AUDITED FINANCIAL

STATEMENTS

THE BARRINGTON

CONDOMINIUM YEAR ENDING APRIL 30, 2012

ASSOCIATION,

lNe.

Ruben Jimenez & Associates, P.e. Certified Public Accountants

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Ruben Jimenez & Associates. P.C

Certified Public Accountants

INDEPENDENT To the Board of Directors of The Barrington Condominium Association, Inc.

AUDITOR'S

REPORT

We have audited the accompanying balance sheet of The Barrington Condominium Association, Inc. as of April 30, 2012, and the related statements of revenues, expenses, and changes in fund balance and cash flows for the year then ended. These financial statements are the responsibility of the Association's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Barrington Condominium Association, Inc. as of April 30, 2012, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Accounting principles generally accepted in the United States of America require that the supplementary information on future major repairs and replacements on page 11 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Financial Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited ocedure do not provide us with sufficient evidence to express an opinion or provide any assurance. . ..I'c. . ~ et4 ...,.,.gl/ t : ~ Ruben J' enez & iates, P.C.

March 20, 2013

4035 Naco Perrin Blvd. Ste. 103B San Antonio, TX 78217

rubenjimenezcpatx.com

Office: Facsimile:

210.590.2776 210.494.2579

THE BARRINGTON CONDOMINIUM ASSOCIATION, INC. BALANCE SHEET APRIL 30, 2012

ASSETS Cash and Cash Equivalents Accounts Receivable AlIowance for Uncollectible Accounts Due from Operating TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accounts payable Prepaid assessments Due to Reserve Total Liabilities

Operating Fund $ 18,687 53,744 (26,351)

Replacement Fund $ 176,555

Total

15,713

195,242 53,744 (26,351) 15,713

46,080

$ 192,268

$ 238,348

5,758 7,762 15,713 29,233

5,758 7,762 15,713 29,233

Fund Balance TOT AL LIABILITIES AND FUND BALANCE

16,847

192,268

209,115

$ 46,080

$ 192,268

$ 238,348

The accompanying

notes are an integral part of these statements.

THE BARRINGTON CONDOMINIUM ASSOCIA nON, INC. STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCE APRIL 30, 2012

REVENUES
Assessments Carport rental Late fees Interest income Legal fees billed and other income

Operating Fund $ 300,643 5,670 55 4,349 310,717

Replacement Fund $ 20,000

Total $ 320,643 5,670 55 400 4,349 331,117

400

TOTAL REVENUES EXPENSES

Administrative expenses: Insurance Management fee Professional fees Licenses and fees Bad debt expense Miscellaneous administrative Total administrative expenses Utilities: Electricity and gas Water sewer Trash removal Total utilities

20,400

47,726 16,361 13,714 334 13,696 12,385 104,216

47,726 16,361 13,714 334 13,696 12,385 104,216

33,976 34,616 10,195 78,787

33,976 34,616 10,195 78,787

The accompanying

notes are an intergral part of these statements.

THE BARR} GTON COl'.'DOMINIUM ASSOCIATION, I C. STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCE (CONT.) APRIL 30, 2012

EXPENSES

(CONT.)

Operating Fund

Replacement Fund

Total

Common area expenses: Maintenance personnel costs Grounds maintenance Plumbing Water Treatment Building maintenance HY AC and electrical Pool maintenance Pest control Painting Gate and fence maintenance General maintenance and supplies Total common area expenses TOTAL EXPENSES Excess deficiency of revenues over (under) expenses Prior Period Adjustments BEGINNING FUND BALANCE

36,080 26,756 4,237 3,713 3,506 2,228 2,442 7,884 207 1,740 10,707 99,500 282,503

$ 5,729 10,750 2,985

$ 36,080 26,756 9,966 3,713 14,256 2,228 5,427 7,884 207 6,946 10,707 124,170 307,173

5,206 24,670 24,670

28,214 (38,131) 26,764 $ 16,847

(4,270)

23,944 (38,131)

196,538 $ 192,268

223,302 $ 209,115

ENDING FUND BALANCE

The accompanynig

notes are an intergral part of these statements.

