How to Find the Right CPA for Your HOA
Proper financial management is key to the smooth running of any Home Owners Association (HOA). Every HOA operates on a budget, and they mustn't exceed the budget since that forces the homeowners to pay higher fees than usual.
For this reason, the board members of every HOA get tasked with the duty of managing the HOA's financial matters. As a board member, you must know that maintaining the financial health of your HOA is not a game of chance. It demands high levels of experience and financial expertise, which you might not possess. Therefore, having a certified public accountant (CPA) to ensure accuracy in the accounting processes is the best way to help you stay on track.
However, finding an experienced and qualified one is often nerve-racking, but it shouldn't be a reason to worry. We have compiled a few tips to help you out, as well as a list of services the CPA will render to your HOA.
Who Is a CPA?
A CPA is a trusted financial advisor tasked with helping organizations, individuals, or businesses plan and manage financial matters. For HOA's, a CPA is primarily responsible for preparing tax returns. However, filing tax returns, especially for an HOA, is confusing since it gets treated as a business and thus required filing a corporate tax return like other corporations.
Besides filing returns, a CPA can also perform the following duties.
- Compiling Financial Statements
The CPA is responsible for compiling financial statements and relevant reports that show the management of the HOA's finances. However, the CPA does not analyze or confirm the accuracy of the reports, and thus the compilation provides "no assurances."1. Review
A review is a step-up from a compilation. Here, the CPA conducts a basic analysis of the information provided by the HOA's financial statements. A review thus provides "limited assurances."2. Audit
An audit of HOA's information is the highest form of assurance that a CPA provides. It involves reviewing all contracts, records, and board meetings to ensure that all financial records are accurate and error-free. As such, the CPA must take time to understand the HOA's policies and structures without missing a bit and test the financial statements using the accounting documents.
Some states demand that HOA's complete an annual audit, while others do not. In states where the audit is not mandatory, CPA services still get required since many associations have by-laws that necessitate such services.
Tips on Finding the Right CPA for your HOA- Do a Thorough Research
A good CPA doesn't come easily. It will require intensive research to find a good firm, most preferably a local accounting firm. It is also advisable to look at the customer's reviews to gets a sense of their results and reliability.- Ask Questions
While choosing the right CPA, you will have to ask specific questions during interviews. This will help you gauge the experience level to determine if they are best suited for your HOA.
During the interview, be sure to ask your CPA the following questions.
- Do you have experience with HOA's?
- Do you have time to accommodate us as clients?
- Do you know the difference between tax forms 1120 and 1120H?
- Do you know exempt and non-exempt function income?
HOA management companies are experts when it comes to matters of finances. Most HOA management companies offer financial management services for their clients. Additionally, the management companies run all management duties on behalf of the HOA board members, enabling the HOA to run effectively.