SECTION 4 FINANCIAL MANAGEMENT

Income Collections ............................................................................................................................. 3 Method of Payment .................................................................................................................. 3 Accepting Payments ................................................................................................................ 3 General Collection Guidelines .................................................................................................. 4 Telephone Collection................................................................................................................ 5 Banking Procedures ................................................................................................................. 6 Accounts with On-Line Access ................................................................................... 6 Accounts without On-Line Access ............................................................................. 7 Late Fees - Standard Charges ........................................................................................................... 8 Non-Sufficient Checks ........................................................................................................................ 8 Notice of Non-Sufficient Check (Sample)................................................................................. 9 Bankruptcy ........................................................................................................................................... 9 Purchasing Guidelines ..................................................................................................................... 10 Capital Purchase Log ........................................................................................................... 13 Inventory Log ....................................................................................................................... 13 Request to Exceed Budget .................................................................................................. 13 Ordering Office Supplies ................................................................................................................. 13 Office Supply via web.......................................................................................................... 14 Invoice Processing ........................................................................................................................... 14 Electric Bill Verification ....................................................................................................... 15 Check Requests .................................................................................................................... 16 Eviction Check Requests .................................................................................................... 16 Check Request Form .......................................................................................................... 16 Petty Cash .......................................................................................................................................... 18 Acknowledgement of Petty Cash ........................................................................................... 18 Petty Cash Reimbursement ................................................................................................... 19 Vendor Procedures ........................................................................................................................... 19 Vendor Request Form ............................................................................................................ 19 W-9 ......................................................................................................................................... 19 Budget ................................................................................................................................................ 20 Computer-Generated Reports ........................................................................................................ 21 Weekly Reporting ............................................................................................................................ 21 Weekly Report .................................................................................................................... 21 Monthly Reporting ............................................................................................................................ 22 PmPro Close Out Coversheet ............................................................................................ 22 PmPro Close Out Balancing Checklist .............................................................................. 22 Community Assessment Survey ................................................................................... 22 Vacant Unit Cost Analysis (VUCA) ..................................................................................... 22 Market Survey ..................................................................................................................... 22 Long Distance Log .............................................................................................................. 22 Employee Update ................................................................................................................ 22 Supervisor Close Out Balancing Sheet ............................................................................. 22

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Adara Communities Standard Operating Procedures | Financial Management

INCOME COLLECTIONS
Method of Payment The primary methods of payment for all fees, rents and deposits are the following:

Online via Adara Res-Link Portal or rentpayment.com (if applicable) Personal check Money order Certified check Debit (ACH with VISA/MC logo) or Credit Card (if applicable)
o If Debit/Credit Cards are accepted via a machine in the office, a signed receipt for every transaction must be obtained. Credit Card Authorization Forms as a part of the lease are no longer acceptable. Cash may not be accepted.

Accepting Payments
All checks, money orders, and certified checks must be made payable to the community (DBA name only). Prior to accepting
checks, money orders, and certified checks the apartment number needs to be indicated on the front of the check, money order and/or certified check (written by the resident/payee).

Immediately after accepting: date stamp on the front of the check top right hand corner and stamp all checks/money orders
on the back with the communitys bank endorsement stamp. The following checks may not be accepted:

Post dated checks Temporary Check (all checks must be pre-printed) Partial payments unless approved by your District Manager Two party checks, i.e. checks made out to the resident from someone else and then endorsed to the company
All revenue must remain in a locked area or safe until deposited. Deposit the funds immediately and attach the validated deposit slip to the batch transmittal daily. From the 1st of the Month up to the 15th, Deposits must be made twice daily and one time a day for the duration of the month. Do not keep more than $200 in rent on-site overnight.

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Adara Communities Standard Operating Procedures | Financial Management General Collection Guidelines Making sure that residents understand the collection policies of your community is the first step to avoiding collection problems. Explain the following: Rent due date Late charges and date late charges are assessed Rent Collection Outline NSF charges The Lockout Process Eviction policies

Remember:

You must treat people consistently and follow the terms of the Lease Agreement.

