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Four Essential Reports for HOA Board Members


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Unfortunately fraud and embezzlement are not confined to the for-profit sector, it often occurs in homeowner associations as well.  To often, little or ineffective oversight by HOA boards lead to embezzlement that can go on for months, or even years without anyone realizing it.  In Portland, Oregon, a management company stole from over thirty different HOAs over a three year time-span, and  no one caught it, until one of the boards went to use some of their association reserve funds and found that their reserve account was empty.  All of the theft could have been avoided if any of these boards had provided the needed oversight.

One of the best ways for boards to provide effective oversight is to have the proper reports at each board meeting.  The four essential reports that I recommend every board member should get at a board meeting are as follows:

  1. A Balance Sheet-  The balance sheet provides a picture of the financial status of an organization at a point in time.  It shows a board what it owns and what it owes.  It tells the board if it has the money on hand to meet its current obligations.
  2. An Income and Expense Statement with a Budget Comparison-  An income and expense statement shows how much it earned and what expenses it incurred for a given period of time.  Boards should ask their manager to make sure that each month they show both the actual and the budgeted expenses, as well as the difference between the two.
  3. A Statement of Aging Receivables- This statement shows the board their delinquency rate and how well the HOA is doing at collecting on those debts.
  4. Bank Statements with a Reconciliation Report Attached- The HOA manager should provide the board with a copy of its bank statement and a reconciliation report.  This will allow the board to make sure it has accurate information when making decisions.

While reports aren’t enough to prevent embezzlement from your HOA, they are a useful tool in spotting embezzlement, so it doesn’t continue on for a long period of time.  For other ways to prevent embezzlement and the number one way a board can  safeguard the HOA funds, please see my best selling book Trade HOA Stress for Success

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Doug McLain, CPA

Doug@HoaTaxHelp.com

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HOA Tax Help was started by 3 CPA’s who felt a need to help small associations save money by being able to prepare and file their own tax returns.

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