Guide
Year-End Handoff to the CPA for an Apartment Building or HOA: The Package and the Deposit Tie-Out
A year-end handoff is the package of closed books and supporting lists that an apartment building or an HOA gives its CPA after December is closed, so the CPA does not have to rebuild the year.
This page lists what the books hand over at year end, for an apartment building and for an HOA, and says where the bookkeeper stops. The sample building, Birch Way with 50 units, and the sample association, Demo Ridge HOA with 60 homes, are invented data.
What is a year-end handoff to the CPA for an apartment building or HOA?
A year-end handoff is the package of closed books and supporting lists an apartment building or HOA gives its CPA after December is closed, so the CPA does not have to rebuild the year.
The package is built from 12 closed months. December is closed like any other month: every bank account reconciled, every bill in its month, rent tied to the bank. The package is the last step of a year of apartment building bookkeeping.
What goes in the year-end package for an apartment building?
10 files: the P&L by month, the balance sheet, bank reconciliations, the deposit ledger, the reserve schedule, loan statements, a list of improvements, payroll records, vendor payment totals, and owner contributions and draws.
| File | What it shows | What it ties to |
|---|---|---|
| 1. The P&L for the year, by month, one per building | Income and running costs for each of the 12 months, with the general ledger behind it | Each month ties to its own closed month |
| 2. The balance sheet on December 31 | What the building owns and owes on the last day of the year | Every line ties to a statement or a list below |
| 3. Bank reconciliations and statements, every account | Each bank balance on December 31 and the items not yet cleared | The bank lines on the balance sheet |
| 4. The deposit ledger by unit | Each tenant's deposit held and anything moved in or out during the year | Security deposits held on the balance sheet and the deposit account at the bank |
| 5. The reserve schedule | Opening balance, deposits in, draws out, closing balance | The reserve account statement and the lender's reserve statement |
| 6. Loan statements | The year-end balance, the interest paid and the principal paid in the year | The loan balance on the balance sheet and the lender's statement |
| 7. The list of improvements and big purchases | Date, vendor, amount, unit, invoice | The improvements line on the balance sheet |
| 8. Payroll records | Wages by person and by building, with the payroll provider's year-end reports | The on-site payroll line of the P&L |
| 9. Vendor payment totals | What each vendor was paid in the year | The general ledger, by vendor |
| 10. Owner money | Contributions in and draws out, by owner | The owner accounts on the balance sheet |
How money paid to owners is recorded, file 10, is in owner draws and partner distributions.
Birch Way, the year, invented data
| Line | The year |
|---|---|
| Rent collected | $817,800 |
| Running costs | -$324,000 |
| Net operating income | $493,800 |
What is the year-end deposit tie-out for an apartment building?
3 numbers must agree on December 31: the deposit ledger total, the security deposits held on the balance sheet, and the deposit account at the bank. In the example each is $35,250.
The deposit tie-out at Birch Way, invented data
| Record | What it is | December 31 |
|---|---|---|
| The deposit ledger | 47 units, $750 each | $35,250 |
| The balance sheet | Security deposits held, money owed back to tenants | $35,250 |
| The bank | The deposit account statement | $35,250 |
When the 3 agree, every dollar of deposit money is in the deposit account and belongs to a named tenant. If they differ, a deposit was banked with the rent, returned without a ledger entry, or kept without being moved to income. How the ledger is kept all year is in security deposit accounting for apartment buildings.
Which loan and reserve records go in an apartment building's year-end package?
The lender's year-end statement, showing the balance, the interest paid and the principal paid. And a reserve schedule with the opening balance, deposits, draws and closing balance, tied to a statement.
The loan: the balance on December 31 is the lender's figure, and the loan line on the balance sheet must match it. The year's payments split into interest and principal.
The Birch Way loan, the year, invented data
| Line | The year |
|---|---|
| Interest paid, on the P&L | $291,600 |
| Principal paid, taken off the loan balance | $110,400 |
| Loan payments made | $402,000 |
The reserves: a schedule with the opening balance, the deposits in, the draws out and the closing balance, each closing balance tied to a statement. Birch Way has 2.
Birch Way reserves on December 31, invented data
| Reserve | Closing balance ties to | December 31 |
|---|---|---|
| The building's reserve account | The reserve account bank statement | $5,750 |
| Replacement reserve held by the lender | The lender's reserve statement | $17,850 |
What do the improvement, payroll and vendor lists for an apartment building show?
The improvements list shows each big purchase with its date, vendor, amount, unit and invoice. Payroll shows wages by person and building. Vendor totals show what each vendor was paid in the year.
The improvements list: one row per big purchase, with the date, the vendor, the amount, the unit it went into and the invoice number. It is a list, not a decision. Your CPA decides how each item on it is treated.
Payroll: wages by person and by building, with the payroll provider's year-end reports behind them. How wages are split across buildings is in on-site staff payroll for apartment buildings.
Vendor totals: one row per vendor, with what it was paid in the year. Your CPA prepares any forms that follow from the payroll records and the vendor totals.
What goes in the year-end package for an HOA?
The same core files, kept by fund: operating and reserve statements, both bank reconciliations, dues billed and collected, the list of owners behind, and the transfers made to reserves against the budget.
- Operating fund and reserve fund statements for the year.
- Both bank reconciliations on December 31: the operating account and the reserve account.
- Dues billed and collected, with the list of owners behind.
- Transfers made to reserves, set against the budget.
- Reserve spending by project, each matched to an invoice and a board approval.
- Payroll and vendor payment totals, where they apply.
Demo Ridge HOA on December 31, invented data
| Line | Amount |
|---|---|
| Dues billed in the year, 12 months of $21,000 | $252,000 |
| Kept in the operating fund | $201,600 |
| Moved to reserves, 12 transfers | $50,400 |
| Operating account on December 31 | $38,400 |
| Reserve account on December 31 | $186,000 |
| Dues owed by 4 owners on December 31 | $4,900 |
When the association's CPA performs an audit or review, the extra steps are in getting HOA books ready for the association's CPA.
Where do the books stop and the CPA start for an apartment building or HOA?
The books hand over closed months, tie-outs and lists. The CPA decides how each item is treated for tax, prepares the returns and any forms, and performs any audit or review.
| The books hand over | The CPA decides |
|---|---|
| 12 closed months and the balance sheet on December 31 | How each item is treated for tax |
| The deposit, reserve and loan tie-outs | The returns and any forms |
| The improvements, payroll, vendor and owner lists | Any audit or review |
We deliver the package. Every decision after that is the CPA's.
Multifamily Bookkeeping closes all 12 months and builds this package for your CPA. See monthly bookkeeping for apartment buildings and HOAs.