Bookkeeping practice in HOA

Marie, the bookkeeper is correct when stating its rare for books in an association to ever be in balance with the bank, due to transactions in transit. They won't be the same if deposits and/or payments are not yet booked by the bank. But, every financial account should be reconcilled every month.

This is comparable to you balancing your check book when you recieve a monthly statement. Does the total in your personal account agree with the total on the bank statement? Obviously they won't when there are checks outstanding.

Thank you for your responses, but I should have, expa[ained my issue better. We are a very small HOA,34 units.There are few delinquencies, about one or two a month pay late and several prepay a year in advace. All in all about 28 checks a month are sent to the bookkeeper and expenses average about 5 checks issued a month.
I understand what "tran]nsactions in trasit" means, but what I'm qrestioning is should these transactions be included as cash in the bank on the monthly trasurer's report circulated to homeonwers before they are in transit? The approximate 28 assessment checks sit in the bookkeeper's office 3 or 4 weeks before they are deposited. The deposit is not made in the month the assessments were due and paid,they are made in the following month, but listed as cash in the bank on the treasurer's report in the month they were due and paid. This is whatI don't understand abd am questioning.
Thank you for any help you can offer to clarify this for me. .

Marie:

I would be very careful with this "bookkeeper". For a corporation such as your HOA, there are multiple statements that make up "the books", and in total they have to match. Basically, you can have the balance sheet, which gives you a snapshot on a particular day, the income statement which gives you transactions over a period of time and compares income and expenses. Both those statements will most likely not match the bank account balance, since those "transactions in transit" are not reflected accurately. Both statements are generated with the method of "accrual accounting", and in general associate the transaction with the month it belongs in from an accrual point of view. So in your case, if the dues are for April, those would be in the income statement in April, although the deposit may be in May. But, there is a third statement for a corporation, which is the Cash flow statement. That is generated using the "cash accounting" method, and it HAS TO accurately reflect the bank balance. Those transactions in transit can only be included if the cash transaction has finalized, so if you have $1,000 in the bank, have 5 checks for dues with $100 each, and 2 checks you paid your Vendors for $200 each, and all 7 checks are still in transit, then the cash flow balance HAS TO BE $1,000 today. If all 7 transactions checks clear tomorrow, then by the end of the day your cash flow statement will reflect $1,100. As that bookkeeper for a balance sheet, income statement, and the cash flow statement. If he doesn't or cannot produce all 3, then I would seriously consider getting rid of that person and hiring someone who has accounting expertise.

Our meetings are on the 8th of the month.

All financial reports are from the last day of the previous month.

Everyone accpets there may be additinal activity after the date of the report.