Hard to Use Accounting Reports

Every meeting, the Board is given accounting and other financial reports. Board Members try to understand them but they aren't easy to understand.

Board Members say that the reports have lots of details but it is hard to figure out things like: "Did we end up ahead or behind of budget last month?" "Did the reserves get funded?" The reports consist of lists of checks issued, delinquencies and actual versus budget on a per month basis. It might be possible for Board Members to take these reports, do number crunching and figure out the answers to their questions but it isn't like it's written in big red marker, "THE HOA IS OVERSPENDING!"

A similar thing happens in the yearly Homeowner's Report. Reserves are reported and, if you do the calculations, you say, "Holy cow, our reserves are underfunded by $X!" But, the report doesn't say: "Your reserves are underfunded by $X". You just have to figure this out for yourself. Then, you have to verify it with the manager/accountant to make sure that you aren't misunderstanding or miscalculating something. (I say "manager/accountant" because sometimes the manager will speak for the accounting firm but, if necessary, the accounting firm can speak for itself.)

The manager/accountant is willing to help and will explain things but states that, as a customer of accounting services, it isn't really the accounting firm's job to teach its customers what the accounting reports mean.

When a Board Member forces the manager/accountant to answer the question "Did we end up ahead or behind of budget last month?", usually it takes some time and calculations for them to even figure it out. So, apparently, their reports aren't any more useful to them than they are to the Board.

Some Board Members have really tried to get across that "these reports serve to help us make informed decisions" but the manager/accountant will have none of that. They say that we'll have to buy additional reports (in addition to our not-very-useful-but-required-by-law reports). They say that they'll help if you ask them the right questions but it is up to the Board and the HOA to figure out, on its own, how to inform and educate itself.

I'm sort of in favor of firing the accountant because I just can't believe any of this. Yes, I understand that accounting reports are complicated and I understand that I am not a professional accountant but I just can't swallow that this is acceptable performance or behavior. I also understand that some companies have a CFO so these reports are useful to them. And, maybe lots of HOAs just take the reports and run their HOA into the ground, not knowing or caring what these reports mean.

I often feel like a policeman who is interrogating a suspect. The suspect doesn't want to lie (because they might get caught) but the suspect certainly doesn't want to volunteer any information. The suspect will provide facts, if forced and the right questions are asked.

Does your HOA have a bunch of "junk reports" like this? How do Board Members understand financial info even though they aren't financial professionals?

Daniel,

We are lucky to have a treas who is a CPA. She thoroughly understands the financial statements and can explain anything to the board. However, we are also lucky to contract with a small mgmt co. The owner of the co. is our property mgr and her husband is the accountant for the firm. He generally attends our meetings and is available to answer any questions. He also prepares a report explaining what the accrued expenses for the month were and also explains the variance analysis for income and expenses.

IMO, most assn managers may not thoroughly understand the financial statements because it is not their area of expertise. The mgmt co will employ bookeepers or accountants to perform the financial accounting for their clients. In this case the BOD may ask that their treas be allowed to meet with the accountant to go over any info that he/she does not understand. I cannot understand that a mgmt co would not be willing to do this.