Discover Why Community's Have HOA Audits and the Services Available
Managing an HOA requires financial transparency and accuracy. Whether mandated by state law or outlined in an association’s governing documents, HOA audits play a crucial role in ensuring compliance and financial integrity.
This guide explains what an HOA audit is, why it’s necessary, and the different levels of financial review available.
What Is an HOA Audit?
An audit is an independent examination of an HOA’s financial statements to verify accuracy and compliance. Audits are conducted by Certified Public Accountants (CPAs) who specialize in homeowners associations and condominium associations.
Purpose of an HOA Audit:
- Ensures financial transparency for homeowners and board members.
- Identifies inaccuracies, mismanagement, or fraud risks.
- Provides a professional audit opinion on financial statements.
Why Do HOAs Need Audits?
HOA audits may be required by:
- State Laws: Some states mandate annual HOA audits, while others require audits based on revenue thresholds or specific triggers.
- HOA Governing Documents: Some bylaws and CC&Rs specify whether audits are required and how often.
- Board Discretion: Even if not required, many HOAs choose to conduct audits to ensure accuracy, prevent financial mismanagement, and build trust with homeowners.
Key Questions for Your HOA:
- Does your community require an annual audit?
- Have there been significant financial changes or major expenses?
What Types of Financial Services Do CPAs Provide?
HOAs can choose from three levels of financial review, depending on their state requirements and association bylaws.
|
Service Level |
Description |
Assurance Level |
|
Compilation |
The CPA prepares financial statements based on provided data but does not verify accuracy. |
❌ No assurance provided |
|
Review |
The CPA performs limited analysis and inquiries to check for inconsistencies. Some assurance is given. |
✅ Limited assurance |
|
Audit |
The CPA fully examines financial records, checks compliance, and issues a professional opinion. |
✅ Highest assurance |
If your HOA only needs basic financial reporting, a compilation may be sufficient. However, if you need full verification and compliance checks, an audit is the best choice.
Is It Time for Your HOA to Conduct an Audit?
HOA audits are an essential tool for ensuring financial stability and legal compliance. Whether required by law or chosen voluntarily, they help HOAs maintain transparency, build homeowner trust, and avoid financial disputes.
Need expert HOA financial management? RealManage offers audit coordination, financial oversight, and professional HOA management services.
Contact RealManage today to ensure your community's financial health!