HOA Auditors
Who hires the accounting firm to perfrom the annual audit of the HOA? If a member of the HOA has a concern that GAAP is not being followed when accounting for assessments designated for a particular purpose, what process should be followed to have the member’s questions and/or concerns asked to the auditor?
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DPK
The board hires all contractors for the association, but it is most probably done by the community manager as authorized by the board. The community has no right to challenge the accountant or to question the accountant only the board does. What you can do is challenge the board on any question or concern that you may have, and ask that they find out from the accountant to answers to your questions.
Dennis
Thank you for your prompt reply.
In my experience:
1) HOA management companies provide a list of vendors that are registered with the Community Associations Institute (CAI) for the board of directors to choose from.
2) HOA management companies recommend compilations over any other audit type
3) Compilations are very basic and do not show cash flow through the accounts.
4) Compilations depend on information that is given to them from the management company, so asking the auditor questions will most likely get redirected back to the management company.
I suspect your ‘audit’ was actually a compilation.
I have been trying to get our HOA to do anything other than a compilation financial review for years (early post on here) for the same GAAP-related issue(s) you mentioned.
https://hoa.tascs.net
Todd,
You are absolutely correct, but the law allows any association to choose between the three different types of annual financial assessment unless the governing documents dictate otherwise. Audit, Review or Compilation. Just remember if your CC&R’s or Bylaws say the word “audit” relative to annual financial assessment they are then required to do audits alone. Many older CC&R’s used the term in a general sense and not specifically intending for the detailed and expensive financial assessment of an “Audit”. But the way the law is structured irrespective of that possible intent, if it says audit the association must do an audit annually until such time that they process an amendment to the CC&R’s to utilize a different form of financial assessment.
Dennis