CPA Reports for Homeowners Associations (HOAs) & Community Associations

Introduction (HOAs) & Community Associations

1. Overview

Homeowners Associations (HOAs) and community associations — whether condominium

associations, planned communities, or common interest developments — oversee significant

financial activity: dues and assessments, reserve funds, maintenance budgets, and more. Given this complexity and the fiduciary responsibility to homeowners, many state laws and governing documents require or strongly suggest independent financial reporting. A CPA prepared report can provide transparency, accountability, and credibility to boards, homeowners, lenders, insurers, and other stakeholders.

2. Who Needs This & When

You may need a CPA report for your HOA when:

• State law requires it based on revenue or number of units

• Governing documents mandate periodic audits or reviews

• Homeowners request increased financial transparency

• The association is seeking financing or refinancing

• Transition between property management companies occurs

• The board wants to proactively demonstrate fiscal responsibility

  
  

3. Common Real World Scenarios

CPA HOA reporting is essential when:

• State statutes mandate financial reviews or audits

• The HOA applies for a loan for capital projects

• Homeowners express concerns about financial mismanagement

• A new board or management company needs a clean baseline

• Insurers request independent validation of financial health

• There are large reserve accounts or major special assessments

4. Regulatory / Third-party Background

State laws governing HOA reporting vary widely. Some states mandate audits or financial reviews when certain triggers are met, while others delegate this to governing documents. Third parties increasingly rely on CPA involvement for reliable financial information.

State-by-State HOA Financial Reporting Snapshot

State	Trigger for CPA Reporting	Required Level	Notes
Florida	≥ $500K revenues or ≥1,000 parcels	Audit	Graduated reporting; limits on waivers
California	≥ $75K gross income	Review (minimum)	Annual disclosures required
Washington	Assessments ≥ ~$50K	Audit	Owner waiver option available
Texas	Usually by governing docs	Varies	Often board-driven
Arizona	No statewide mandate	Varies	Transparency rules strong
Nevada	≥ $75K revenues	Review	Annual disclosures required
Colorado	Board or 1/3 owners request	Audit/Review	High petition authority
Illinois	≥ 100 units (condos)	Audit	Unit-size threshold based
Virginia	Disclosure driven	Review/Audit	Lender reliance common

Florida is one of few states with both revenue and parcel count triggers.

5. Communities Where This Is Most Relevant

CPA-prepared HOA financial reports are vital for:

• Large HOAs or condo associations

• Communities with large reserve funds

• Projects with major common area improvements

• Loan or refinancing requirements

• States with statutory mandates

6. Why a CPA Is Typically Involved

CPAs bring:

• Independence

• Professional standards and assurance

• Internal control insights

• Confidence for homeowners and lenders

7. What the CPA Does & Documents Needed

CPAs may:

• Prepare, review, or audit financial statements

• Test internal controls

• Verify reserve fund balances

• Provide comfort letters or verification of financial capacity

Documentation needed:

• Bank statements and ledgers

• Vendor contracts

• Reserve schedules and budgets

• Assessment receivables and payables

8. Deliverables (Example)

Possible deliverables:

• Audit, review, or compilation report

• Reserve verification letter

• Management/internal control recommendations

Example excerpt:

"Based on our procedures, we confirm that reserve funds meet the minimum requirement outlined by XYZ Association’s governing documents. This report is intended solely for use by XYZ Community Association and its members."

9. Timeline & Fees (Illustrative)

• Review/Compilation: 1–2 weeks | $2,000 – $6,000

• Audit: 3–6 weeks | $4,000 – $15,000+

• Verification engagements: 3–7 days | $1,500 – $4,000

10. Common Mistakes

• Assuming all HOAs must have audits

• Waiting until fiscal year-end to gather documents

• Relying solely on internal reports

• Neglecting reserve fund requirements

• Ignoring governing document mandates

11. How Jedidiah CPA Helps

Our services support Board Members, Property Managers, and Homeowners seeking transparency and stronger governance.

We provide:

We support HOAs with:

• CPA financial statements (audit, review, compilation)

• Reserve fund studies and verifications

• Internal control evaluation

• Advisory on financial transparency and best practices

Independence is strictly maintained when required, including restrictions on bookkeeping or management involvement.

12. FAQs (Search-Optimized)

1. Are HOAs legally required to get an audit?

Not in every state. Requirements depend on state law and the HOA’s governing documents.

Larger associations or those with significant annual revenues are more likely to be required

to obtain audits.

2. What’s the difference between an audit and a review for an HOA?

Audits provide a higher level of assurance and include detailed testing of internal controls.

Reviews provide limited assurance.

3. How often should an HOA get audited?

Many governing documents call for annual reporting. Some boards opt for audits every 2–3

years with reviews or compilations in between.

4. How much does an HOA audit cost?

Costs vary by number of units, reserve fund complexity, and record readiness. Small–mid

HOAs typically pay $4,000–$15,000+.

5. Why do lenders care about HOA financial statements?

They rely on audited or reviewed financials to assess reserve strength, liquidity, and the

HOA’s ability to support major repairs or special assessments.

13. Disclaimer

General informational purposes only — not legal or accounting advice. Requirements vary by state and governing documents.