Duties. The responsibilities of a budget/finance/spending committee will vary from association to association. It depends on the duties assigned to the committee by the board of directors. Duties might include:
- preparing a draft budget for the board to review and approve;
- reviewing the association's finances on an ongoing basis and making recommendations to the board regarding cost controls;
- soliciting and reviewing bids for maintenance projects;
- Setting long-term reserve funding goals, etc.
Board Members on Committee. If a quorum of board members attend a budget/finance committee meeting, it qualifies as a board meeting since matters discussed by the committee will, at some point, be presented to the board for action. Accordingly, four-day's notice must be given to the membership plus the posting of an agenda. Normally, the treasurer chairs the committee but there is no legal requirment that he/she do so. Committee members may consist of members and non-members, unless the association's governing documents require otherwise.
Committee Approval Re Spending. Unless the governing documents state otherwise, neither budgeting nor spending issues are required to pass through committees before being reviewed and approved by the board of directors. Even if a prior board established a procedure that all spending proposals first be reviewed by a finance committee, subsequent boards are not bound by those procedures. Internal board procedures created by one board can be altered or abandoned by any subsequent board.
Finance Subcommittee. Boards have a duty to review the association's finances. The Davis Stirling Act allows boards to create a subcommittee consisting of the treasurer and at least one other board member to review the association’s finances on a monthly basis. (Civ. Code § 5501.) The committee's review satisfies the board's review of finances required by Civil Code § 5500 once the board ratifies the review at their next open board meeting. The ratification must be noted in the board's meeting minutes.
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