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Community associations use a system of accounting called fund accounting. As with non-profits and charities, the entity is collecting money for specific purposes, and should account for specific financial activity in pre-determined funds.

If you’re as Olympic-addicted as we are here at Charter Construction, then you were glued to the tv and news stations waiting for the next world record breaker or the neck and neck race for gold or the headline-grabbing Simone Biles’ and her decision not to compete.    

How you handle your HOA reserve funds really makes a difference in the successful running of your association. Managing HOA reserve funds is  important for the longevity and future investments of your association.

As a member of the board, it is your responsibility to stay on top of your reserve fund making sure it is regulated well and in the community’s best interests.

Another part of a financial statement deals with prepaid expenses. A prepaid expense is an expense an association has paid in advance. It is an asset of the association. The most common prepaid expense is an association’s annual insurance premium.

Now we come to the part of a financial statement that deals with accounts payable and accrued expenses. A payable is something the association owes to another entity or person. It is a liability of the association.