The following are generally the minimum procedures that must be implemented when a resident has not paid rent. The responsible party for the collection process is the office employee who must sign all appropriate letters, notices and/or forms.

GRACE PERIOD All rent and associated fees are due on the first of the month unless otherwise stated in the lease. Typically, there is a grace period that ends with a date stated in the lease in which the rent is late and no penalties are charged.

FIRST NOTICE-COURTESY NOTICE On the 3rd day of the month, send a friendly/courtesy reminder letter to inform residents they will be late on rent if not received before the 4th. SECOND NOTICE-DEMAND NOTICE This notice is the official notice which states that, unless rent is received within a specific time period, legal (eviction) proceedings will begin and demands possession of the apartment. This notice must contain the amount of rent, late charges, and legal fees (if applicable) owed. A three-day pay or vacate and intent to lock out notice (where applicable) must be delivered by the initial late date of the month to all residents who are delinquent. By the 10th of the month, eviction proceedings must be underway for all residents who have not yet paid their rent and other monthly charges. This notice must be photocopied. The original is delivered according to state law. If you cannot gain entrance to the apartment, the notice must be mailed by certified mail (keep the receipt) and the copy is to be placed in the resident file. Refer to the Landlord-Tenant law of your state to determine the proper date and procedures for a demand notice. (Example Houston, TX: If hand delivered it must be delivered to someone over the age of 18, if no one is home post on the inside of the front door.

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Adara Communities Standard Operating Procedures | Financial Management If you cannot gain entrance to the apartment, the notice must be mailed by certified mail (keep the receipt)). Once a demand notice is served, begin to accrue late charges and only accept payment in full with a cashiers check or money order.

Note: Notices must not be taped on the EXTERIOR of the door.

REMINDER: NO NOTICE IS EVER TAPED TO AN EXTERIOR FRONT DOOR..

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Adara Communities Standard Operating Procedures | Financial Management

LEGAL ACTION
Refer to the Landlord-Tenant law for your state for the required documentation and fees to file for eviction. NOTE: It is your responsibility to understand and comply with state and local laws regarding eviction. For specific questions, contact your District Manager. Telephone Collection Every resident who is delinquent with rental payments or other charges must be contacted by telephone. These calls must begin on the 4th of the month and continue daily until a conversation occurs with the resident and a commitment is made to pay or a move out date has been established. Always remember to document the conversation. Certain telephone procedures must be followed: You may leave a message on an answering machine or with a co-worker or anyone answering the phone, but you may not indicate that your call concerns a delinquent payment. Simply leave a message with your name and phone number. When you discuss payment with a resident, make sure that the resident understands the collection procedures. Update Delinquent Report

RESIDENT COMMUNICATION LOG COLLECTION COMPANY POLICY DAILY DEPOSIT PROCEDURE MEMO

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Adara Communities Standard Operating Procedures | Financial Management

BANKING PROCEDURES
For Accounts with Online Access **YOUR COMMUNITY WILL BE NOTIFIED OF WHAT PROCEDURE TO FOLLOW** Deposits are to be made twice daily from the 1st to the 15th of each month. By 4:00 p.m. any pending deposit exceeding $200.00 must be banked. The only exceptions are pending Security Deposits. Do not put more than $15,000.00 and/or 17 items on one deposit slip at a time. All deposited items must be photocopied prior to depositing at the bank. Copies must be filed (bundled by the batch) in the Accounting Folder. After making a deposit, make a copy of the deposit slip showing the bank validation. (Some banks stamp the validation on the back of the deposit slip and some on the front. If your bank stamps on the back, ask them if it is possible to stamp the front of the slip. If the stamp is on the back, a copy of the front and the back must be made.) If they give a separate validation receipt a copy must be faxed along with the copy of the deposit slip. It is not necessary to send copies of each check and money order. Copies of checks and money orders are to remain at the community with closeout.

