Sharing audit results - good or bad

I agree the members have a right to take a look at it if they want, but more importantly, the board needs to come up with a plan on how to address the problems uncovered by the audit. As you have guessed, the reason this board member doesn't want others to see it is because people will ask questions as to why and how the board let things get to this point, and begin considering not re-electing him/her to the position. But such is politics - even if you do everything right, people still nitpick, so you may as well do what's right from the start.

Anyway, take a long, hard look at the audit - hopefully, some suggestions were made that your board should take seriously. There are various books on the web about running HOAs and managing the money (the community association institute website is a good place to start). If you have a property manager, you need to take a serious look at him/her, also because if they've been charged with preparing the books, you may need to reconsider keeping them.

EVERYONE shares responsibility - the board was apparently lax and didn't keep track, while the homeowners didn't ask enough questions for 10 years. I'm assuming you're on the board, so now that you have your audit, you should lead the way in turning things around. You can't and shouldn't do this by yourself - start looking for some like minded people who might make up some sort of finance committee that can develop procedures for the board's review and approval. Once those procedures are in place, the finance committee can serve as some sort of oversight group to continue to make recommendations.

I'm more or less with others on this one.

Owners should be able to receive a copy of the audit if they desire a copy. However, I would make it known that the audit is available only after the Board has carefully reviewed it and developed a get-well plan. But that plan needs to be done quickly so release of that plan and the audit is timely.

Releasing the audit and informing ownership how screwed up things are without simultaneously showing the get-well plan will most certainly create havoc. The Board Members' time will quickly be consumed by questions, criticism, and calls for their head. Their time right now needs to be spent on figuring out what went wrong and how to make things right.

If things are so severely off track, the Board should look into hiring a professional who can help create this get-well plan. Good luck.

If the audit was requested by the HOA and paid for by them then it is an HOA record. Per state law, upon request by any member the HOA must allow inspection of the audit and provide copies at the member's expense if so requested.

My personal opinion is that few members will want to review the audit.

I was just about to post that there is no Arizona audit requirement. That would have been so wrong!

Here is the full text of ARS 33-1810:
"Unless any provision in the planned community documents requires an annual audit by a certified public accountant, the board of directors shall provide for an annual financial audit, review or compilation of the association. The audit, review or compilation shall be completed no later than one hundred eighty days after the end of the association's fiscal year and shall be made available upon request to the members within thirty days after its completion."

I am not certain as to the difference between "audit, review or compilation" and the statute provides no guidance. It appears that the board must do one of those within six months after the end of each fiscal year.

There seems to be nothing in the statutes to require that the "audit, review or compilation" be publicized or distributed to the members. If a member request to see it then the association must make it available within ten business days. If the member wants hard copies, the association must provide them at a cost of no more than 15 cents per page. ARS 33-1805.

I thought maybe AZ had some kind of requirements, Larry--good you found them.

The below is from Davis-Stirling.com, a website compiled by a CA HOA law firm and includes the distinctions among the three procedures.

"There are three levels of examination for financial statements.

Audit. If an association's governing documents require an audit, a licensee of the California State Board of Accountancy (a Certified Public Accountant) performs an extensive examination of the association's financial records and issues a statement as to their compliance with generally accepted accounting principles (GAAP). An audit is performed in accordance with GAAS (generally accepted auditing standards) established by the American Institute of CPAs (AICPA). The auditing standards are described in Statements on Auditing Standards (SAS). An audit provides a "reasonable level of assurance" that the financial statements are materially correct. As a result, audits are more expensive than reviews and compilations.

Review. If an association's governing documents are silent regarding an audit, the Davis-Stirling Act requires, at a minimum, a "review" of the finances for any fiscal year in which the association's gross income exceeds $75,000. (Civ. Code §5305.) In a review, a CPA performs limited inquiries in accordance with GAAS .... and gives "limited assurance" that the financial statement is materially correct. Reviewing standards are described in Statements on Standards for Accounting and Review Services (SSARS).

Compilation. A compilation is the lowest level of review in which a CPA assembles information provided by an association. The CPA need not be independent and is required to perform very few procedures. Further, the CPA takes little responsibility for the financial statement and gives no assurance as to compliance with GAAP.

NOTE: Neither audits nor reviews guarantee that embezzlement will be detected."

Transparency is best. If things are messed up, they are messed up. Its just reality.

If it was my HOA I would email a link to the PDF to every homeowner. Why? Its obvious the HOA mgmt needs some new blood. The people that would take the time to read the report, would also be the type of people who would volunteer and have the skills/interest to actually help out. If the current people running the HOA have caused this mess, they are unlikely to fix it.

Yes. Let members view the audit report.

Yes. Have the HOA Board quickly (but with deliberation) create a tangible plan for correcting the challenges outlined in the audit.

Your board transparently reveals the problems but issues the answers. This reflects strong leadership if the board follows through.