Every homeowners’ association (HOA), no matter its size, must keep accurate financial records. Income, expenses, assets, and liabilities should all be carefully tracked to prepare useful accounting reports.
Accounting reports provide financial transparency and inform current and potential community members about the financial health of the organization. They also assist the board with budgetary decisions, demonstrate stability to banks if the HOA applies for a loan, and satisfy legal and tax-related requirements.
So who is responsible for preparing these pivotal reports?
HOA Accounting Report Preparation
Although smaller HOAs can elect a financial officer or treasurer and attempt to self-manage the books, it is usually better to hire a professional. Even relatively simple financial reports can contain errors and lose their usefulness if the preparer does not have the necessary accounting experience. A certified public accountant (CPA) should prepare HOA accounting reports or at least review them for accuracy after completion.
If the HOA has a community association management company running its day-to-day operations, it will prepare the accounting reports. This is often the case for large associations with more complicated budgets, but even small HOAs can benefit by using outside management for vital accounting services and report generation.
Regardless of who is preparing the accounting reports, the right HOA Board reporting software can increase report accuracy and efficiency. For example, CINC’s community association management software utilizes integrated banking systems and automation of repetitive tasks to create timely reports as often as needed.
Frequency of HOA Accounting Reports
There is no national standard for HOA accounting report preparation frequency. Some reports may be generated monthly, while others can be released quarterly, or even annually. The more frequent the statements, the more useful they will be to the board and the rest of the community.
Variables to consider when determining report frequency include:
- Community size — The more substantial an HOA, the more complicated its financial statements. These communities may decide to receive quarterly rather than monthly budget updates, especially if they lack the accounting software tools to generate automated reports.
- Community goals — If a community is undergoing or preparing for a costly renovation project, financial reports may need to be generated more frequently.
- Government regulations — Some states or local governments have rules regarding how often HOAs need to submit specific financial reports.
HOA Accounting Reports Foster Transparency
Financial transparency is crucial for any organization. Accounting reports prepared by an inexperienced board officer or an accountant or association manager who lacks automated software tools may not satisfy this need for transparency.
When manually input, reports are likely to take longer and contain more errors — neither of which promotes trust among homeowners, HOA boards, and the association management companies that handle their operations.
Selecting robust, multi-faceted, cloud-based software is the first step in preparing HOA accounting reports. CINC’s automated accounting software with integrated banking features can provide the tools needed for frequent, timely, and accurate HOA accounting reports.