M-100 Community Association Management 2023/ 2024 Exam Terms| Complete Guide with Verified Answers| 100% Correct

M-100 Community Association Management 2023/ 2024 Exam Terms| Complete Guide with Verified Answers| 100% Correct Q: Electronic data processing (EDP) insurance? Answer: This insurance may be needed for computer equipment, networks, websites, security systems, protection from hackers, and similar information technology exposures. Coverages vary so much that the community association needs to carefully evaluate its exposures and the ability of the EDP to meet those potential exposures to loss. EDP is one of the common insurance coverages for property exposures to loss. Q: Emergency services maintenance? Answer: This is the ability to respond to unpre- dictable maintenance problems (for example—sewer backups, elevator failures, roof leaks, frozen pipes, etc.). The key to a successful response to an emergency is to anticipate the different possibilities—and to develop a plan for responding to each one. Especially important is the development of a disaster plan to address possible natural and terrorist catastrophes. The other four types of maintenance include routine maintenance, preventative maintenance, requested maintenance, and reserve replacement. Q: Employee handbook? Answer: A written set of personnel policies and procedures that define the relationship between the association and its employees and explain the responsibilities of both parties. Depending upon the state in which you work, the content of an employee handbook can have legal implications. Q: Employers' Liability Insurance? Answer: —in this case, loss of services due to injuries received while working on behalf of the community association. Commercial insurers include employers' liability insurance with workers' compensation protection. Em- ployers' liability provides protection for claims made by injured employees (and their spouses) for certain types of liability that is excluded in the commercial general liability insurance (CGL). Every community association should consider obtaining workers' compensation and employers' liability insurance. Q: Employment agreement? Answer: A contract that formalizes the relationship between the association and the association-employed manager. The agreement should contain all of the basic components of a legal contract and: 1.Specify the manager's authority and duties 2.Establish a clear chain of command (For example—after a board makes a decision, the president must direct the manager to implement the decision before he or she can do so.) 3.Provide for the manager's compensation and termination 4.Be signed by authorized representatives of both parties—the community association and the "manager" Q: Employment at will? Answer: A statement that states that the association can dismiss an employee without cause at any time. This is commonly found in the personnel manual or employment agreement. The enforceability of an employment at will statement varies by state. Q: Engagement letter? Answer: When your community hires a certified public accountant (CPA), s/he will send the association an engagement letter, which is a legally-binding contract. This type of letter describes the: 1.Nature of the work to be done 2.Type of report to be prepared 3.Fee for services 4.Time frame for the assignment 5.Accoun- tant's disclaimers—statements about what the accountant's services do not include Q: Entire obligation provision? Answer: Standard contract provision stating that the writ- ten, signed contract constitutes the entire agreement between the parties. Except for any documents that are expressly referred to in the contract, neither party can claim that any other correspondence, communication, or documents contain obligations, promises, or requirements that are part of the binding contract between the parties. Q: Equal Employment Opportunity Commission (EEOC)? Answer: The federal govern- ment agency that prohibits discrimination against otherwise qualified people in hir- ing, promotion, dismissal, compensation, and working conditions based on specific personal characteristics including— 1.Race and ethnicity 2.Color 3.National origin 4.Age 5.Gender 6.Religion 7.Pregnancy 8.Disability Q: Ethics? Answer: Ethics involves learning what is right and wrong, and then doing the right thing—but "the right thing" is not nearly as straightforward as conveyed in a great deal of business ethics literature. What is an ethical guideline today is often translated to a law, regulation or rule tomorrow. Q: Eviction? Answer: The process of physically removing a tenant (not an owner) from a property. This process involves the local court system and the use of an attorney. Do not consider this alternative without consulting your community's attorney. Many jurisdictions do not permit eviction as a remedy for violations. Q: Excess revenue over expense? Answer: Excess revenue is the amount left after de- ducting expenses from revenue on a statement of revenue and expense. This is also known as a net gain. A loss occurs when expenses are greater than revenue. A loss is indicated by putting the figure in parentheses. The net revenue or loss can be significantly different depending on whether a cash, accrual, or modified cash basis is used. Q: Executive session? Answer: There are times when a board of directors must hold a discussion or make decisions of a sensitive nature. Many states have so-called "sunshine laws" which limit the reasons why a governing board may go into a closed or executive session. Executive sessions may be held to discuss sensitive items such as litigation, contract negotiation, issues of a sensitive nature or personnel matters. Typically, there are no minutes for an executive session as the proceedings are confidential and intended for discussion only. Once the board has decided on its course of action, it should reconvene to the regular board meeting to vote so that the decision is recorded in the minutes. The discussion leading to the decision remains confidential. Some state statutes limit how executive sessions can be used and how decisions made in executive sessions should be recorded. Q: Expenses? Answer: Expenses are the cost of goods and services used to operate and maintain the community's property. 1.Expenses on a cash basis statement consists of any amounts paid. 2.Expenses on an accrual basis statement consists of any amounts incurred, whether or not paid. 3.Expenses on a modified cash basis statement is generally reported on a cash basis. In a budget, there are three types of expenses: 1) Operating expenses: These are items which occur on a routine basis for the operation of the association. 2) Major improvement expenses or capital improvements: These consist of items that are not required for daily operations, but may be added later to enhance value— such as adding a gazebo or awnings. 3) Replacement funding: Amounts set aside for future replacement of existing major components. Q: Exposure avoidance? Answer: This risk control technique involves avoiding the circum- stances that would expose the community association to certain type of loss. For example, to avoid problems that may result from serving alcohol in the clubhouse, the community association has a rule prohibiting the use of alcohol in the facility. Q: Extra expense insurance? Answer: A common insurance coverage for income expo- sures to loss. There is usually a certain amount of this coverage in the Commercial Package Policy (CPP). It is useful to consider the community association's income exposure as a net exposure to loss because both lost revenue and increased operating expenses may be insurable. This insurance applies when a covered loss either increases operating expenses or diminishes the income produced by normal operations. An example would