HOA glossary · H
HOA Financial Audit
What is an HOA financial audit?
A financial audit is an independent review of the HOA’s financial statements, typically by a CPA. It’s a more rigorous process than a financial review or compilation, involving testing of records and internal controls to verify accuracy.
Why is an HOA financial audit important?
It helps ensure accuracy, prevent fraud, and increase homeowner confidence. Some states or governing documents require regular audits, especially for larger associations or those with significant reserves.
How can you use “HOA financial audit” in a sentence?
The board scheduled an HOA financial audit before approving next year’s budget.
Related terms
- HOA Bank ReconciliationBank reconciliation compares an association's internal financial records to its bank statement to verify transactions are accurate.
- HOA BudgetsHOA budgets outline planned expenses and income, helping the community manage funds for maintenance, projects, and unexpected repairs.
- Amending Governing DocumentsIt refers to formally changing the association’s foundational rules, such as the Declaration, Bylaws, or Articles of Incorporation.
- Capital ReservesCapital reserves are funds an HOA sets aside to pay for the replacement of key components of the property or repairs due to unexpected damage.
