Begin your search for the right one today using our online directory. HOA disputes and misunderstandings can lead to expensive legal proceedings if not addressed in a timely manner. For the sake of both parties, HOA board members should take time to communicate with homeowners in a professional but cordial manner. Homeowners associations hoa accounting must not discriminate against homeowners in any way, shape, or form. That means HOAs can’t deny housing, enforce rules selectively, or take any action based on discriminatory judgments. A homeowner has a right to a hearing before the HOA takes disciplinary action, such as imposing fines or suspension of privileges.
Using the accrual basis, the association reports revenue when it earns them, regardless of when money actually changes hands. In the same way, the association reports expenses when it incurs them. The Association’s General Ledger contains a record of the transactions (checks written, receipts from customers, etc.) that involve its checking account.
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Based on these numbers, you can focus on problem areas and adjust accordingly. Whether that means raising the budget for lawn care, increasing assessments, or looking for a cheaper vendor is entirely up to you. HOA Accounting Service’s founder, Gary Satterfield has been an active member in the Common Interest Development Industry since August 2003. Gary has served several Homeowner Association Board member terms and is a past Board member of the Community Association Institute, Bay Area and Central California Chapter. Our staff members have excellent accounting and community association industry experience for delivering high quality service to your association. Click on the employee names shown on the Contact Us page to see more about their related work experience and education.
The Cash Basis doesn’t conform with GAAP, which means it’s an unacceptable method when preparing your official financial statements. For cash transactions, this includes the date, payee, amount, and description. For checks, the check date, check number, payee, check amount, the invoice number, and a description of the expense are required.
Bank Reconciliation Report
The association should have all final authorization over replacement and reserve transactions. This report, also called the check register, shows board members the HOA’s written checks. Your accounts payable report details all of your association’s payables. This report has a receivable counterpart, usually known as the account delinquency report, which shows all of the money owed to the association. Your general ledger is where you record all of your accounting transactions following the date of occurrence and a numerical order you set known as the HOA chart of accounts.
In some cases, though, homeowners may first need to submit a written notice, as well as pay for copying and postage costs. HOA boards may refuse access to documents that are bound by attorney-client privilege and those with pending litigation. Also, board members should properly communicate the reasons for an increase.
Effect on Financial Statements
This statute also explicitly allows the owner to attend the hearing via telephone or other electronic means. The statute has been revised to specify that the committee must approve the proposed fine or suspension by majority vote. HOA Accounting Services facilitates the CPA annual review process and reduces their effort. These reports are clear, easy to read, and provide all the tools necessary for the Association Board of Directors to fulfill their fiduciary responsibilities. Once you decide that you’re ready to use FreshBooks as your accounting software, you can choose from one of our plans that start at just $15 a month. Luckily, FreshBooks designed exactly what you need to successfully manage your homeowners association.
While the modified accrual method is less complex than the accrual method, the main downside is it does not always accurately match all expenses and income in the fiscal month in question. Because expenses follow a cash basis, monthly reports may mislead associations. As an example, if the board approves a $50,000 roofing contract, it will not show up on monthly reports until the check is written. The board may think it has extra money because the $50,000 is an obligation not yet on the books. Under the accrual basis of accounting, all HOA financial activities are reported on the financial statements. This type of accounting is usually considered superior because it offers the most complete overview of the HOA’s financial status compared to the modified accrual or cash methods.
Well, as you may have already discovered, there are many things that can go wrong – which makes for a logistical nightmare if not managed properly. Making things worse, the world is now in the second year of the Covid-19 pandemic, complicating HOA accounting and collections processes even further. There should be a budget comparison report for every fund the association maintains. All Balance Sheets contain the same categories of assets, liabilities, and owner’s equity.