Do not accept personal checks after the late payment date of each month. Money orders must be completed by the resident that is presenting it, no exceptions (PROPERTY NAME, RESIDENT NAME AND APARTMENT NUMBER REQUIRED). CASH IS NOT TO BE ACCEPTED FOR ANY REASON. All application fees, security deposits and prorated rents must be in the form of a cashiers check or a money order. Personal checks must be preprinted with the issuers name and address and will only be accepted after thirty (30) days of established residency. ALL APPLICATION, ADMIN FEES and DEPOSITS must be written as separate cashier checks or money orders. No Temporary, Two-Party/Third-Party or Foreign checks may be accepted. Post all checks and money orders prior to banking the deposits. Run a tape to make sure the deposit slip totals match the batch entered in the computer. By 4:00pm each day a Total Batch Deposit Report, reflecting that days deposits, must be faxed to your assigned corporate administrator at: Houston: (832) 249-2569 (832) 249-2566 (832) 415-0333 Long-Distance: (888) 887-1073 (866) 888-8534 If your community has a separate account for depositing security deposits, please make sure you are entering your deposits into the proper account. Fax the deposits to the Corporate Office as soon as you return from the bank. Make sure that the validation is included. PLEASE DO NOT REDUCE THE SIZE OF THE DEPOSIT SLIPS BEFORE FAXING. Indicate on the fax copies and when calling the Corporate Office, which deposits are security and which are not. You must keep a deposit log on site to record the name of the person who took your deposit and the date it was called in. Some of the deposits are very faint, it will help if you will write on the side of the copy of the slip, in big letters, the name of the community, the batch number and the total amount of the deposit before you fax it to the Corporate Office. A cover sheet for the faxes is not necessary if all of the above information is included on the deposit page.

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Adara Communities Standard Operating Procedures | Financial Management LATE FEES STANDARD CHARGES

charges begin and are determined as stated on the lease agreement. Your District Manager will advise you of the Late
standard late charges for your area and the maximum amount of late charges you may charge a resident each month as restricted by local/state law or regulations.

NSF checks are charged late fees up until the NSF check is replaced as restricted by local/state law or regulations. All
All late payments must be made by cashiers check or money order. Personal checks are not accepted after late charges are assessed for a period of at least six months.

All late fees must be applied equally and cannot be waived arbitrarily.

NON-SUFFICIENT CHECKS As soon as you have knowledge that a check is returned to your community, a NSF letter (along with the standard Notice to Vacate) must immediately be sent to the resident. You must place this letter in a visible spot inside the residents apartment (posted on the inside of the front door). If you do not receive a response, a Demand Notice (a 10 day letter of demand is to be sent certified mail) is to follow within 24 hours. Policies regarding non-sufficient fund checks are as follows: It is against company policy to run a residents check through the bank twice, and another personal check cannot be accepted, therefore payment must be made with a money order or cashiers check. Cash is not accepted under any circumstances. Standard fees for non-sufficient funds checks are determined by the lease agreement and state laws. Non-sufficient funds fees cannot be waived under any circumstance. Late fees are assessed through the day the resident replaces the nonsufficient check with a money order or cashiers check. After a resident has written one non-sufficient funds check, he or she will be required to make rental payments either by a money order or cashiers check for the remainder of their lease. If the resident still attempts to pay by check, use an appropriate letter and return the check to the resident. With few exceptions the bank returns all NSF checks to the Corporate Office. When received, each community manager or bookkeeper is emailed immediately so the appropriate steps can be taken to collect on the returned checks. Because all NSF checks are reported via email you are required to check your email at least twice a day. A read receipt email will be sent with each NSF notification. Always check yes to send the return receipt. Returned checks will then be mailed to the community. When an NSF has been collected, properties are to email corporate with payment information (apartment number, date paid, and the amount including fees paid). NOTICE OF NON-SUFFICIENT CHECK LETTER FOR MONEY ORDER ONLY RESIDENTS

