Lava,
Unless applicable laws require an audit, the Association does not have to do one.
However, it is always good to get an independent review of Association finances.
Audits cost more then Financial reviews.
The cost for an audit can be from $2,000 to $10,000 (depending on the complexity and the number of years).
If you are unaware of the differences see the following thread:
Subject: Financial Audits, Reviews or Compilation Which do you use? Understanding Compilation, Review and Audit What comfort level is there from an audit, review or compilation report? For information on transitioning from Declarant to membership control, see the following links:
Developer/Homeowner Transition: A Guide To Success Developer Transition in a Community Association Best Practices - Transition from the Foundation for Community Association Research (pdf document)
Developertransition.com This website is intended to specifically address the issues facing townhome, condominium, and homeowner associations in North Carolina. [still has good general information as well]
Transistion Plan an HOA's formalized plan for transition.
Subject: HOA transition from developer control to homeowner control Thread in HOATalk that discusses having a Transition Study done by an engineering firm.
I've also attached the checklist that is typically provided by many on this site when there is a discussion about transitioning.
You should also be thinking about Reserves. For more info on Reserves see:
For more information on Reserves, see the following thread in this forum:
Subject: Reserve Studies/Funds 101 There are links on that thread which include video seminars (via you tube) that go from the basics to advance information about Reserve Studies and what is considered 100% funded.