Financial Statements
I was looking over my HOA’s Annual Budget and Revenues and Expenses Statements and noticed something I thought was peculiar. One account number was used for two unrelated expenses, i.e. acct. 5010 in the Budget is for Landscape Maintenance Contract and acct. 5010 in the Statement of Revenues and Expenses is for Legal Expenses. I found nine other instances of this kind of activity. Shouldn’t each expense have a unique account number and should we be concerned?
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Pricilla,
This is very basic accounting practices and is indicative of the fact that whoever is doing your association’s bookkeeping has absolutely no knowledge of accounting. This makes auditing of your financials impossible; these are very different expenses and must be recorded in a ledger using an appropriate account code for each type of expense based on the budget developed for the community. Your ability to recreate and understand the association financials is in jeopardy based on these sloppy practices and may have some significant tax ramifications.
Dennis