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Adara Communities Standard Operating Procedures | Financial Management

BANKRUPTCY
If a resident in your community files for bankruptcy, contact your District Manager for instructions. The following commentary on the Federal Bankruptcy Code was written by Larry Niemann, legal counsel to the Texas Apartment Association. BANKRUPTCY CODE (Federal)

by Larry Niemann Commentary. The following is a laymens summary of the more important parts of the federal Bankruptcy Code. A number of provisions in the Code both hurt and help residential owners. A brief summary of the more important provisions of the Bankruptcy Code are described below. THREE KINDS OF BANKRUPTCIES. A bankruptcy under Chapter 7 is straight bankruptcy, i.e., where the debtor permanently gives up and the creditors usually eat the carcass to the bone. A bankruptcy under Chapter 11 is reorganization bankruptcy in which collection by creditors is delayed with the stated goal that everyone will eventually get paid in full. Usually a reorganization bankruptcy is strung out over a long period of time. Most Chapter 11 bankruptcies result in partial payments to the creditors just as in a Chapter 7 bankruptcy. A bankruptcy under Chapter 13 is also a reorganization bankruptcy for persons with few assets, a limited amount of debt and uncomplicated financial conditions. THE BANKRUPTCY PLAYERS. There are a number of different parties and names commonly used in bankruptcies. The debtor is a person or corporation which is declaring bankruptcy. The creditors are persons to whom the debtor owes money. The court is the judge. The trustee is a layman or lawyer appointed by the judge to make some decisions in administering the bankruptcy on a non-biased, third-party basis. A trustee often recommends certain courses of action to the judge after negotiations with the debtors attorney and the creditors. The attorney for the debtor is just that. A debtor in possession is a debtor in a Chapter 11 reorganization bankruptcy in which the court normally allows the debtor to continue to operate the business, but under strict court instructions. IMPORTANT PROVISIONS OF THE CODE. The Bankruptcy Code is quite lengthy. Some of the more important sections which apply to the residential landlord-tenant relationship are noted here. Section 362. AUTOMATIC STAY. This section states that the mere filing of the bankruptcy petition automatically stays all litigation and all self-help remedies of owners, including the exercise of a landlords lien, termination of utilities, lockouts, etc. The stay applies even if the owner does not know of the bankruptcy. However, an owner cannot be found in contempt of the bankruptcy judges stay order unless the owner has received actual notice of the filing of the bankruptcy petition, either directly by formal notice or indirectly by word of mouth. Copyright, TAA

If you hear rumors of the residents bankruptcy or if you are told by the resident of his bankruptcy, it is usually advisable to ask the debtors lawyer or call the bankruptcy court to verify whether a bankruptcy petition has been filed. It is risky to trust the word of the self-proclaimed bankrupt. If you do not check, you may spend a lot of money on attorneys fees in pursuing litigation, only to have the result pulled out from under you when you later discover that the resident had filed bankruptcy prior to your litigation or self-help remedies. On the other hand, if you do check and find out that the alleged bankruptcy was a bluff, you will know that it is safe to proceed after all. Section 362 (a) (3). REPOSSESSION STAYED. This clause says that the courts stay order prevents eviction of the resident and repossession of the leased premises by the owner, even if eviction and repossession is specifically authorized in your lease. It Page 8

