🧾 “Fiscal Management” — After the Warning Was Given

What the Board Celebrated vs. What They Were Told ⏱️⚠️

The other day, owners at 175 East Delaware Place HOA (at the former John Hancock Center) received a board newsletter authored by HOA Board President Scott Timmerman and distributed by Sudler Property Management, including a section on “FISCAL MANAGEMENT.”

It reassures.

It congratulates.

It declares success.

But what owners were not told is far more important:

⏱️ Many hours before the board voted to accept the audit on December 15, 2025, the auditor (CondoCPA), HOA counsel David Sugar, the HOA Board, and others received a formal, written, quantified notice alleging material tax noncompliance, internal-control failures, reserve misstatements, and auditor-independence concerns.

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📬 What Was in the Auditor’s Hands Before the Vote

This detailed written communication outlined:

🚨 Identified approximately $1.9 million of understated taxable income

🚨 Estimated ~$543,000 in unpaid federal and state taxes

🚨 Documented improper capital vs. expense treatment

🚨 Flagged misclassification of taxable income as non-taxable capital contributions

🚨 Cited recurring improper loss deductions across multiple years

🚨 Described unauthorized compensation for contracted staff totaling ~$586,000

🚨 Detailed reserve contribution waivers exceeding $1.2 million per year

🚨 Warned of deficiencies in the 2022 reserve study relied upon for budgeting

🚨 Raised independence threats from dual roles as auditor and election administrator/judge

This was expressly framed as NOCLAR-relevant information that requires heightened professional skepticism before issuing any audit opinion.

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🗳️ What Happened Anyway

Despite this notice:

✔️ The board voted to accept the audit that same evening

✔️ The audit opinion was unmodified

✔️ No amended tax returns were filed

✔️ No prior-period restatements were issued

✔️ No prominent disclosure of tax exposure was provided to owners

A short time later, owners were told everything reflects strong “fiscal management.”

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📰 The Board’s Newsletter — Carefully True, Critically Incomplete

The board emphasizes:

🟢 “$21.7 million in reserves.”

🟢 “Excess operating revenue.”

🟢 “No special assessments.”

What it does not disclose:

📉 Unfunded reserve liabilities approaching $30 million

📉 Projected liabilities nearing $100 million

📉 Reserve contributions repeatedly waived without owner approval

📉 Income taxes charged to reserves instead of operations

Reserves are not a scorecard.

They are a comparison.

And the comparison here is unfavorable.

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🧠 Why Timing Matters (Legally and Professionally)

This is not a disagreement about judgment.

This is about what was known — and when.

Under GAAS and the AICPA Code:

• Auditors must respond to credible, quantified NOCLAR information

• New auditing firms must evaluate opening balances and prior-period reliability

• Independence must be preserved in fact and appearance

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