Audits Anyone

Seems that auditing rules have become so onerous and potentially risky for CPA firms that many of those firms are abandoning that area of practice.

Near me, the cost of an audit has more than doubled and we're finding difficulty finding a firm willing to take on a self-managed HOA like ours.

Any similar experiences? How are you dealing with it?

For 14 years my HOA has had an outside accountant prepare annual reviewed financial statements. That's in line with the statute due to our level of revenue. But the new board along with some homeowners think it's way past time we had an audit done. We've had at least 7 Treasurers and 4 bookkeepers since 2007. So we'd like to have an audit to use as a point-of-reference going forward. Some of us that have seen how the sausage is made over the last 6 years or so believe an audit will turn up some issues. (With that said, no money has gone missing since I've been here - which is a good thing.)

Anyway, our cost for annual Reviewed Financials has been between $2,200 and $2,500 for the last 6 years. We have no idea how much an audit is going to cost. Personally, I have seen numbers in the $9,000 range but no one has a good estimate. The outgoing president was asked several times last year to get in touch with the outside accountant and inquire about the potential cost of an audit but he never asked.

We have no idea about auditing rules or how much time it will take to accomplish, or even who an auditor might talk to. We're self-managed so I assume at least one Offficer or Director will have to work with the auditor answering questions, etc. Our bookkeeping firm will probably charge us for any time their people have to spend with an auditor. I don't think that's covered in our contract with them.

NP,

Yep, rules changed making audits a bit more labor intensive.

Question is, do you really need an audit or just a financial review (same as audit without the verification aspect)?
Reviews are less expensive.

A compilation simply takes your numbers/docs and places it into accounting forms/layout.

See the following thread on this forum:
Subject: Financial Audits, Reviews or Compilation Which do you use?

What I did find is that companies didn't like self managed Associations because of record keeping.
If you use a financial program (vs. pen and paper or excel), the companies are a little more willing to consider.

Good Luck

Thx again Geno and Tim

The sad part is that our bookkeepers used to be our auditors. They saved our hides by taking over bookkeeping when we fired an incompetent management company. Of course, they can't audit their own work, so we've had to find replacements. Bookkeepers run our books on QB. Incredibly clean financials. Even with that background, we're stuck with the stigma of being self-managed.

Our revenues are under $250k, so no legal requirements at present. But if income grows much larger, we need to be prepared.