Adara Communities Standard Operating Procedures | Financial Management makes no difference whether the lease term has expired before or during the bankruptcy. Section 362 (c). AUTOMATIC TERMINATION OF STAY IN RESIDENTIAL LEASES. In bankruptcies under Chapter 7, the lease is automatically terminated 60 days from date of bankruptcy filing unless the lease is expressly assumed by the resident. In Chapter 11 bankruptcies (reorganization), the lease is not automatically terminated until the courts confirmation of the debtors reorganization playand that could take a long time. If the rent losses or damages are great enough for the owner, he must apply to the court to lift the stay under Section 362(d) so he can evict the resident for nonpayment of rent. The bankruptcy does not operate to wipe out rents accruing after the filing date of the bankruptcy, but payment of those rents is likely to be very slow. Section 362(d). LIFTING OF THE STAY. In both straight bankruptcies (Chapter 7) and the reorganization bankruptcies (Chapter 11), the stay against litigation and self-help remedies remains in effect until the bankruptcy case is closed or until there is a court order lifting the stay. Obviously, it is in the best interest of the owner to get the stay lifted as soon as possible. You will need a lawyer to do so. It is fairly easy to accomplish. The judge must hear the motion to lift the stay within 30 days after filing. If the stay is lifted by the court, the owner can evict or sue the resident for nonpayment of rent or other defaults. Therefore, the wisdom of immediate courthouse action by the owner is obvious. Do not dally. The sooner you can file your complaint to lift the stay, the better off you will be. Section 365. ASSIGNMENT OF LEASE BY TENANT. Also, if the trustee or debtor-in-possession has assumed the lease, he is authorized to assign the lease to others even if the lease expressly prohibits such assignment. But if it is so assigned, the assignee must assume liability under the lease and such assignee must be reasonably able to pay. The court must be assured of future performance by such assignee. There is one important exception to the trustees (or debtor-in-possessions) right to assign a lease which he has assumed. It cannot be assigned if, under the state statute, such assignment would be prohibited. Fortunately, under the Texas statutes, residents (and therefore bankruptcy trustees) are prohibited from assigning or subletting by virtue of Section 91.005 of the Texas Community Code. Therefore, in Texas, the trustee or debtor-in-possession cannot assign a lease unless the owner has waived the statute by specifically authorizing assignment or subletting in the lease itself. Section 522(f). RESIDENTIAL LANDLORDS LIEN (Texas only). If an individual person has rented a dwelling unit and thereafter files for bankruptcy, and the owner did not exercise a landlords lien before the resident filed, then the owners landlords lien in that persons residential lease is virtually worthless to the owner. This is because Section 522(f) states that in both Chapter 7 and Chapter 11 bankruptcies, non-purchase money liens and non-possessory liens on the debtors personal items such as personal household goods, clothes and jewelry, are voidable at the option of the debtor. Copyright, TAA Section 553. OFFSET BY LANDLORD. The owner has the right to offset monies by the owner to the resident against money owed by the resident. This offset is on a one-to-one basis. For example, a security deposit can be offset against rent due prior to or after bankruptcy filing, dollar for dollar. Obviously, the higher the security deposit, the less the owner will be hurt in a bankruptcy. If a resident has prepaid the last months rent, the Bankruptcy Code does not require the owner to offset such prepaid rent against monies due by the resident to the owner. Court permission may be required for such offsets under some circumstances. WAYS TO AVOID BEING HURT BY RESIDENTS BANKRUPTCY 1. Inquire on the rental application whether the resident has filed bankruptcy before. 2. Get higher security deposits since they can be offset against monies owed by the resident, dollar for dollar. 3. All occupants over the age of 18 must be listed as lease holders since bankruptcy by one of multiple residents does not release the other from liability. 4. Exercise landlords lien quickly and sell quickly before the resident can declare bankruptcy. (Texas only.) 5. Evict quickly when the resident becomes delinquent. 6. Negotiate a settlement with the resident to forgive past rent if the resident will move immediately. 7. If all else fails, go to a lawyer quickly when the resident has filed bankruptcy.

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Adara Communities Standard Operating Procedures | Financial Management

PURCHASING GUIDELINES
Every employee has an obligation to the company to make well informed and wise financial decisions when purchasing for the community. The following guidelines have been established to help you in this ongoing effort.

