When residents see where their dues payments are going, they possess greater trust and satisfaction in the HOA and are more likely to involve themselves in its operation. There should be a budget comparison report for every fund the association maintains. All Balance Sheets contain the same categories of assets, liabilities, and owner’s equity. Owner’s equity (or net worth or capital) is increased by money or property contributed and any profits earned, and decreased by owner withdrawals and losses.
Understanding the Components of HOA Financial Statements
These documents will be available to everyone in the community, most of which do not have advanced accounting degrees. For an HOA financial statement to be effective, it needs to be prepared so that anyone can understand the content. The main purpose of this HOA financial statement is preventing fraud – and it is very easy to tell what is happening in the report at a quick glance.
Board Budget Review
It provides information about the homeowner’s most recent payment, helping to track payment history and ensure accurate accounting. The HOA can efficiently plan a monthly due for the members while planning the HOA budget, as the budget process allows them to account for most expenses, along with the reserve fund. CINC’s software has self-contained modules that you can add https://www.bookstime.com/ for maximum scalability as your company grows. CINC’s all-in-one cloud-based system also includes automation, allowing your HOA managers more time to focus on value-added activities. Advances in technology have made scalability and growth more accessible for association management companies, but you need scalable resources and structure to achieve manageable growth.
HOA Financial Reports and The Board’s Responsibility
He/she provides any and all required documentation for the HOA board to review. Managing and overseeing the finances of your HOA should be one of the board’s main priorities. That said, many HOA board members may not have experience with hoa accounting HOA financial reports. If you still have questions about financial reports of your association, here’s what you need to know. It allows you to see what resources it has available and how they were financed as of a specific date.
Which Accounting Method is Recommended for HOAs
It will also inform the board’s discussions when it comes to the association’s finances, allowing them to make sound financial decisions. An HOA financial statement functions as a comprehensive overview of a homeowners association‘s financial activities. This document provides detailed information about the association’s income, expenditures, assets, debts, equity, and overall financial position.
- The reserve study ensures that sufficient funds are available for significant future expenses, preventing the need for large special assessments.
- While cash flow refers to the cash that’s flowing into and out of a company, profit refers to what remains after all of a company’s expenses have been deducted from its revenues.
- While a large number of associations use the calendar year (January-December) as their fiscal year, a business can elect to use any other twelve-month period such as June-May as their fiscal year.
- So the HOA statement can have varied dues and the amount can change accordingly.
- A cloud-based AMS database syncs with member profiles so association managers can complete tasks and access information whenever they need it.
- It offers centralized access to the data needed to produce timely board packages.