Should the HOA have a CPA for oversight of the management company

Started by CorbinB • 9 replies • 381 views

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CorbinB (Florida)
Posts: 7

Posted:

In our last audit the auditor noted a lack of HOA financial oversight of the management company. So I'm wondering if it's common practice for Board to hire a CPA to review monthly financial reports from the management company. Our budget is north of 7M.

TimB4 (Tennessee)
Posts: 21,059

Posted:

The board should be reviewing the monthly financials.
I think the board should also be the ones reconciling the checkbook.

A CPA should do an audit every year or two (depending on your documents requirements)

MaxB4
Posts: 3,513

Posted:

I am sure Florida has a requirement that HOA have either reviews or audits done on an annual basis.

IMO, with a $7M budget, it shouldn't be a board reviewing the financials, but a Finance Committee with some very experience people leading it. The MC will be the ones doing the actual reconciliations of ALL bank accounts.

KerryL1 (California)
Posts: 14,550

Posted:

We, as max suggests, have a Finance Committee chaired by the board treasurer that reviews the financials every month. The MC reconciles the checkbooks. directors should review the financials every month or least skim them to see if there are any anomalies.

Our ann. budget for '23 is south of 4m.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By KerryL1 on 12/06/2022 5:57 PM
We, as max suggests, have a Finance Committee chaired by the board treasurer that reviews the financials every month. The MC reconciles the checkbooks. directors should review the financials every month or least skim them to see if there are any anomalies.

Our ann. budget for '23 is south of 4m.

Actually, in California, the board is required to review their financials records on a monthly basis.

KerryL1 (California)
Posts: 14,550

Posted:

I'm aware of that, of course, Max. Our assn. Board acknowledges review of the financials every month as a part of its Consent Agenda. for its open meetings. But that seemed off topic for Corbin of FL.

MichaelS56 (Minnesota)
Posts: 859

Posted:

We do an annual audit.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Having a CPA review the monthly financials can actually be counterproductive. It can give the board an excuse to ignore this oversight, which is probably listed as one of the Treasurer's duties in the bylaws. As others noted, all board members should know what's going on with the finances in order to make good decisions.

Also, CPAs aren't cheap. Hiring one for the annual audit makes good sense, as does hiring one if a community has gotten itself into a real financial mess. But for routine surveillance in a community that is being run properly, it's overkill IMHO.

MichaelT21 (Arkansas)
Posts: 462

Posted:

In the case of an association with a $7 million annual budget, I think that monthly outside professional reviews of finances would be prudent, responsible, and affordable.

You can only ask volunteers to do so much. I know that our Treasurer for our association (operating budget 1/30th your size) does not read the documents e-mailed to him each month. I also know that I did just a check of all invoices sent to us (and promptly paid by our property manager) by our legal firm, and found $330 of charges in error. It's a pain to verify every invoice to ensure accuracy.

I can't imagine 30 times the workload, and expecting volunteers to do it.

Yes, definitely hire a professional to help keep tabs on your finances.

LoriM15 (Florida)
Posts: 1,009

Posted:

Quote:

Posted By MaxB4 on 12/06/2022 5:20 PM
I am sure Florida has a requirement that HOA have either reviews or audits done on an annual basis.

IMO, with a $7M budget, it shouldn't be a board reviewing the financials, but a Finance Committee with some very experience people leading it. The MC will be the ones doing the actual reconciliations of ALL bank accounts.

In Florida, both HOAs and COAs with budgets over $500,000 are required to have audited financial statements yearly unless a majority of voting interest vote to waive that requirement.

Our property management company does all our financial transactions for us but our treasurer monitors all transactions to and from our accounts at least monthly. It could be the auditor was commenting that no one from the association is overseeing the finances and leaving it all to your property manager.

Also, the board can vote to have a higher level of financial oversight and also that can happen if 20% of the voting interest request it.

A good place to start with this might be to ask the auditor what they want to see.

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