The Treasurer of an HOA has one of the most important jobs on the HOA board of directors. It is important for HOA board members to consider carefully who they will be recommending to their treasurer position given that the role will determine the liquidity of the HOA and how it makes its most important financial decisions. One great area of confusion is understanding an HOA Treasurer Report and what information it should contain. Learn more about this report below:
What Does an HOA Treasurer Do?
An HOA Treasurer is responsible for both compiling and presenting reports at HOA board meetings. The HOA Treasurer Report helps keep the HOA BOD up to date with the HOA’s finances. If the HOA Treasurer fails to prepare their reports properly, it could cause the HOA board to make irresponsible financial decisions. Such decisions can be detrimental to the fiscal health of the HOA.
What Are the Requirements of an HOA Treasurer Report?
Generally speaking, the format in which the HOA Treasurer will prepare their report will vary. It is common practice for HOA Treasurers to write their reports down and present them to the board of directors at the HOA meeting. Some HOAs do not require the report to be written, and it is important to review the governing documents of the HOA to see whether the HOA Treasurer Report is required to be in writing.
Typically, it is best to have a paper trail of the Treasurer’s Reports to protect against embezzlement. Also, it promotes more financial transparency across the board in your HOA. Below is a list of the elements you will see in the HOA Treasurer Report:
Profit and Loss Statement
The Profit and Loss Statement usually has two parts: the income of the HOA will be documented and the expenses which include office supplies, utilities, and administrative expenses, among others. The budget should be listed next to the Profit and Loss Statement to verify that the HOA is staying within its projected annual budget.
The Balance Sheet is a basic layout that lists Assets such as accounts receivable, prepaid insurance, and cash accounts along with Liabilities to include prepaid homeowner balances and accounts payable. The Balance Sheet will provide an accurate total of the current assets that the HOA possesses.
The Payables Report will include all outstanding bills that the HOA owes up to a specified time frame. It is essential that the Payables Report matches the Liabilities section in accounts payable. If you are on the board of directors in your HOA and see a discrepancy in these numbers, it is wise to question your HOA Treasurer to notify them you are paying attention. Failure to raise financial questions leads to laziness and theft if HOAs are not careful.
The Owner Balance summary report should include all homeowner accounts regardless of their balance. The total listed in this report should consist of all receivable accounts and prepaid accounts. It is imperative that these figures match the figures in the receivables and prepaid sections. Be sure to check this report carefully to ensure residents are paying their required dues. This is to avoid any impact on the projected budget of your HOA and its upcoming plans for spending in the year ahead.
Homeowner Deposits provide HOA board members with a breakdown of the homeowners’ standings and the total income the HOA has received for the month. This is a more focused report that can help your HOA board of directors send reminder notices to residents to ensure that the cash flow of your HOA does not get too far behind due to members failing to pay their HOA dues.
When to Get Outside Advice
The relationship between the HOA Treasurer and other HOA board members can be complex. The individual chosen to be HOA Treasurer needs to be ethical and trustworthy. In addition, the HOA Treasurer should be receptive to other HOA board members asking questions about their reports.
The HOA Treasurer needs to keep documented records of their findings to shield themselves from accusations and potential liability. If the current HOA Treasurer is causing issues, it could be wise to seek outside financial or legal advice.
An HOA treasure should always practice accurate recording and transparency. This is to ensure your residents trust the financial integrity of your HOA organization. As soon as any resident doubts about funds management, the suspicion will spread quickly. And this could be greatly damaging to your HOA in terms of losing potential residents or experiencing lawsuits from existing residents about the mismanagement of HOA funds.
If there is any doubt whatsoever, it is best to consult an outside party with how to proceed. Give us a call and we can talk about how Elite Management Services can help with managing your HOA finances.