Page 10 - CooperatorNews New Jersey Summer 2021

10 COOPERATORNEWS NEW JERSEY
—SUMMER 2021
NJ.COOPERATORNEWS.COM
FINANCE
Where Does It Go?
Th e Problem of Financial Leakage
BY A. J. SIDRANSKY
continued on page 11
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Th e vast majority of co-op and condo-
minium boards are well intentioned and work
diligently with their management and ac-
countants to draft and monitor their annual
budgets—and recalibrate them as necessary.
Despite their best eff orts to keep costs under
control, however, many communities fi nd
that expenses oft en exceed their projections.
Even in the absence of an unforeseen crisis or
major repair project, it oft en seems like money
is just leaking out of the system. Th e question
is, where does it go—and how can we plug up
the leaks when we fi nd them?
Financial Leakage Defi ned
Avi Zanjirian is a partner at the account-
ing fi rm of Czarnowski & Beer, and works
with clients in New Jersey and New York.
According to him, fi nancial leakage is more
oft en a result of inattention than of outright
negligence or fraud. To fi nd these blind spots,
“We look at it from an auditor’s perspective,”
he says. “You might be paying electric, water
usage, and repairs, and all are within budget.
But at the same time, you may not be look-
ing at all the line items regularly to make sure
they’re working effi ciently.” Zanjirian recom-
mends taking a hard look at every line item
in your budget on a year-to-year basis, and
assessing whether you’re getting the most for
your money (or even just getting what you’re
paying for) from your community’s vendors
and service providers. “Do you have the best
vendors, contract terms, etc.?” Zanjirian says.
“As contracts expire, you should be checking
this.”
Another factor Zanjirian points out is the
popularity of using autopay systems to send
out payment for recurring bills. While the
convenience of a ‘set it and forget it’ payment
option is undeniable, it can oft en mean that
less close attention is paid to cash outfl ow ev-
ery month. Th is is why it’s important to peri-
odically take a close look at your community’s
accounts payable, as well as to conduct an end
of year review to determine whether costs
went up, and if they did, why? “It could be be-
cause no one negotiated a new contract or a
misplaced charge,” says Zanjirian. “In terms
of metered services like electric and water, are
meter readings estimates or actual? Too much
stuff is on autopilot.”
He goes on to list other areas that should
be scrutinized: “Are we looking at real estate
taxes and protesting them every year, for ex-
ample? Another costly area is energy repairs,
supply and maintenance, and service con-
tracts. Th ese should be evaluated every two to
three years. Are rates competitive? Th e same
should be done with professional services like
auditors, attorneys, engineers, and architects.
Th ere’s also the minutia—things like cleaning
supplies. What’s cheaper? Mr. Clean versus
Fabuloso, for instance. But boards should re-
member, you generally get what you pay for—
especially with professional services—so don’t
try to save a few dollars on an attorney or an
accountant and expect top shelf service.”
According to Karen Sackstein, principal