THE BARRINGTON CONDOMINIUM ASSOCIATION, 1Ne. STATEMENT OF CASHFLOWS APRIL 30, 2012

Operating Fund CASH FLOWS FROM OPERATING ACTIVITIES Excess(deficiency) of revenues over (under) expenses Adjustments to reconcile excess (deficiency) of revenues over (under)expenses to net cash provided (used) by operating activities: (Increase) decrease in: Prepaid insurance Accounts Receivable (net) Charge back receivable Settlement receivable Increase (decrease) in; Accounts payable Prepaid assessments NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES

Replacement Fund

Total

28,214

(4,270)

23,944

8,603 (11,163) 36,902 (7,371) (3,120) $ 52,065 $ (4,270) $

8,603 (11,163) 36,902 (7,371) (3,120) 47,795

CASH FLOWS FROMFINANICING ACTIVITIES Transfer between funds Interfund borrowings NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH

(61,573) (61,573)

61,573 61,573

(9,508) BEGINNING CASH AND CASH EQUIVALENTS ENDING CASH AND CASHEQUIV ALENTS
$

57,303 119,252
$

47,795 147,447 $ 195,242

28,195 18,687

176,555

The accompanying

notes are an integral part opf these statements.

THE BARRINGTON CONDOMINIUM ASSOCIATION, INe. NOTES TO FINANCIAL STATEMENTS April 30, 2012 NOTE 1 - - NATURE OF ORGANIZA nON The Barrington Condominium Association, Inc. was incorporated in the State of Texas as a nonprofit association in April 1997. The Association was established for the exclusive purpose of promoting the health, security, safety and welfare of the residents on the property and maintaining and preserving common property of the Association. The Barrington Condominium Association located in San Antonio, Texas consists of 81 residential units in an area of approximately 7 acres. NOTE 2 - SUMMARY OF SIGINIFTCANT ACCOUNTING POLICIES A. Accounting Method/Fund Accounting The association maintains its books of account on the cash basis of accounting. However, for this audit and to be conformance with accounting principles generally accepted in the United States of America, they were converted to the full accrual basis of fund accounting. Under this method of accounting, revenue is recognizes when earned regardless of when received, and expenses are recognized when goods or services are received regardless of when paid. To ensure observance of limitations and restrictions on use of financial resources, financial resources are classified for accounting and reporting purposes in the following funds established according to their nature and purpose: Operating Fund - This fund is used to account for financial resources available for the general operation of the Association. Replacement Fund - This fund is used to accumulate financial resources designated for major repairs and replacement.

B. FISCAL YEAR The Association has fiscal year beginning on May 1 of each year and ends on April 30.

THE BARRINGTON CONDOMINIUM

ASSOCIATION,

INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED) April 30, 2012

C. CASH AND CASH EQUIVALENTS Cash and cash equivalents include demand deposits, savings and money market accounts. D. PROPERTY AND EQUIPMENT Real property and common areas donated by the developer are not capitalized on the Association's financial statements. The property includes, but is not limited to, landscaping, clubhouse, pool, roofs, exterior walls, and parking area. Real and personal property purchased with Association funds, to which the Association holds the title, is capitalized at cost and depreciated over the estimated useful life using the straight-line method of depreciation. E. MEMBER ASSESSMENTS Association members are subject to monthly assessments for the improvement and maintenance of the Common Area and the buildings situated upon the properties; for the enforcement of any restrictions of the Association; and for the payment of any insurance premiums, utilities and similar expenses for which the Association is responsible. Any assessment not paid with fifteen (15) days after the due date shall be considered delinquent and bears a monthly late fee of$45 per month until assessments are current. The Association may bring legal actions against owners personally for the collection of unpaid assessments. Once legal action has commenced, all legal fees and costs will be assessed to the unit owners. Any excess assessments at year-end are retained by the Association for use in future years. An allowance for uncollectible accounts has been established in the amount $26,351 per management's estimate. Revenue from assessments is recognized in the period assessed. Payments received in advance of their period of assessment are deferred and carried on the balance sheet as prepaid assessments. F. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

THE BARRINGTON

CONDOMINIUM

ASSOCIATION,

INC.

