HOA Accounting
HOA Accounting
A homeowners’ association (HOA), a condominium association and other common-cause realty-based organizations have a responsibility to the community of members to manage the collected funds efficiently and protect the owners’ real estate investments in their properties.
Considering HOA board members are usually volunteers from member households, there’s often very little professional expertise in finance between them.
That’s the main reason for seeking out an HOA accounting firm: to add knowledge and experience to support the board. By hiring a certified public accountant (CPA) for property management, board members unburden themselves of the nitty-gritty bookkeeping and financial planning tasks. With the appropriate level of oversight, HOA and condo association boards gain an experienced ally and a financial partner.
Since the financial aspect of operating an HOA is arguably the most important, you need a professional accounting firm that can handle everything from monthly bookkeeping to annual audits.
You also get the additional benefit of freeing up time to address other concerns and priorities. When you’re looking for an association accounting firm, look no further than Miller & Company, LLP, which operates in New York, Washington DC and Sarasota, FL.
Non-Profit Doesn’t Mean No Financials
HOAs and condo associations are established as non-profit entities. That means every cent from owners’ dues must go to completing the duties of the organization. No one profits from it. In fact, the board members are volunteers. But even non-profit entities have income to collect and expenses to track. And every cent — from the owners’ dues coming in to the monthly maintenance expenses to the funds earmarked for particular improvements or replacements — has to be painstakingly tracked and managed.
HOA CPAs at Miller & Company in Sarasota not only track the financials month to month, but they generate quarterly and annual reports that detail for the board and members that the association is on track in their duties. They provide a specialized form of HOA bookkeeping services that include tax services and financial audits for the HOA or condo association. Since there are many requirements to manage large amounts of money in a responsible way, every condo association and HOA needs an expert accountant.
The Many and Varied Responsibilities of a Sarasota HOA CPA
An accounting company for condominiums and HOAs typically provide a wide range of HOA accounting services, often under the watchful eye of the board members. Some of the most common income-related services include:
- Sending out dues notices annually, quarterly or monthly
- Collecting and tracking payments
- Sending confirmation notes
- Providing a lockbox service to speed up income processing
- Depositing funds and tracking bank balances
- Fielding homeowner or condo owner questions and complaints
- Dealing with late payments, including:
- Mailing late notices
- Applying appropriate penalties
- Implementing collection procedures when needed
HOA financial management also involves common expense-related services, such as:
- Maintaining ledgers and financial statements to track expenditures
- Reviewing and approving invoices and bills
- Paying approved bills after getting appropriate board member signatures
- Dealing with vendors and their payment systems and schedules
HOA and condo association accounting firms also perform many functions that fall between the incoming and outgoing funds, such as:
- Providing HOA consulting services to help the association board set HOA strategies and priorities and manage emergencies of all kinds
- Consulting on the budget, special projects, financing options and insurance
- Preparing the annual operating budget
- Keeping the financial books month-to-month, per HOA accounting standards
- Projecting expenses for current and future years
- Providing tax planning services to limit tax liability
- Recording and tracking every financial transaction
- Accounting for HOA reserves and preforming reserves assessments
- Preparing and filing the end-of-year HOA tax forms, including 1099 forms, Form 1120 and Form 1120-H
- Attending association meetings, as deemed necessary
- Preparing financial status reports, including all year-end statements
- Communicating with owners and members throughout the year, as needed
- Creating the HUD forms and estoppel forms for renters, buyers and sellers of property within the HOA or condominium association
- Maintaining the association’s financial archives, as required by law
- Performing audits
Preparing and Completing Financial Audits
Besides providing ongoing management consulting services, bookkeeping services and tax prep services, Miller & Company — your choice as a HOA or condominium accounting firm — also performs HOA audits.
A required annual project, an HOA or condominium association audit is a major task that reconciles every dollar collected and tracks where it all went. It’s usually done every year, according to state law, to maintain financial transparency to the board and homeowners so everyone can see and understand how and where the money has been allocated.
All income and expenses for the year are listed and categorized. Even funds set aside for specific future purposes — such as replacement costs or emergency funds — are listed.
The process generates a detailed HOA audit report that measures whether specific savings are on-track to be available when necessary. For example, if exteriors need to be painted every 10 years, the association should be adding 10 percent of the total cost every year. The audit tracks how well these savings are progressing toward their goals.
Condo association audits and HOA audits may be done at any time of the year, especially if there are questions about the association’s finances. The cost of an HOA audit can range from $5,000 to $6,000 for a full accounting. There are some ways to minimize the costs by focusing on specific areas instead of an overall audit. Other alternatives to a full HOA audit are reviews and compilations.
Hire a Trusted Partner
Miller & Company coordinates its activities with your association’s board of directors, adhering to best practices as related to HOA accounting standards and accounting for condominium associations. The Sarasota CPAs you work with are experts in the legal financial reporting requirements for your association and in related areas, such as:
Since overseeing your HOA’s funds and financial obligations is what matters most, make sure your accounting partner is adept, forward-thinking and knowledgeable. Miller & Company manages your finances in a wholistic manner, meaning that the goals and values of your association are taken into account.
Financial management responsibilities involve:
- Cash management to ensure enough liquidity for day-to-day operations
- Bank account administration and reconciliations
- Reserve fund management to protect your assets
- Report generation as needed
So hire a trusted HOA CPA. Miller & Company, LLP is a respected name in the industry, and you can trust their accountants for honest bookkeeping practices, clear communication, superior planning abilities and above all: no surprises. Contact us today to discover how much a professional accounting firm can make your HOA or condo association board’s duties lighter.