Adjusting financials

Started by EdV1 • 3 replies • 1180 views

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EdV1 (Florida)
Posts: 2

Posted:

My HOA board in Florida has determined now in June 2013 that invoices were paid in FY 2013 that should have been paid in FY 2012. FY 2012 ended on 12/31/2012, and the books were finalized and closed. Can these invoices be posted against the 2012 financials and be reduced from the 2013 financials?

DavidW5 (North Carolina)
Posts: 565

Posted:

Are your books kept on a cash basis or on an accrual basis? Has your 2012 audit been completed? If so, have the adjusting entries from the audit been posted?

If your books are kept on a cash basis then the expenditure is recorded when the bill is paid, no matter when the work took place. If your books are on an accrual basis then the costs should have been accrued in 2012 when the goods or services were received whether or not the bill had been received or paid. If no accrual was made in 2012, the audit should have picked up the error and an adjustment to 2012 should have been posted.

The real question is does the posting of the costs in 2013 result in a material difference? Depending on your total budget this could be a big deal or a "so what".

EdV1 (Florida)
Posts: 2

Posted:

The books are accrual basis. The budget is appx $900,000, and a simple review was done, audit was waived by board. It was determined last week that the invoices were not paid in '12, and were simply adjusted off the May 13 financials. Notice was sent out in March 13 that the eoy '12 financial report was ready for distribution.
The board did the adjustments to the May 13 financials in response to criticism about being over budget in '13.

DavidW5 (North Carolina)
Posts: 565

Posted:

Ed,

So before the adjustment was made the 2012 report would have showed that you were under budget by $12,000 - right? And before the adjustment was made the May 2013 report would have shown you were over budget by $12,000 - right? Either way the net effect is the same. The unspent 2012 funds would have carried over on your balance sheet as "unappropriated members equity" or some similar description. Those funds would be available to offset any 2013 overrun.

It seems to me that this should be explained to the members rather than making an adjustment to 2012 at this late date.

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