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HOA Bookkeeper vs CPA: Who Keeps the Books and Who Does the Audit
An HOA bookkeeper keeps the association's books every month, and the association's CPA is a licensed accountant who audits or reviews those books and prepares the tax return once a year.
This page is for the board that thinks the CPA who files the return also keeps the books. It shows 12 monthly jobs and 1 yearly job, done by different people, and the hand-off between them. The sample association, Demo Ridge HOA with 60 homes, is invented data.
What is the difference between an HOA bookkeeper and a CPA?
An HOA bookkeeper records the association's money every month and reports to the board. A CPA is a licensed accountant who audits or reviews those books and prepares the tax return, usually once a year.
The bookkeeper's work is monthly and never stops. The CPA's work comes once a year and checks what the bookkeeper kept. Both jobs sit inside HOA accounting explained for board members.
What does an HOA bookkeeper do each month?
Records dues and assessments per owner, records every bill, reconciles each bank account, moves the reserve transfer, lists owners who are behind, and sends the board its monthly report.
- Records dues and assessments per owner, so each owner has a balance.
- Records every bill, in the month it belongs to.
- Reconciles each bank account to its statement: operating and reserve.
- Moves the reserve transfer from the operating account to the reserve account and records it.
- Lists the owners who are behind, with how much and for how long.
- Sends the board its monthly report before the meeting.
What that monthly report contains is in HOA financial statements.
What does an HOA's CPA do each year?
The association's CPA audits or reviews the year's financial statements, prepares the tax return and answers tax questions. The CPA sets the scope and the price of that work.
- The audit or review of the year's financial statements.
- The tax return.
- Tax questions from the board.
The board hires the CPA, and the CPA sets what the work covers.
HOA bookkeeper vs CPA: who does which task?
Each task has one owner. The bookkeeper's tasks repeat every month. The CPA's come once a year.
| Task | Bookkeeper | CPA |
|---|---|---|
| Record dues and assessments per owner | Every month | |
| Record every bill | Every month | |
| Reconcile each bank account | Every month | |
| Move the monthly reserve transfer | Every month | |
| List the owners who are behind | Every month | |
| Send the monthly board report | Every month | |
| Prepare the year-end package | Once a year | |
| Audit or review the financial statements | Once a year | |
| Prepare the tax return | Once a year | |
| Answer tax questions | As they come up |
Does an HOA need both a bookkeeper and a CPA?
They are 2 different jobs. Every association needs its books kept each month. Whether it must also have an audit or review is set by state law and its governing documents, a question for its attorney.
The bookkeeper gives the board a closed month, 12 times a year. The CPA gives the board an opinion on the year, once. What each of the 2 costs is in what HOA bookkeeping costs.
Can the same person keep an HOA's books and audit them?
No. An audit or review is a check by a CPA who did not keep the books. That is why the bookkeeper and the CPA are different people.
The check only means something when the person checking did not make the entries. So the association keeps a bookkeeper for the months and a CPA for the year. We keep the books. The association's own CPA does the audit or review.
What does the HOA bookkeeper hand to the CPA at year end?
A year-end package: the 12 monthly reports, the year-end balance sheet by fund, every bank reconciliation, the list of owners behind, the year's reserve activity, and the general ledger.
Here is the year at Demo Ridge HOA: 12 closes, then the package, then the CPA's step.
The year at Demo Ridge HOA, invented data
| When | Who | What happens | Dues recorded | To reserves |
|---|---|---|---|---|
| Month 1 | Bookkeeper | Close: dues recorded per owner, bills recorded, each bank account reconciled, reserve transfer made, board report sent | $21,000 | $4,200 |
| Month 2 | Bookkeeper | Close: dues recorded per owner, bills recorded, each bank account reconciled, reserve transfer made, board report sent | $21,000 | $4,200 |
| Month 3 | Bookkeeper | Close: dues recorded per owner, bills recorded, each bank account reconciled, reserve transfer made, board report sent | $21,000 | $4,200 |
| Month 4 | Bookkeeper | Close: dues recorded per owner, bills recorded, each bank account reconciled, reserve transfer made, board report sent | $21,000 | $4,200 |
| Month 5 | Bookkeeper | Close: dues recorded per owner, bills recorded, each bank account reconciled, reserve transfer made, board report sent | $21,000 | $4,200 |
| Month 6 | Bookkeeper | Close: dues recorded per owner, bills recorded, each bank account reconciled, reserve transfer made, board report sent | $21,000 | $4,200 |
| Month 7 | Bookkeeper | Close: dues recorded per owner, bills recorded, each bank account reconciled, reserve transfer made, board report sent | $21,000 | $4,200 |
| Month 8 | Bookkeeper | Close: dues recorded per owner, bills recorded, each bank account reconciled, reserve transfer made, board report sent | $21,000 | $4,200 |
| Month 9 | Bookkeeper | Close: dues recorded per owner, bills recorded, each bank account reconciled, reserve transfer made, board report sent | $21,000 | $4,200 |
| Month 10 | Bookkeeper | Close: dues recorded per owner, bills recorded, each bank account reconciled, reserve transfer made, board report sent | $21,000 | $4,200 |
| Month 11 | Bookkeeper | Close: dues recorded per owner, bills recorded, each bank account reconciled, reserve transfer made, board report sent | $21,000 | $4,200 |
| Month 12 | Bookkeeper | Close: dues recorded per owner, bills recorded, each bank account reconciled, reserve transfer made, board report sent | $21,000 | $4,200 |
| After month 12 | Bookkeeper | The year-end package goes to the CPA | ||
| Then | CPA | Audit or review of the year's financial statements, then the tax return | ||
| The year | 12 closes, 1 package | $252,000 | $50,400 |
The package has 6 parts.
- The 12 monthly reports.
- The year-end balance sheet by fund: operating and reserve.
- Every bank reconciliation, for every account, for every month.
- The list of owners behind, with how much each owes.
- The year's reserve activity. At Demo Ridge HOA that is 12 transfers of $4,200, $50,400 in, plus interest, less what was spent.
- The general ledger: every entry of the year.
The full package list is in getting the HOA's books ready for an audit or review.
When should an HOA get a bookkeeper?
When the board wants a monthly close it can rely on: every bank account reconciled, dues owed known per owner, the reserve transfer recorded, and a report ready for each meeting.
4 signs the board is ready for one:
- The board wants every bank account reconciled each month, not once a year.
- The board wants to know, per owner, who owes dues and for how long.
- The board wants the reserve transfer recorded the month it is made.
- The board wants a report ready for each meeting.
What stays with the treasurer either way is in HOA treasurer duties.
Which questions go to the HOA bookkeeper and which to the CPA?
Ask the bookkeeper what happened in the books: balances, bills, who is behind. Ask the CPA about the audit, the tax return and tax rules.
Ask the bookkeeper:
- What is the balance in each bank account, and does it match the statement?
- Which bills were paid this month, and which are still open?
- Which owners are behind, and by how much?
- Was the reserve transfer made?
- What does this line on the board report mean?
Ask the CPA:
- What will the audit or review cover, and when?
- The tax return.
- Any tax rule that applies to the association.
Multifamily Bookkeeping is the bookkeeper in this picture and works beside the association's own CPA. See our HOA bookkeeping service.