Only the Community Manager has the authority to approve purchases on the site level. All major purchases that exceed the current monthly budget must have written District Manager approval on the Request To Exceed Budget form prior to ordering. Shop and compare prices but be sure to take into account sales tax, delivery charges, staff time, delays, etc.. A product may look less expensive on price alone but may cost more after these factors are considered. When making purchases outside of approved vendors a three-bid process must take place and the selected vendor must be approved by the contract department prior to purchase. Never purchase anything through telemarketing sales such as light bulbs, office supplies, etc. Often these offers are scams. Orders must be consistent with the manner in which the community budget was prepared and in line with available storage. Always prepare written specifications when shopping for a service such as painting or cleaning. Some of these are supplied to you in the Resident Services section of this manual. If you need help with this, discuss it with your District Manager. Capital Purchase Log Inventory Log Request to exceed budget

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Adara Communities Standard Operating Procedures | Financial Management

OFFICE SUPPLIES ORDERING

Office supplies are ordered via the web at: https://business.officedepot.com/ Log-In ID your log in ID must be the 10-digit telephone number to your community. Password when you log in for the first time, type in the word password (without the quotations). This automatically directs you to a page that will say your password has expired. At this point, you will be able to pick your own personal password that only you will know and remember. Place your order by using item numbers found in your Office Depot catalog or online. When placing an order you MUST always consult the corporate list provided in the web site under My Shopping Lists. Almost everything a community needs is on this list. (we receive a discount on these items, please keep that in mind when ordering). Some items are not on the corporate list, example: toners, cartridges, and other special items needed for your office equipment. These item numbers are also found online; any item numbers that you cannot find feel free to contact the Corporate Office for assistance (Please see the property resource page for the corporate staff member that handles your account). After you have entered all of your item numbers and saved them in your shopping cart, review all order information for accuracy, and click on purchase now. This will complete your order and send an email to corporate to be reviewed and released. All orders must be placed by 2:00 p.m. to allow time for review, in order to be received by the next day. Only order necessary items and use your monthly budget wisely. Once a community has exceeded their budget, they will not be allowed to order again until the following month. If you have any questions or problems always contact Corporate Office, never contact Office Depot directly.

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Adara Communities Standard Operating Procedures | Financial Management

INVOICE PROCESSING
The following procedures must be followed when processing invoices: When an invoice is received, review it for accuracy. If any adjustments are needed, contact the vendor before proceeding. If the invoice is showing a past due balance more than one month old, investigate it by referring to your invoice accounts payable tracking. If the past due balance has not been paid or posted in the computer, contact the vendor for a copy of the original invoice to submit for payment. If you request payment of past due balances or an amount different from the invoice amount, specify the reason on the invoice. When a statement (each vendor must be providing the community a monthly statement, this can be used to audit the invoices entered into the accounting system) is received, verify that the invoices covered by the statement have been submitted for payment. If the statement includes an invoice that you have not received, call the vendor and request a copy of the original invoice to submit for payment. On some statements, you may notice an un-applied payment along with outstanding invoices. Indicate where the payment must be applied and send the statement back to the vendor for processing. Do not submit a statement for payment. The only exception is a vendor who only uses statements as their invoices. Must you ever need to submit a copy of an invoice for payment, indicate on the invoice why the original was not obtained. Remittance Advices are sent with the check to the vendor. Do not stamp or write on the remittance portion of an invoice. After following the above procedures, code the invoice using the chart of accounts. Once completed, the invoice is ready to submit for payment. Invoices must be entered weekly and sent to the Corporate Office. After the invoice has been entered, print the DBA Invoice and staple it to the back of the original copy. Copies of all invoices must be kept on site in the vendors file.

Electric Bill Verification All vacant unit circuit breakers must be turned off after make ready has been completed except show units that are vacant ready. Be sure to leave the breaker to the refrigerator on. The service must be disconnected prior to the new resident moving in. In the event that a high bill is due because of failure to transfer to/from resident in occupied units, a copy of the bill with the prorated amount to be collected from the resident will be faxed to the community. The average vacant cost per month may not exceed $35 per month. Balances due from residents must be collected and documented on the resident ledger. Please update this daily, as the area District Manager will be checking periodically. Employees living on-site are required to connect personal utilities in his/her name and are not permitted to use the community account. Any employee found not in compliance may receive disciplinary action up to termination.

