HOA audits can be a stressful experience, but they don’t have to be. Follow the tips and tricks in this blog post to ensure your HOA audit goes as smoothly as possible.
One of the most important things you can do to prepare for an HOA audit is to keep good records, including everything from financial records to minutes from board meetings.
Maintaining accurate and up-to-date records will make the audit process more manageable and less stressful. Another helpful tip is to communicate with your auditor. If you have any questions or concerns, be sure to voice them.
We spoke with some of the pros in the industry to get their best advice on how to survive an HOA audit. Keep reading for helpful tips on everything from recordkeeping to communication!
Why You Need to Prepare for an HOA Audit
The homeowner’s association (HOA) is responsible for maintaining common areas and amenities. But did you know that the HOA must also conduct an annual audit?
California law requires homeowners associations to have an annual financial audit conducted by an outside firm to ensure the appropriate use of funds.
While it may seem stressful, going through an audit can be a good thing. It helps to ensure that your HOA is healthy and functioning correctly. Plus, it gives the homeowner peace of mind knowing that their money is well-spent.
Whose Responsible for Preparing for an HOA Audit
As mentioned above, an outside firm typically conducts homeowners association audits. However, it is the responsibility of the board of directors to prepare for the audit.
This includes ensuring that all records are in order and providing the auditor with any necessary information. Every board member should contribute to the overall success of the audit and answer any questions the auditor may have about the community or bookkeeping.
The auditor will usually request access to the homeowners association’s books, records, bank statements, and tax returns.
They may also want to speak to homeowners or staff members. Cooperating with the audit process is essential, as resisting could result in fines or other penalties.
Preparing for an HOA Audit
Step 1: Keep Good Records
One of the best ways to prepare for an HOA audit is to keep good records. This includes financial records, board meeting minutes, and other relevant documentation. Accurate records will make the audit process much easier and less stressful.
Step 2: Communicate with Your Auditor
Another helpful tip is to communicate with your auditor. If you have any questions or concerns, be sure to voice them. The auditor is there to help and should be able to answer any of your questions.
Step 3: Be Organized
Finally, it is essential to be organized. This means having your documents in order and being prepared to answer any questions the auditor may have.
The audit will go much smoother if you take the necessary steps to have all your records in order. One way to do this is to ensure that files are updated often and only pushed aside a week before your scheduled audit.
Understanding the HOA Audit Process
The homeowners association audit process is not something you should take lightly, and it can be a very stressful and intimidating experience.
However, it is vital to understand the process and what to expect. With the proper knowledge and preparation, you can survive an HOA audit with flying colors.
Here are a few tips and tricks from the pros:
- Get an HOA Audit Report from the CPA
- Ask for their help in interpreting the findings and recommendations
- Understand the HOA Audit Process
- Be prepared for the HOA Audit Meeting
- Have all of your documentation ready
- Follow up after the meeting to get clarification on any items of concern
The most important thing to remember is that an HOA audit is not a punishment; it’s simply a way to ensure that the association operates effectively and efficiently.
With some advance planning and preparation, you can ensure that your audit goes smoothly and provides valuable insights into the operation of your HOA.
What Happens After the Audit?
Once the audit is complete, the homeowners association will receive a report detailing any findings. The HOA can use this report to improve the homeowners association.
For example, if it is found that there are inconsistencies in the way homeowners’ fees are collected, steps can be taken to fix this issue.
Audits can be stressful for homeowners associations, but you can successfully navigate them by being prepared and cooperating with the process. These tips can help ensure a successful outcome for your homeowner’s association’s audit.
Consider Contacting a CPA in Your State
While the tips above can help you survive an audit, your best bet may be to avoid one altogether. One way to do this is by working with a professional who understands HOAs and their audits.
A certified public accountant (CPA) can help ensure your HOA complies with all state and federal laws. They can also help you prepare for an audit by ensuring all your documentation is in order.
Look for a public accounting company or independent CPA serving homeowners associations in your state. At the first consultation, you need to discuss everything from the work scope to audit goals to the associated costs and reporting deadlines.
Talk about concerns during the initial consultation. Don’t shy away from conveying problems to your auditor.
Get an HOA Audit Report from the CPA
After the audit is complete, you will receive an HOA Audit Report. This document should list any findings and recommendations. The CPA may also offer to present their findings to the HOA Board of Directors.
Ask for their help in interpreting the findings and recommendations. They can also guide you in implementing changes to avoid future problems. If you have a good working relationship with your auditor, they can be a valuable resource in the future.
At Silvercreek Association Management, we have a team of experienced professionals who can help you with all aspects of your homeowners’ association, from audits to management and everything in between.
Contact us today to learn more about how we can help you run a successful and effective homeowners association. We look forward to hearing from you!