Forcing an Audit

Our POA Board has never issued any financial statements besides a budget. There are several people in the Assn. who are concerned that the BOD does not provide any signed statements regarding the finances/actual spending of the Assn. Because the annual collection amount is not all that much (less than $20K)the majority could not be bothered with it.

There are several members who have, at Assn meetings, requested an audit and in response the Treasurer offered to give them a copy of the checkbook - to prove what checks were written but he never has. This really wouldn't mean anything anyway unless they also provided the bank statements.

The BOD states that they don't want to have a cpa or accountant do an audit because "it would cost too much money" and there are alot of speculations as to why they refuse.

Is there any legal way to force them to do an audit or sign off on a financial statement? If the concerned members hired and paid for a CPA on their own would they be able to demand access to the books so an audit could be conducted? The Assn. has not filed taxes in years because they say they are a non-profit and their intake is not enough to require it.

Any advice is appreciated.

We are always asked by a select few to perform an audit but it is very expensive and we have only 137 homes. We do supply the budget each year as required and on the budget is the current year actual vs. budget. If anyone wants to see the books, they just need to make an appointment with the management company. Each quarter when I receive the finanicals, I go over them and ask questions to the management company. HOA's have pretty basic/simple accounting and annual audits are expensive. It is not hard to see where the money comes from, where it goes and who hasn't paid. I can't see spending the money on an audit unless there is something going on.

Virginia - We have a similar situation where several of our homeowners are skeptical of our MC bookkeeping. We had problems earlier this year with HOA fees being placed in wrong accounts which led to late fees and some liens being placed on properties. We have had several people ask for an audit.

I received some quotes on audits and found they ran anywhere from $8-$10 k. I also talked with the CPA's about an audit and they told me that the information contained in a formal audit is not what we as homeowners were looking for.

They suggested three courses of action. The most complete level of service less than an audit is a "review" which is a very general term referring to very specific procedures that study the overall bookwork without getting into appraisals of assets and the like. Secondly they suggested that we could study some specific "agreed upon procedures" that would insure that your bookkeeper was handling specific tasks proper the same time everytime. Finally they indicated that we could have what is called a "compilation" which looks at a specific bookkeeping function ( accounts receivable) and make sure that all items were documented and accounted for. Each of these functions were less than $2500 and would give us homeowners what we were looking for.

I am hoping that we do a compilation study prior to our meeting, then we are going to ask the homeowners if there are further issues items that they would like reviewed studied by the CPA. Our BOD goal is to be reasonably assured that the books are being handled correctly, and pass that assurance on to the homeowners without spending a dime more than we have to.

Take Care