HOA Audit

Can a homeowner ask for a independent audit and who has to pay for it?

Depends on the state you are in. Maryland law says that 3 owners can petition for an audit not more than once a year and when it is done it is a common expense.
Jeanne

Peter,

Since you're in FL, FL statutes would apply. As others have said, I am not an attorney and I do not work in the legal profession.

Depending on the statute that applies to your Association, your Association may or may not be required to have an audit (unless of course your governing documents say otherwise). For example: Per FL 720.303 (7)(a):

(a) An association that meets the criteria of this paragraph shall prepare or cause to be prepared a complete set of financial statements in accordance with generally accepted accounting principles as adopted by the Board of Accountancy. The financial statements shall be based upon the association’s total annual revenues, as follows:
1. An association with total annual revenues of $150,000 or more, but less than $300,000, shall prepare compiled financial statements.
2. An association with total annual revenues of at least $300,000, but less than $500,000, shall prepare reviewed financial statements.
3. An association with total annual revenues of $500,000 or more shall prepare audited financial statements.

The difference between the different financial statements can be found in this article:
Understanding CPA Service Levels: Compilation, Review and Audit. A Primer

You do have a right to see the latest audit, compilation or financial review.
If you want to have an audit performed (which by the way can cost $5-10K) you will likely need to pay for it yourself and, it may or may not be possible without a court order as the auditor would need access or copies of many documents and some of those documents, like individual lot ledgers, may be protected by privacy concerns, you would likely have to pay for it yourself.

Depending on what you are looking for, a simple review of the Association's financial documents may be all you need.

Hope this helps,

Tim

From our experience, if the HOA has been administered properly, it is likely that they have had the audit's done per the CCR's and whatever your actual question is as it pertains to an audit should be answered easily.

If your HOA has never had an audit done, of any kind, the cost of having it done will be excessive since they may want or need to go back many years. In our individual case, we have no record of having one done, and because of a very unorganized PM, it will become too costly for us. Next year we will have our first review, and if anything seems out of place, an actual audit will be done. (that's our plan as of now). We are very lucky that our annual budget is very small, so it's just a matter of making sure there are no unexplained invoices or movement of monies etc. And that is where having control systems in place comes in handy.

Someone complained on another thread about the time consuming act of how things are paid within their HOA, and when you think about it, those acts can actually allow for just a review because all the t's were crossed etc.

Pay it now, or pay it later. If the board does it's job properly, having an audit done shouldn't have to be so costly. Unless you hire a CPA who likes billable hours.

An audit is required by my governing documents in NJ. However, it is an audit based on statements given to the CPA by the Board (who is less than ethical on so many levels its beyond description). As such, the CPA gets to state that he is basing his "audit" on the information provided to him by the COA and gets to claims indemnification from any errors in the audit that result from what he has been given. In short, if he was given false information -- he based his findings on false data. And he isn't liable. Yep. It's most definitely not any type of forensic audit and I question the validity of what is provided. For many reasons...

As per demands of records, in NJ, you can't even get access to the financial records. Although it's the law, there is no enforcement. If the COA withholds them (with help from the COA lawyer), so be it.

Again, in this state, seeking to pay for an audit would likely turn into a legal battle in the courts (even if I wanted to pay) which, of course, in my case would be opposed vehemently as a burden of epic proportions that they need not be forced to endure. They should just be trusted... And the courts in NJ would, as they always do, would find in favor of the corporation as one acting in "good faith" via the "business judgment rule" which seems to be a "get out of jail free" card for those in power over COA/HOAs for anything/everything they do.

If you think something is wrong financially, you are probably right. I wish you the best in trying to find out and then getting the matter resolved.

In NJ -- there is no getting the issue resolved. Theft is part of the process in the Garden State and all government agencies look the other way while it's going on. Known. Proven. Reported. It's a lawless state. And we're just screwed. They don't call it "The Soprano State" for nothin'.

No one knows your HOA better than you. Form an audit/finance group and continuously audit the books. Free.

Most fighting comes from misunderstanding where the money is going. A finance committee could help educate homeowners as to where, specifically, the money is going.