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Adara Communities Standard Operating Procedures | Financial Management

CHECK REQUESTS
A Check Request Form must be submitted for all miscellaneous and non-vendor related requests. Since check requests are submitted with your check runs for processing, plan ahead if requesting funds for a resident/marketing function. A description of the request must be included. District Manager approval must be obtained prior to the submission of the request. Original receipt(s) must be mailed to the Corporate Office within 10 days of receipt of check. Additional check requests will not be processed if the original backup for a previous check request has not been received in the Corporate Office. Unused funds must be deposited within 24 hours, on a separate deposit slip and are not faxed into Corporate as a deposit. Once deposited, fax the validated deposit slip to the appropriate A/P staff. Unused checks need to be marked void, faxed and returned to the Corporate Office immediately. Eviction Check Requests Eviction check requests should be submitted on or before the 8th of each month. A check request form must include all relevant information such as, name of resident(s), unit number and description of legal action such as eviction, writ, etc., including District Manager approval. Within 48 hours of receipt of check, back up such as filing document, receipt, etc. must be faxed to the appropriate A/P staff member and originals must be mailed after the faxes have transmitted properly. Unused funds issued to the Manager or Asst. Manger must be deposited on a separate deposit slip, with validated slip faxed to the Corporate Office within 48 hours of receipt of check. Unused checks issued to the Judge or Community Manager must be marked void, faxed and returned to the Corporate Office immediately. No additional eviction check requests will be processed until back-up receipts are received in the Corporate Office. Eviction money cannot be used for any other purposes.

PETTY CASH A Petty Cash Fund is established for each community for the Community Managers use in making small purchases. The Community Manager is responsible for the fund and its proper use. The petty cash fund must be kept in a secured area to which only the Community Manager has access. Petty cash is to be used only for emergency items that are not normally ordered from established vendors. Petty cash is never to be used as a regular operating account or for personal loans, payroll advances or employee parties. When removing money from petty cash, a voucher must be signed by the person taking the money, acknowledging that he/she has the money in his/her possession. The voucher is then placed in with petty cash. After the purchase has been made and the sales receipt and change are returned to the fund, the voucher is then discarded. No voucher must remain in the petty cash longer than 2 days without a sales receipt. When removing money from petty cash, a voucher must be signed by the person taking the money, acknowledging that he/she has the money in his/her possession. The voucher is placed in petty cash. After the purchase has been made and the sales receipt and change are returned to the fund, the voucher is then discarded. No voucher must remain in the petty cash longer than 2 days without a sales receipt. As expenditures are made from the petty cash fund, the receipts held plus the cash on hand must always equal the total fund. As the fund is used and the cash available is depleted, it will be necessary to replenish the fund. When approximately HALF of the fund is used, a request for reimbursement must be submitted. Reimbursements must be Page 13

Adara Communities Standard Operating Procedures | Financial Management submitted at least once a month and need to be received in the Corporate Office in time for the check to be sent with the next payroll. A Petty Cash Fund Acknowledgement must be filled out and signed by the Community Manager. The original must be sent to the Corporate Office to be filed in the Community Managers personnel file. When a Community Manager leaves employment with the company, an audit will be done of the petty cash. Once the petty cash is balanced, the agreement will be returned to the Community Manager. To submit for reimbursement of petty cash: Organize your receipts in date order and tape them to a piece of paper. List the receipts on the Petty Cash Reimbursement Request. Code the receipts. Total the receipts and enter the total in the box marked Total Disbursed. Add up the remaining cash from the petty cash drawer and enter the amount in the box marked Cash on Hand. Enter the set amount of your petty cash fund in the box marked Amount of Fund. The Total Disbursed plus the Cash on Hand must equal the Amount of Fund.

