Good or bad, board members need to know what the numbers say so they can make adjustments as needed. This could include looking for new vendors, increasing monthly dues, hiring a property manager, etc. Smaller, self-managed associations may have an elected treasurer, financial officer, or president that is responsible for compiling financial documents. In such cases, it is a good idea to use a professional accountant to ensure that HOA financial statements are prepared correctly before releasing them to board and community members.
These statements together give a holistic view of the HOA’s financial status and are crucial in making strategic decisions, planning future expenses, and setting realistic budgets. Most HOAs find it tough to navigate through the complicated world of finance. If you find yourself in the same boat, consider hiring a professional to take care of your financial management needs.
These assessments are therefore prepaid and still the property of the homeowner – and not of the association. Prepaid Revenues are Liability Accounts because https://www.bookstime.com/ the association has not “earned” the money yet. Prepaid Expenses are assets because the association has paid for something it has not yet used.
As a volunteer board member, a large part of your responsibility is your fiduciary responsibility to the community. Overseeing the monies of your homeowners, ensuring they are safe and being spent responsibly is extremely important. Take time each month to review these reports and ask questions of your Treasurer or Property Manager. Denali Property Management provides these reports, and more, each month.
Also known as shareholders’ or owner’s equity, you compute this section by deducting liabilities from assets. In other words, it is the value left after subtracting all the negative (liabilities) from the positive (assets). Of course our service offers a host of condo / HOA financial reports that serve a supporting role to our top 4 which allow you to drill down for greater detail. Additionally, there is plenty of available software that can assist self-managed communities.
Therefore, you may not be able to push through with any pending legal cases with the homeowner or collect past due balances. If you only need help with accounting, though, it might be better to seek help hoa accounting from an accounting firm, CPA, or a financial management company. A good way to keep track of your income and expenses over the course of a 12-month period is to create an HOA accounting spreadsheet.
Most importantly, having detailed financial statements readily available to all HOA members can promote transparency between the board and the community. If the homeowners can see what their money is going towards, they will be more agreeable and open with the board of directors. As a title professional, focus on the study’s funded status and projected expenses to assess the HOA’s financial health. A well-funded reserve indicates proactive financial management, reducing the risk of unexpected assessments for new homeowners. The HOA Balance Sheet is a financial statement that provides a snapshot of the association’s financial condition at a specific point in time.
Your total assets must equal your total liabilities plus equity — it’s in the formula. Check your general ledger, which is should contain all financial transactions. Compare it with your balance sheet to see where the inconsistency lies. This is the basic formula that your HOA balance sheet should follow.
If you are having trouble preparing community financial statements, the professionals at CSM are standing by to answer all your questions. We have years of experience working with thousands of residents across the United States. An HOA Reserve Study is a comprehensive assessment that projects the long-term funding needs of a homeowners association for major repairs and replacements. It evaluates the current condition and estimated lifespan of common area components, estimating future costs and establishing a funding plan to meet those expenses without financial strain on the community.