Being a member of an HOA board means you’re involved in homeowners association accounting. If you’re not prepared for the job, the financial reports and records you’ll have to go through — many of which will be inaccurate — can become overwhelming. It’s necessary to analyze and decipher this documentation hoa accounting in order to prepare your homeowners association for bankruptcy, maintenance, and repair to the common areas. Furthermore, it combats financial dishonesty within the board or among employees. Using the cash basis, the association reports revenues when it receives them, not when it earns them.
- Both of these fees can be configured so they are covered by the payor or absorbed by the community.
- Reconciliation can uncover errors or omissions that may be causing a discrepancy between these two figures.
- HOAs often allocate an average of 5% to 10% of their budget for professional accounting software, showcasing the importance of technology in maintaining accurate and efficient financial records.
- Maintain healthy HOA vendor relationships to keep your management company and the communities you serve at the top of their client list.
An HOA Financial Statement is an official record that details all the HOA or condo association’s financial activities. HOA fees are assessments paid to the homeowners’ association to fund everyday operational expenses like landscaping, maintenance, and insurance. The ideal tech option will be designed from the ground up for the HOA space and available as part of a comprehensive community management suite.
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When looking into property management companies, it is important to look for a company with a strong financial background. The entire community association becomes ineffective if there is improper handling of finances. Most importantly, having detailed financial statements readily available to all HOA members can promote transparency between the board and the community.
Empowered with this solution, HOA board members can step up their accounting performance without retraining themselves to become accountants. Software that enables a direct link between banks and HOA boards is an important trait to look for, because of the amount of manual work it saves. When HOA board members need to process payments by hand, the actions can be time-consuming, month after month.
How To Find And Evaluate HOA Management Companies
Conversely, suppose an association charges fees that cannot cover the reserve fund. In that case, it can hurt the community if it is forced to find alternate methods of funding the replacement project. Whether an HOA is made up of ten units or ten thousand units, it could be beneficial to hire a management company to ensure that everything is being run as efficiently and effectively as possible.