March 1, 2008

McGuffey Park Homeowners’ Association

P.O. Box 1365

Ozark, MO 65721

HOA Members,

I have completed the annual audit of the McGuffey Park Homeowners’ Association books for the year ended December 31, 2007. Once again, Joanne Bennett has done an excellent job in maintaining the records in an orderly and consistent manner. The funds of the association appear to be properly handled and accounted for. Joanne has done a commendable job in maintaining appropriate records of expenditures in addition to making every effort to collect on all dues owed the association.

No discrepancies were noted and all expenditures appear to be appropriate. Additionally, all revenues appear to be properly recorded and reported. However, in an effort to maintain transparency and accountability, some minor suggestions to the Board of Directors of the HOA are recommended:

Ø Although the bank no longer verifies the dual signature requirement of the HOA, it is recommended the HOA maintain this requirement. With only three Board members, the dual signature clearly indicates approval of the majority of the board for the respective transaction. Although the bank alleviates itself of this responsibility, this can be verified during the annual audit for consistency. Additionally, when presenting a check for electronic account debit, the check would still be expected to include the proper signatures.

Ø While it is recognized that according to the covenants, the HOA has the ability to ensure that properties are maintained appropriately and charge the related expenditures to the respective property owner, this practice should be administered consistently. For yard maintenance, it is recommended that bids be taken at the beginning of the mowing season, with the bid awarded to the lowest bidder to perform all services needed. If the lowest bidder cannot keep up or withdraws, the next lowest bidder should be hired. This would ensure fairness to the specific homeowner and the association as a whole. Although the fees will eventually be paid back to the HOA, the time value of money is lost. This practice also gives the HOA a defendable position if the charges are disputed in court.

Ø Checks made payable to an HOA director, with the exception of professional fees to Director 2, should be signed by the remaining two directors. This ensures the knowledge of all directors and avoids any appearance of impropriety.

Ø Significant decisions made by the Board of Directors outside of general HOA meetings should be documented in meeting minutes. Although this would not be as important if dual signatures are maintained, since this practice indicates majority approval, it is still recommended to protect Board members should disputes arise at a later date.

If there are any questions, comments or concerns, please contact me at judyaug@gmail.com or 582-0332.

Respectfully submitted,

Judy Aug