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Why Balance Sheets Matter

By D.W. Haney, CPA (Retired)

Most HOA disputes, dysfunctions, and disruptions are due to financial and standard of care stewardship issues. Who pays what, when, and why? And unfortunately, HOA financial statements produced today are misleading and fail to reflect the community’s economic reality.

In general, HOA directors, managers, and advisors do not have the skill sets necessary to understand, analyze, and respond to the financial statement stories contained in GAAP (Generally Accepted Accounting Principles) compliant financial statements. These statements are a foreign language to most, who oftentimes do not seek the advice of financial translators and guides to help them on this important piece of the HOA journey.

One big piece in this puzzle is the Statement of Financial Position (balance sheet). Here we will examine the three different methods to tell the financial strength story: cash basis, full accrual, equity designation. (There is a fourth method on the scene...

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Investigating Suspicious Financial Activity in Your HOA

#hoas finance fraud Dec 15, 2022

By Joe Garza, CPA

Today, a homeowner’s association’s (HOA) board of directors depends on technology to store contracts, banking information, and other confidential documents. Unfortunately, while digitization increases efficiency, it also intensifies the potential for fraud and theft of community funds. Even with checks and balances, like collective oversight of a community’s financials from board members and community managers, an association’s money can still be at risk.

Managing an association’s account manually and collectively elevates the opportunity for mistakes to happen, making it crucial to differentiate human error versus ill intent. While it’s a board’s fiduciary duty to protect the financial health of its HOA, board members must also remain respectful, objective, and observant. If you see something, do something. Here are steps for investigating suspicious financial activity that may be going on in your HOA and tips for...

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