VENDOR PROCEDURES
Each community has specific vendors that must be utilized for purchases and contract work. GE Appliance Process General Electric Appliance Order Form Wilmar Log In If a new vendor is requested a completed Vendor Request Form, along with appropriate insurance and W-9 information must be forwarded to the Corporate Office before the vendor is utilized. A corporate officer must approve all new vendors and assign a Vendor ID Number before you may use them, so you must allow ample time for this approval. Insurance documentation: (CALL BILL NEWMAN FOR REQUIREMENTS CC) Budget The Community Manager and District Manager prepare annual operating budgets jointly with the Asset Management Department. The ability to accurately project income and expenses is the key to success for a Community Manager. Budget due dates may vary depending on the needs of the community. Check with your District Manager for your budgeting schedule. The following are general steps necessary for devising a quality budget. Keep a wish list of anticipated needs and desired upgrades. Add to this list all year long. Conduct a detailed physical inspection of the community 90 days before the budget is due, concentrating on potential capital needs. Solicit contractor estimates for any needs or wish-list items identified. Contact service and monthly contract vendors for anticipated cost increases (including utility companies) 60 days in advance of the deadline. Gather available historical income and expense data on the community. Review current year numbers and annualize for comparison purposes. Begin budgeting a minimum of 30 days in advance of the deadline to allow for revisions. Remember, you are closer to the community than anyone else. Do not be shy about telling your District Manager what you think Page 14

Adara Communities Standard Operating Procedures | Financial Management is realistic. To a great extent, your performance will be reviewed based on your ability to meet or exceed budgeted net income projections.

BUDGET VARIANCE REPORTS: The budget variance report needs to be filled out once a month and submitted to the District Manager and the Asset Management Department. The process is completed 45 days after the closeout of the month. (get the memo from colleen)

COMPUTER-GENERATED REPORTS Weekly and/or monthly reports that are a result of daily activity entered into the computer will need to be reviewed by the Community Manager. In addition, these reports may also need to be distributed to your District Manager or the corporate office. The following documents are part of the reporting process for Adara Communities.

For detailed instructions on entering data or retrieving information in the computer, refer to your computer manual.

WEEKLY REPORTING FOR PMPRO USERS Refer to your PMPro Users Manual for instructions on sending the weekly report. Any property maintaining an occupancy under 90% must complete the Daily Update. This report must be sent to the District Manager, Regional Vice President, Asset Manager and COO.

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MONTHLY REPORTING
CLOSE-OUT REPORTING FOR PMPRO USERS Close out is scheduled on the 20th or 25th of every month. You must be notified by your District Manager which day your community is scheduled. In the event that close out falls on a Saturday you will be required to close out on the Friday before. If your close out date falls on a Sunday you will close out the following Monday. In the event that close out falls on a holiday break, you will be notified in advance of the new scheduled date. Due to tight holiday schedules, we urge everyone to be prompt in closing. Any extension or exception to this date must be approved by the Corporate Controller. Refer to your PMPro Manual for Pre Close Out and Close Out Procedures. PmPro Close Out Coversheet PmPro Pre-Close Out Balancing Checklist Community Assessment Survey Vacant Unit Cost Analysis Market Survey (to be completed within Pmpro) Long Distance Log Employee Update

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Adara Communities Standard Operating Procedures | Financial Management

INDEX
B BANKRUPTCY code, 10 Budget income, 20 Budget variance, 20 C Charges NSF; late, 4, 5, 7, 8, 13 Check Requests, 9, 16 Close Out procedures, 22 Collection guidelines, 1, 4, 5 Banking, 6 communication, 6 Income; Payments, 3 F Funds Petty Cash, 17 I INVOICE Processing, 14 L Legal three day, 5 Telephone, 5 O Office Supplies, 13 P Petty cash acknowledgement, 17, 18, 19 Purchase Capital, 13 Inventory, 13 guidelines, 13, 17, 19 R Reporting Close-out, 21 Weekly, 21 V Vendor Forms, W-9, 19 Procedures, 19

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