Glossary 3 Barrera & Company

Glossary: Page 3

Cash Flow Method	Full Funding	Remaining Useful Life
Component	Fully Funded Balance	Replacement Cost
Component Inventory	Fund Status	Reserve Balance
Component Method	Funding Goals	Reserve Provider
Condition Assessment	Funding Plan	Reserve Study
Current Replacement Cost	Funding Principle	Responsible Charge
Deficit	Life and Valuation Estimates	Special Assessment
Effective Age	Percent Funded	Surplus
Financial Analysis	Physical Analysis	Useful Life

Replacement Cost

The cost of replacing, repairing, or restoring a Reserve Component to its original functional condition. The Current Replacement Cost would be the cost to replace, repair, or restore the component during that particular year. [back to the top]

Reserve Balance

Actual or projected funds as of a particular point in time that the association has identified for use to defray the future repair or replacement of those major components which the association is obligated to maintain. Also known as Reserves, Reerve Accounts, Cash Reserves. Based upon information provided and not audited. [back to the top]

Reserve Provider

An individual that prepares Reserve Studies. [back to the top]

Reserve Study

A budget planning tool which identifies the current status of the Reserve fund and a stable and equitable Funding Plan to offset the anticipated future common area expenditures. The Reserve Study consists of twp parts: the Physical Analysis and the Financial Analysis. "Our budget and finance committee is soliciting proposals to update our Reserve Study for next year’s budget." [back to the top]

Responsible Charge

A reserve specialist in responsible charge of a reserve study shall render regular and effective supervision to those individuals performing services, which directly and materially affect the quality and competence rendered by the Reserve Specialist. A Reserve Specialist shall maintain such records as are reasonably necessary to establish that the Reserve Specialist exercised regular and effective supervision of a Reserve Study of which he was in responsible charge. A Reserve Specialist engaged in any of the following acts or practices shall be deemed not to have rendered the regular and effective supervision required herein:
1. The regular and continuous absence from principal office premises from which professional services are rendered; except for performance of field work or presence in a field office maintained exclusively for a specific project;
2. The failure to personally inspect or review the work of subordinates where necessary and appropriate;
3. The rendering of a limited, cursory, or perfunctory review of plans or projects in lieu of an appropriate detailed review;
4. The failure to personally be available on a reasonable basis or with adequate advance notice for consultation and inspection where circumstances require personal availability.[back to the top]

Special Assessment

An assessment levied on the members of an association in addition to regular assessments. Special Assessments are often regulated by govering documents or local statutes. [back to the top]

Surplus

An actual (or projected) Reserve Balance greater than the Fully Funded Balance. See "Deficit." [back to the top]

Useful Life (UL)

Total Useful Life or Depreciable life. The estimated time, in years, that a reserve component can be expected to serve its intended function if properly constructed in its present application or installation. [back to the top]

Remaining Useful Life (RUL)
Also referred to as "Remaining Life" (RL). The estimated time, in years, that a reserve component can be expected to continue to serve its intended function. Projects anticipated to occur in the initial year have "zero" Remaining Useful Life. [back to the top]