Board published financial statements have material changes to many expenses

2021 Year end income statement sent to members in January, by the Board, is different from the "same" income statement the Board is showing now.

The income, total expenses and bottom-line remain the same.

Material changes:

Contractors exp goes from $3,820.00 (1st) to $5,785.93 (now)

Job Supplies exp (which makes no sense as a name, the Board said it is the cost of buying and installing custom street signs which should be capitalized not expensed and certainly not be called "job supplies" in either case) goes from $12,993.47 to $15, 993.47

Reimbursable exp goes from $3,000.00 to nothing.

Uncategorized exp goes from $2,615.93 to $650.00

The Association is clearly not following GAAP, which by law it should be since it is a 501C in Texas, but with its small size I have no problem with that if the financial statements were consistent and made sense - not call a major capital expenditure "job supplies." What is troubling to me is expenses shifting around by material amounts, combined with some ".00" endings - expenses groupings are likely not going to end in "00."

In my opinion, the Association has gone bonkers using attorneys for everything, and as a result, legal expenses have gone from previously nothing to less than $1000 a year typically to ~$7K per year the last few years without any major projects that would explain it. From things I have heard this year, I think they doubled legal expenses from that $7K range and instead of reporting it as such, I suspect they are spreading it around into other expenses. I thought that when the first release was done, and with the material changes noted above in the "same" financial statement being shown now, I am almost convinced that is what is taking place. Even though it is a small POA, I want to request that a CPA Review (a full audit is not warranted in my opinion and a Review would make sure the statements are under GAAP.)

Why most ignore this, or do you think it is suspect?

Suspect. I would get enough members to sign a petition to demand a full forensic audit of the books.

Roger

Is your COA a TPC 209 HOA or a Chapter 81 or 82 Condominium association?

It's not unusual to recode expenses from one GL category to another. And it's not unusual to round up or down to a whole number.

The board does not have to honor your request for an audit. I would suggest asking to see the invoices from the changed categories.

I do not think so. Presentation is exactly same format.

I already ask for supporting documents via an email request. My request ignored - no response. A neighbor sent a similar request by certified mail, and the Board would not sign for it, and it eventually was sent back to her after about 6 weeks.

-- First, why is it you think your HOA is in the extremely rare (for HOAs) category of being a IRC 501(c)(4) organization? That your HOA is an IRC 528 organization is much more likely. Do you know what a 501(c)(40 organization is? If not, google on why very very few HOAs are 501(c)'s.

-- Second, the reason your HOA should be following GAAP is because it is a nonprofit corporation.

Rodger

Can we assume one was a Budget (best guess) and one was the final? There will be differences.

I'm going to assume since you mention GAAP, you're familiar with financial statements. The one question I have, is the difference between the two statements is that one is audited? Maybe some expenses were misclassified. Also, not knowing the size of your HOA, those expense do seem material, but for a large HOA, they're rather minimal. I don't know who audits your HOA's books, whether it's a CPA firm, or members of your Association, (kind of depends on your CC&Rs) but before being accusatory, it may be best to just ask some questions.