Community Association Management: Insurance, Contracts, and Financial Reporting, Exams of Business Administration

Download Community Association Management: Insurance, Contracts, and Financial Reporting and more Exams Business Administration in PDF only on Docsity! 1 CMCA EXAM REAL EXAM 150 QUESTIONS AND CORRECT ANSWERS(VERIFIED ANSWERS) Why are special membership meetings held? - ANSWER>>To conduct specific business Executive sessions should typically be used for discussing which of the following issues: - ANSWER>>Member's delinquency Which of the following is a duty of a manager attending a board meeting? - ANSWER>>Be the time keeper. If the governing documents and laws present conflicting notice periods, follow: - ANSWER>>Follow state laws If an owner fails to receive notice of a meeting, the association is not responsible if the owner: - ANSWER>>Did not notify the association of their current address. Board meeting minutes should include which of the following: - ANSWER>>Exact wording of each motion. If a proxy vote needs to be approved, the best option for an approver would be: - ANSWER>>The secretary. Where would a manager find guidelines regarding the association's responsibility for maintaining physical assets? - ANSWER>>Board resolutions. The primary management control tool for identifying whether the association needs to maintain a particular property element is: - ANSWER>>Maintenance responsibility chart. To determine which physical assets must be maintained by the association, the manager should: - ANSWER>>Review the association governing documents. Which of the following is a common management control for ensuring maintenance work is performed in a timely manner? - ANSWER>>A work order/response form. When monitoring maintenance of an association's swimming pool, which of the following should be entered into a permanent log at regular intervals? - ANSWER>>Chlorine level readings. 1 Which of the following is an example of an association control system? - ANSWER>>Frequent neighborhood inspections. 1 Rather than describing the scope of work in detail in the contract, a manager may: - ANSWER>>Attach bid specifications. Alternative dispute resolution includes which of the following methods? - ANSWER>>Mediation. Employment contracts need not include: - ANSWER>>Interests. In terms of compensation, a contract should state: - ANSWER>>When and on what terms payment(s) will be made. Preparing a bid request includes which of the following? - ANSWER>>Identifying potential contractors. For which project would a board most likely want to use a consultant to help develop bid specifications? - ANSWER>>Repairing and/or replacing all roofs. In what type of a contract would a waiver of lien be recommended? - ANSWER>>Re- roofing the buildings. When a dispute is mediated, an uninvolved third party facilitates discussion and: - ANSWER>>Assists both parties in reaching a mutually acceptable agreement. You have a proprietary lease in XYZ development. Which of the following best describes your interest in the property? - ANSWER>>Stock membership. Management conducts its tasks for the day to day operation of the association in accordance with the: - ANSWER>>Contract. The Board of Directors receives its authority to perform its specific duties through the: - ANSWER>>Governing documents. Which of the following is within the authority of the Board of Directors? - ANSWER>>Establishing programs. In preparing the association's annual financial report, many governing documents specify: - ANSWER>>Retaining an independent certified public accountant. In an initial letter you send to an owner who has violated one of the association's adopted rules, which of the following is included? - ANSWER>>The offer to meet to hear the owner's viewpoint. In the hierarchy of a community association's governing documents, which of the following is the highest authority? - ANSWER>>Declaration. 1 When developing a rule, it must be consistent with: - ANSWER>>Applicable statutes and governing documents. A board exercises its fiduciary responsibility by: - ANSWER>>Establishing internal controls. The primary purpose of a community association is to: - ANSWER>>Deal with governance and business Who has the ultimate responsibility for the care and maintenance of the common areas, facilities, and physical property? - ANSWER>>The Board of Directors. What "duty" do the Board members and the manager have to the members? - ANSWER>>Loyalty. Which of the following would impact the operation of a newly installed entry control system? - ANSWER>>Communicating the access control policy to residents Which of the following has the greatest regulatory influence on the management of a community association? - ANSWER>>Specific state statutes. What are the two essential financial documents the board of directors should use to determine the amount of funds available for an unbudgeted expense? - ANSWER>>Balance sheet and statement of revenue and expense. What is the purpose of a Management Letter? - ANSWER>>To note problem areas in an association's financial operations and recommend modifications and improvements.To note problem areas in an association's financial operations and recommend modifications and improvements. The interim financial report should, at minimum, include a: - ANSWER>>Statement of income and expenses, account balance, and a balance sheet. The manager is not usually responsible for preparing the: - ANSWER>>Tax returns. Your association just completed the eighth month of its fiscal year. Which financial report would be most useful to project year end expenses? - ANSWER>>Statement of revenue and expense. A significant decline in the amount of investments is most likely the result of: - - ANSWER>>Expenditures out of reserve funds. If you want to know the difference between actual and budget figures for a 1 revenue account, to which documents should you refer? - ANSWER>>Statement of Income and Expenses and Budget 1 What duty does the BOD and manager have to its members? - ANSWER>>Loyalty management conducts its day to day operation of the association in accordance with: - ANSWER>>contract in an initial letter you send to an owner who has violated one of the associations adopted rules, what is the best way to get the owner in compliance? - ANSWER>>Offer to meet to hear the owner's viewpoint If you have a proprietary lease in a development, what is your best interest in the property? - ANSWER>>stock membership a board exercises its fiduciary responsibility by: - ANSWER>>establishing internal controls. the primary purpose of a community association is to - ANSWER>>deal with governance and business in the hierarchy of a community associations governing documents, what is the highest authority? - ANSWER>>declaration who has the