unlikely it could be disposed of by the BOD for cash or claims of cash.  This is exemplified by the fact that even though access control services have been out-sourced, the Association retained title to the property and building.
Capitalization threshold
 The BOD has established $10,000 as the minimum threshold for capitalization.  Therefore, if common property or equipment meets the above criteria for capitalization but is under $10,000 it will be expensed.