Expectations for HOA audit

Started by DavidF22 • 3 replies • 1025 views

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DavidF22 (New York)
Posts: 91

Posted:

I was wondering if the typical HOA audit would address practices that aren’t necessarily accounting-related, but could still have a financial impact on the community. For example, should auditors address a Board’s practice of signing no-bid, long-term contracts that may not be in the best financial interests of the community? Should it be noted in the audit if the Board is violating state law by not having a conflict of interest policy and not requiring directors to sign disclosure statements as to whether they’ve had personal/business dealings with HOA vendors?

Our state comptroller typically goes into this detail in auditing procedures of our local school boards, but I don’t know whether it would be inside the scope of responsibility for an HOA audit. I couldn’t find an appropriate thread to answer this question, so I’m asking here. Thanks.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

So if I hired a contractor in my personal life that did good work, I can't recommend hiring them to our HOA board? Would that violate some kind of law to you? I've read some of your posts and find that sometimes your not seeing the forest for the trees. If there is a no-bid policy going on, it's because of the practice put into place. My HOA I initiated the 3 bid rule. However, other HOA's who are managed by a MC it may be they allow the MC to do no-bids or their own choice for contractors. I can't criticized their process if that is what was agreed upon per contract with the MC.

It's almost like you want to find fault with your board for every decision it does. Sometimes we need to step back and breath. Audits are a good resource to make sure issues are addressed that are out of the norm. They don't make changes or put anyone in jail. They just make one aware of the situation so then one can make corrections.

Former HOA President

TimB4 (Tennessee)
Posts: 21,062

Posted:

David,

Auditors check the books and the internal financial controls (who does what, who has custody of what, who can do what).

They do not evaluate contracts to see if there was or wasn't something better available.
They do not evaluate how contracts are awarded.

See: What an Auditor Does and Doesn’t Do

DavidF22 (New York)
Posts: 91

Posted:

Thanks for your straightforward response, Tim. It’s very helpful. And thanks, too, for refraining from the trolling, condescending and judgmental responses that some others seem to relish on here.

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