November 2023

TIGHTENING... from page 28.

from your management company’s reports. An annual audit is an independent verification of the financial control procedures of the association and your management company and the accuracy of the information presented. This minimizes the risk of material misstatement, whether due to fraud or errors, includ ing discrepancies. The annual audit should be performed by a 3rd party CPA firm specializing in common Interest reality associations (CIRA) audits. The CPA firm will audit your books and internal controls of management according to General Accepted Auditing Standards (GAAS), provide an opinion of the records in accordance with Generally Accepted Accounting Principles (GAAP), and provide a written report with comments and recommendations on areas that may need some fine-tuning to comply with these standards as they relate to your financial controls. In conclusion, whether or not your association changed any of its practices due to the pandemic, now is an excellent time to review your association’s current financial control practices and procedures as we close out 2023. Let 2024 be the start of a more robust system of financial control over your association’s finances. n

4) Monthly reports and reconciliation: Most associations’ management companies provide a finan cial report to their boards monthly. It may be the management company’s commitment to prepare and deliver these financial reports to the board. Still, it is the board’s fiduciary responsibili ty to review the report. Board members should review the bud get variances to see if any overages or savings make sense based on past and current projects. Check registers should be examined in conjunction with the canceled checks contained within bank statements to ensure only approved transactions occurred. Bank reconciliations should be prepared monthly, and differences reviewed and corrected before minor errors or mistakes snowball into more significant issues. 5) Annual audit: Most associations’ governing documents require annual audits as the importance of this financial control is paramount. A yearly audit is more than just a fancy-looking report derived

Your Association is in Good Hands with Homestead Management Services.

Responsible Property Management that responds to your needs

• Personal, responsive customer care with 24/7 emergency call service • Modern, fully intergrated databased network for quick response to problems and solutions

• Live, expert staff of experienced management personel

A complete financial package: •Complete Monthly Financial Statement •Accounts Payable •Accounts Receivable •Deliquency Report •Annual Reports

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NOVEMBER 2023