Accounting for the Unique Needs of HOAs
Managing a successful Homeowners’ Association (HOA) requires the mindset of a business owner and a close attention to detail. Properly managing its financials requires specialized knowledge as well as a team that understands the importance of curtailing costs, minimizing risks, and ideally, building on the value of each homeowner’s investment.
There is great advantage to having an experienced accounting firm handle the financial needs of your HOA rather than your management company. Like any responsible business, you need a system of checks and balances in place to reduce the risk of fraud or error. The role of a management company is
valuable as they enforce policies, handle day-to-day operations, and perform ongoing maintenance on the property. Many times, this requires them to pay vendors and manage the funds collected by the HOA to pay for these services. If they are also the ones managing the HOA’s money and creating financial statements, this creates a scenario where fraud is possible. This is why we always recommend having a separate entity manage the day-to-day tasks like payroll and collections as well as the larger tasks like tax preparation and planning, budgeting, and preparing financial statements to present to the board.
Want to Learn More?
Reach out to Bailey Scarano today. We would love to talk to you about your HOA’s unique needs and how we may be able to help.