NOTES TO FINANCIAL

STATEMENTS

(CONTINUED)

April 30, 2012

NOTE 3-- FUTURE MAJOR REPAIRS AND REPLACEMENTS The Association's governing documents require that the Association establish adequate reserve funds for major repair and replacement of Common Area components. The replacement fund can be funded by regular and special assessments. Accumulated funds are maintained in separate money market accounts and banking accounts and are not generally available for expenditure for normal operations. However, due to higher than expected legal fees, related to a dispute between the board of directors and a group of homeowners over control of the Association, the Association's operating fund burrowed funds from the replacement account. As of the balance sheet, there was a balance of $15,713, due from the operating account to the reserve fund. The Association plans to repay the replacement account in the near future. Wildwood Management Group conducted a study in 2009 to estimate the remaining useful lives and the replacement costs of the components of common property. The table included in the unaudited Supplementary Information on Future Major Repair and Replacement is based on that study. There has not been a study completed since 2009. In the current year, the Association increased replacement reserves by $57,303 and spent $24,670 on major repair and replacements projects, leaving a balance of $176,555. Because funding is based on estimates, actual needs may vary significantly from the study and this variance could be material. Money accumulated in the replacement fund may not be adequate to meet all future needs for major repairs and replacements. Thus, the Board has the right to raise regular assessments or levy a special assessment to meet these needs. NOTE 4 - FEDERAL INCOME TAXES The Association qualifies as a tax-exempt association for all income and expenses related to its exempt function purpose of the acquisition, construction, management, maintenance and care of Association property. The net nonexempt income from earned interest and nonmember fees is taxed as 15% to 30% by the federal government, dependent upon certain filing elections made. The Association has elected to file Form 1120 for the fiscal year ended April 30, 2012. Resulting in tax expense of $60.

THE BARRINGTON CONDOMINIUM ASSOCIATION, INe. NOTES TO FINANCIAL STATEMENTS (CONTINUED) April 30, 2012

NOTE 5 - PRIOR PERIOD ADJUSTMENTS During the fiscal year management made revisions to prior balances for accounts receivable, allowance for uncollectable accounts, and prepaid assessments which required an net adjustment of $35,978 to the operating fund balance. In addition, management adjusted its accounts payable balance in the amount of $2,153 for total prior period adjustments in the amount of $36, 131.

NOTE 6 - SUBSEQUENT EVENTSILITIGATION Management has evaluated subsequent events through March 20, 2013 and has concluded that there are no subsequent events that should be reported in the notes to the financial statements. Furthermore, management is not aware of any other pending or threatened litigation against the Association.

SUPPLEMENTARY

INFORMATION

(UNAUDITED)

10

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THE BARRINGTON CONDOMINIUM ASSOCIATION, SUPPPLEMENTARY

INC

INFORMATION ON FUTURE MAJOR REPAIRS AND REPLACEMENTS APRIL 30,2012 (UNAUDITED)

Wildwood Management Group performed a reserve study in 2009, using contractor bids to estimate the remaining useful lives and the replacements costs of the components of common property. The estimates are based on the reserve study and may vary significantly from actual costs. The following table is based on the study and represents significant information about components of common property.

Components Streets and Drivers Building and Carpentry Boilers, Heating, Cooling Landscape Replacement Roofing/Gutters Fences Pool

Estimated Remaining Useful Lives (Years) 2 10 10 10 15 15 20

Estimated Current Replacements Costs 42,000 220,000 46,500 80,000 218,000 86,665 16,500 709.665

Components

of Funds
Balance at 04/30/2009 9,728 50,956 10,770 18,530 50,493 20,073 3,822 164,372

At 4/30/2009 the reserve was 23.2% funded.

See independent

auditor's report

11