The CPA will also conduct an inspection of your HOA’s minutes and contracts for errors. This report comes with a “positive assurance.” The CPA expressly guarantees that all financial statements correctly identify the financial position and health of your homeowners association and all of its operations. General Ledger — is the center of your HOA financial records, where you record every transaction, the transaction date, and numbering of those transactions. Balance Sheet — This keeps the details of your HOA’s assets vs its liabilities and where your HOA equity is found. Assets and liabilities should be balanced, providing an immediate view of how much money is in your bank account and what your HOA’s net worth is (using HOA accounting software). The Basis of Accounting refers to how when you’ll record earnings and expenses.

This job can be complicated by inaccurate or incomplete financial reports. Poor reporting can make an already immense obligation harder to manage. Therefore, it’s important for all board members to know how to understand and analyze financial reports. This way, they can prepare the association for maintenance, repairs, homeowner bankruptcy, and even financial dishonesty. Whether your HOA’s governing documents require it or not, it is often recommend that associations with a large cash flow get an annual audit.

Modified Accrual Basis

If detailed records are not kept, it can be near-impossible to keep track of delinquent dues or know how much money is available to budget for community maintenance and new projects. The most common mistake that people make when preparing HOA financial statements is not adding enough detail. Add every detail, no matter how small, so you have a more thorough insight and better decision-making.

• Buildium is a cloud-based property management software that offers a range of features, including accounting and financial management.
• Assets and liabilities should be balanced, providing an immediate view of how much money is in your bank account and what your HOA’s net worth is (using HOA accounting software).
• Born in Telluride, Colorado, a resort community, ASAP grew up on Main Street within walking distance to many of our customers.
• An Accounts Payable Report and Accounts Delinquency Report must also accompany the ledger.
• By following the guidelines outlined in this guide, board members can navigate the complexities of HOA accounting with confidence and make informed decisions that benefit everyone involved.

Finding and choosing the right hoa accounting software begins with understanding what is it’s designed to do — fulfill accounting goals. Our remote management system is a hybrid solution of self-management and having third party support. While our virtual services do not provide onsite meeting attendance, inspections, or maintenance, we do provide full accounting and administrative support.

HOA Accounting Terms You Should Know

The balance sheet compares the HOA’s current assets to its liabilities and equity by providing the totals of each item as well as any net income gains or losses. An HOA’s assets consist of everything the HOA owns, including the cash it has in the bank and the value of its property, such as a playground, clubhouse, or fitness equipment. Equity is the net value of the association, or what’s left over when the liabilities are subtracted from the assets. So, if the balance sheet is balanced correctly, the total amount in the assets section should equal the total amount listed in the liabilities and equity section. This method allows the HOA to recognize revenue only when it is available for use, but record applicable expenses when the funds actually leave the bank account.