HOA Accounting Services: Dues, Reserves Kept Separate and a Monthly Report Your Board Can Read

What do HOA accounting services include each month?

Recording dues and assessments per owner, tracking who is behind, recording every bill, reconciling each bank account, moving the monthly reserve transfer, and sending the board a report.

1. 1We record dues and assessments on each owner's account.
2. 2We match payments to owners. Anyone behind shows up on the list with the amount and how long it has been open.
3. 3We record every bill to its line: landscaping, insurance, management, utilities, repairs, office.
4. 4The budgeted amount moves from the operating account to the reserve account, and the transfer is recorded between the 2 funds.
5. 5We match each bank account to its bank statement.
6. 6We send the board its report.

How each of these pieces works is in HOA accounting explained for board members.

How is the HOA reserve fund kept separate from operating money?

The reserve fund has its own bank account and its own fund in the books. Each month the budgeted amount moves from operating to reserves, and the report shows both balances.

Here is one month at Demo Ridge HOA, 60 homes. Dues are $350 a home, so $21,000 comes in. The budget keeps $16,800 in operating and sends $4,200 to reserves.

Demo Ridge HOA, one month, invented data

We record the transfer as a move between the 2 funds, so it does not count as an expense. Both balances appear on the board's report, side by side.

Reserve separation is part of the base price, not an add-on. The entries behind the monthly transfer are in HOA reserve fund accounting.

What does the HOA board get each month?

A balance sheet by fund, income and expense against budget, a reconciliation for each bank account, a list of owners behind on dues, and the month's reserve activity.

• Balance sheet by fund: what the association owns and owes, operating and reserves in their own columns.
• Income and expense against budget: each line beside the amount planned, for the month and the year so far.
• Bank reconciliations: one for each account, checked against the bank statement.
• Owners behind on dues: who owes, how much, and for how long.
• Reserve activity: the balance at the start, the transfer in, interest, any spending, the balance at the end.

Sample first page, invented data

What to look for in each report is in HOA financial statements.

Does it work for a self-managed HOA and for one with a management company?

Both. A self-managed board can hand us the books. A board with a management company can keep that company and have us check its books each month.

• Self-managed board, full books: you send the bank statements, the owner list and the bills. We keep the books and send the report.
• Board with a management company, review only: the company keeps the books. We match dues billed to dues banked and check its statements against the bank. We confirm the reserve transfer went through, then send the board the numbers with a list of differences.

A board that keeps its management company can add review-only bookkeeping.

What does HOA bookkeeping cost per door?

Full books cost $10 a door for the first 100 doors. Review only costs $7. The minimum is $699 a month, so a 60-home association pays $699 either way.

Price per door, both services

For Demo Ridge HOA, 60 homes: full books comes to $600 and review only to $420. Both sit under the minimum, so the association pays $699 a month either way. Prices are real; the association is invented.

Who does the HOA's audit or review?

The association's own CPA. We keep the books and prepare the package the CPA asks for. We do not audit and we do not give tax advice.

For an audit or a review, we hand over clean books: every entry for the year, the bank reconciliations, the owner balances and the reserve activity. Whether your association must have an audit or a review, and how reserves must be funded, differs by state and by your governing documents, so ask the association's attorney. What the CPA will ask for is in getting the HOA's books ready for an audit or review.

Which add-ons can an HOA board use?

4: paying the bills at $4 per bill with a $150 monthly minimum, a yearly budget for one month's fee, a lender or audit package for one month's fee, and cleanup of past months for one month's fee per month.

• Paying the bills: $4 per bill, $150 a month minimum. We prepare every payment. The board approves and releases it.
• Yearly budget: one month's fee, once a year. We build it from your books, with operating and reserve columns.
• Lender or audit package: one month's fee per package. We prepare it. The association's own CPA does any audit.
• Cleanup of past months: one month's fee for each month we catch up.