Audit seems to be made up: how would your HOA handle it

Why bring it up if you don't plan to do anything about it? Isn't this attitude similar to your previous question about the property manager being on the board or whatever it was? How else do you expect any problems to be resolved?

Can you be more specific as to why you think the entire audit is shady just because the common area laundry machine revenue hasn't changed in three years? Have you even READ the entire audit? Could it be the numbers haven't changed because the number of residents using the machines hasn't changed, nor their frequency? It would appear the machines are operating well, otherwise you might see a bump machine fees to cover increasing costs. You own a rental property, so you know how expenses work - why not go to your Board with any questions?

Frankly, you sound like some of the investor owners in my community - don't give a rat's behind about anything as long as the rent check clears, and then scream bloody murder when the assessment increases. The place is nothing more than an income stream to you - who cares if the property is shoddy and the dues are relatively steep (whatever that means)? And then owner-occupants like moi have to serve on the board because you can't be bothered to attend meetings, let alone volunteer - and unlike you, we don't get to deduct our assessments on our taxes. I was on my board for 10 years and had to listen to crap like this - and what I said to you is what I said to some of the owner-landlords.

You don't like what's going in your community for whatever reason? Either get involved or shut the hell up, sell your property, buy elsewhere without an HOA and do whatever you want with it without worrying about pesky things like rules, reserve funds and whatnot.

So ends the rant of an owner-occupant.

I've noticed the same thing about ChrisE, Sheila: "I don't really care, but...." is in most of her/his posts.

I also can see how laundry room revenue could remain stable. Aren't there bigger $$ fish to fry,
ChrisE?

This is an AUDIT right? Which means it can be general #'s just to get an idea of overall budget health. Some Audits depending on the type aren't exact. So not unusual to see a line item that doesn't change much just to keep the same #. I'd request to see the actual #'s.

I am not sure how it is called "revenue". It's not a revenue item as much as covering the expenses of use. That money should go to a fund for later machine replacement in my opinion. Plus to cover maintenace and utility costs. So it may be reported as revenue but it may be dispursed as an expense.

In my experience with audits, the auditor verifies all line items and has a checklist of materials used to verify each line item.

So if $12,674.50 was the laundry room revenue in each of 2017, 2018 and 2019, in order to properly do the audit, the auditor would have needed to verify those amounts, and supporting documents (such as records of how much was taken in by the laundry card machines).

It's simply not plausible that the auditor properly verified records and found that the amount taken in by the washing machines was exactly the same ($12,674.50) in each year.

There are no notes or anything in the audit indicating that amounts are assumed; $12,674.50 is passed off as the exact amount of revenue in each of three years.

Clearly the auditor just wrote down a number instead of actually verifying an amount of revenue. That calls into question the entire audit.

I think you'd have to find out exactly what type of CPA check on the books this was. I'd ask for the paperwork that retained the CPA (I presume) and see if this was an "audit," "review," or "compilation." These are quite different. For one, "audits" are way more expensive. Unless the governing documents clearly state an "audit" is required each year, and unless the contract with the CPA states that she or he is to do an audit, then I would not trust that a full blown audit was done. I think your expectations of a certain level of detail, for whatever was done, may be misplaced.

I think it is also possible that the condo/co-op has a contract with a laundry machine vendor. The terms of the contract may state that the vendor need only turn over a fixed amount each year, from the coins put into the laundry machines, to the co-op.

Actually I'm with Chris on this one. My inner accountant would be hopping up and down hollering if I suspected that the audit wasn't done properly. An audit, if done right, would be one way to show that there are financial shenanigans going on, and that's kinda important, yes?

Income from coin operated laundry identical for several years? Nopity nope. Once is coincidence, twice is enemy action (unless the machines are set up in some way to stop at an arbitrary point, which would be weird).

Me, I'd take a harder look at the audits and put all of my concerns in writing, then send them to the board. Even if they do nothing, they're now on notice that people are paying attention.

I do agree with all comments about judging the level of assessments. Two identical communities could legitimately have very different assessments, depending on things like whether their reserves were funding properly in the past or if they're playing catch up. Or if they had some unusual maintenance expenses and are paying off a loan. Of if one community is self managed and the other employs a property manager. You really need to dig into the financials to be able to evaluate the reasonableness of the assessments.

My Declaration requires an annual audit, and the few others I've read have had similar requirements. But you may be right that what Chris saw is actually a budget, would would explain the one item remaining constant.

I took a look at the financial materials.

They are entitled "Report of Independent Auditors" and they state, "I have audited the accompanying financial statements..., which comprise the balance sheets as of December 31, 2019 and December 31, 2018 and the related statements of income and cash flows for the years then ended and the related notes to the financial statements." They then describe audit procedures.

They also state, "Management has omitted information about future major repairs that GAAP require to be presented to supplement the basic financial statements. Such missing information is required by the Financial Accounting Standards Board..."

Sounds like it is an audit, not less, and that omitting required information is a bigger issue, now that I look at this.

Excellent, thank you very much. I checked and it's a qualified opinion.

Good to know that the revenue might just be a set amount of revenue per year regardless of what's actually collected.

Thanks again, everyone.

Thanks, AugustinD, and good point. I will give this HOA credit in that it got an audit, even if the audit was not quite right. I lived in what I thought was an upstanding HOA for a few years and it didn't get an audit despite a requirement (in the governing documents) to get one. And I'm on the board of a nonprofit that didn't get an audit one year because the CFO was such a mess. In both cases, nobody cared.

I'll check the governing documents. For the audit being "not quite right", I'll take your position (and appreciate your mentioning) that the laundry room revenue might be a fixed payment pursuant to a contract. That makes sense.

But the audit left out major repairs. "We have $250,000 in the bank account--let's not mention that we have a $1,000,000 HVAC repair project or another big capital project coming due next year, though." That's what I got out of the cover letter.

ARGH, I have *not* seen an audit that discussed reserve projects in the future. My kingdom for an edit button...

I agree on both......LOL