Most associations have fiscal years that end on December 31. If an association does not obtain an independent audit by a Certified Public Accountant, it is perhaps more imperative that boards of directors pay close attention to their internally generated year-end financial reports.
Whether preparing an annual budget or a reserve study, it is important to know how much money is available to spend and where the money is saved and recorded. Maintaining separate bank accounts for operating expenses or for reserves activities is both required by some statutes, and highly recommended. Having a bank account for each type of fund is a great place to start separating each fund’s financial activity.
Question: If three different accountants/bookkeepers sat down with the same data & transactions to process, would they prepare financial statements that look exactly the same?
Answer: Possibly but probably not.
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.
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.
The past two weeks have been devastating after witnessing the partial collapse of the Champlain Tower South condominium in Surfside, Fla., learning of the lives that perished, and seeing the tragedy’s impact on survivors and those in the immediate community. An investigation into the cause of the condo collapse is ongoing; standards of practice and legal requirements related to ensuring maintenance and structural integrity of condominiums understandably are coming under scrutiny.
Receivables are an asset which is generally presented just below cash on the balance sheet. It represents amounts the association has the right to receive. Receivables are amounts due from other people or entities.Â
You may have been noticing an increase in the frequency of plumbing system replacement, at very high costs. Now that a significant portion of the housing stock we serve within Washington Community Associations has reached or is near the 50-year mark of life, expect that trend to continue. But what do you plan for in terms of timing, and cost? Why isn’t total replacement typically in your reserve study?