ultimate responsibility for the care and maintenance of the common areas, facilities, and physical property? - ANSWER>>the board of directors where would a manager find guidelines regarding the associations responsibility for maintaining the physical assets? - ANSWER>>board resolutions to determine which physical assets must be maintained by the association, the manager should: - ANSWER>>review the association governing documents a work order: - ANSWER>>assigns maintenance tasks the primary management control tool for identifying whether the association needs to maintain a particular property element is: - ANSWER>>maintenance responsibility chart when monitoring maintenance of an associations swimming pool, what should be entered in a permanent log regularly? - ANSWER>>chlorine level readings common management control to ensure that maintenance work is performed in a timely manner? - ANSWER>>a work order/response form rather than describing the scope of work in detail in the contract, a 1 manager may - ANSWER>>attach bid specifications in terms of compensation, a contract should state: - ANSWER>>when and on what terms payments will be made 1 legal review prior to executing a contract will assist the association in the event that: - ANSWER>>the BOD has questions or concerns in older condominiums, an association should have what type of contract covering mechanical equipment? - ANSWER>>preventive maintenance preparing a bid request includes: - ANSWER>>identifying potential contractors employment contracts need not include: - ANSWER>>interests a type of insurance coverage that has limited value to a community association: - ANSWER>>assessment fee receivable A component of building ordinance insurance coverage includes: - ANSWER>>extra demolition what section of an insurance policy describes the coverage limits, deductibles, policy period, and premium? - ANSWER>>declaration page liability claims should be sent to the insurer: - ANSWER>>without admitting negligence when an association contracts all of its employees, it is a best business practice to: - ANSWER>>negotiate contracts within the bidding process what does coinsurance obligate the association to do? - ANSWER>>maintain certain limits of insurance to provide a payment to the insurance deductible, you would: - ANSWER>>allow for costs in the operating budget directors and officers liability insurance is designed to cover claims resulting from - ANSWER>>wrongful acts of employees of the association the purpose of a personnel manual or employee handbook is to: - ANSWER>>explain employee rights and responsibilities what is the best way to communicate managements expectation for an employee to complete regular and special tasks during a certain time period? - ANSWER>>establishing performance goals discipline as a part of HR management can include: - ANSWER>>counseling the employees which tool is the most effective for defining employees duties? - 1 ANSWER>>statement of income and expenses, account balance, and a balance sheet 1 the manager is not usually responsible for preparing the: - ANSWER>>tax returns what is the purpose of a management letter? - ANSWER>>to note the problem areas in an associations financial operations and recommed modifications and a significant decline in the amount of investments is mist likely the result of: - ANSWER>>expenditures out of reserve funds if you want to know the difference between the actual and the budget figures for a revenue account, to which documents should you refer? - ANSWER>>statement of income and expenses and budget on what basis is the community association reporting its finances when the financial reports indicate income when received and expenses when paid? - ANSWER>>cash basis your association just completed its eighth month in the fiscal year. which financial report would be most useful to project year end expenses? - ANSWER>>statement of revenue and expenses Preparing a bid request includes which of the following: A. Verifying References. B. Identifying potential contractors. C. Recommending a contractor to the board. D. Verifying contractor insurance. - ANSWER>>B. Identifying potential contractors. Legal review prior to executing a contract will assist the association in the event that: A. A subcontractor is used. B. A performance bond is required. C. There is a budgetary shortfall. D. The board has questions or concerns. - ANSWER>>D. The board has questions or concerns. Rather than describing the scope of work in detail in the contract, a manager may: A. Attach the bid specifications. B. Call each contractor to describe the job. C. Be on-site to oversee project content. D. Suggest the board meet the contractor to talk about the scope of work. - ANSWER>>A. Attach the bid specifications. In older condominiums, an association should have what type of contract covering mechanical equipment? 1 A. Time and materials B. Specific repair C. Service 1 Discipline as a part of the HR management can include: A. Counseling the employee B. Selecting using a progressive system C. Terminating an under-performing employee D. Gathering performance information from other employees - ANSWER>>A. Counseling the employee Which tool is mot effective for defining the employees duties? A. Personnel Policy B. Job Description C. Routine performance reviews D. State or local labor regulations - ANSWER>>B. Job Description The purpose of a personnel manual or employee handbook is to: A. Provide the format for job evaluations B. Define individual job descriptions C. Detail the programs the company offers D. Explain he employee rights and responsibilities - ANSWER>>D. Explain he employee rights and responsibilities What "duty" do the Board members and the manager have to the members? A. Accountability B. Loyalty C. Service D. Conduct - ANSWER>>B. Loyalty Which of the following would impact the operation of a newly installed entry control system? A. Communicating the access control policy to residents B. Identifying warranty procedures C. Developing a capital replacement budget line item D.Informing the associations insurance agent - ANSWER>>A. Communicating the access control policy to residents Who has the ultimate responsibility for the care and maintenance of the common areas, facilities and physical property? A. The board of directors B. The association manager C. The developer until turnover D. The executive committee - ANSWER>>A. The board of directors In an initial letter you end to an owner who has violated one of the associations adopted rules, which of the following is included? 1 A. The amount of fine assessed B. Steps to amend the rules 1 C. The offer to meet to hear the owners viewpoint D. What the outcome of similar cases has been - ANSWER>>C. The offer to meet to hear the owners viewpoint