Why Accrual Accounting Is the Best HOA Accounting Method HOAM

<img class='wp-post-image' style='margin-left:auto;margin-right:auto' src="https://www.bookstime.com/wp-content/uploads/2021/06/fda3c50b-da96-4f53-903b-da3623bb9f35-300x200.jpg" width="258px" alt="accounting for hoa" /> <p>Accrual Accounting for HOA communities is considered by most experts to be the best basis of accounting. This is because the Accrual method gives you a more accurate picture of your financial situation. Since you report income and expenses as they occur instead of when money moves, you immediately know <a href="https://www.bookstime.com/blog/hoa-accounting">accounting for hoa</a> how much money you have.</p> <ul><li>The entire community association becomes ineffective if there is improper handling of finances.</li><li>Our dedicated team is not just about exceptional and proactive management; we believe in making a difference in our community.</li><li>As a fiduciary and advisor to our community clients, we perform our work with integrity and to the highest professional standards.</li><li>Automate bookkeeping tasks, enable client bill pay, and expand opportunities for your firm by offering spend and expense management services enhanced by AI.</li><li>For each of these types of reports, the total balances must agree to the amounts reported as an asset (or liability) on the Balance Sheet.</li></ul> <h2>HOA accounting software with all the features you need</h2> <p>Our different levels of service will accommodate an association of any size, from large to small. 2The BILL Divvy Card may be issued by one of Divvy Pay, LLC's bank partners. Whether welcoming new volunteer board members or setting up new committees, we provide ongoing education and proven tools to help board members to succeed in their fiduciary roles governing all Association matters. Our Community Managers have technology at their fingertips to perform site inspections via mobile phone with easy reference to prior violations history as they enforce the CC&Rs and maintain the beauty of the community.</p> <h2>Understanding the Pitfalls of Cash Accounting for HOAs</h2> <div style='text-align:center'></div> <p>While it’s not mandatory to seek help from an accounting firm, it may be required to have an independent third-party audit or review the association’s books once a year. Each accounting method comes with unique advantages with a different effect on HOA finances. Thus, it’s important for board members to understand which method the association will use. As a member of your association’s Board of Directors, it’s your job to know and understand these key financial concepts and safeguards, in order to better protect your community’s funds and properly serve your fiduciary duty. Ethics and compassion should guide your judgment, particularly when it comes to homeowners and the honest maintenance of financial records.</p> <ul><li>That being said, if you find yourself in a position where financial responsibilities are becoming overwhelming, it’s in everyone’s best interest to hire a professional who can get the association back on track.</li><li>Not all expenses take place every year, but you should still plan for them to be categorized under the same account regardless of when they occur.</li><li>In doing so, you can get a better grasp of your financial condition and make more informed decisions.</li><li>Under the cash basis of accounting, revenue is recognized when cash is received; expenses are recorded when they are paid in cash.</li><li>Instead, the person who writes the association’s checks should be different from the person in charge of managing receivables.</li><li>Do you currently self-manage your condo community or homeowners’ association?</li><li>There’s no shame in asking for help, especially when it comes to a subject as difficult and confusing as accounting.</li></ul> <h2>Conducting Audits for your HOA</h2> <p>It acts as the basis from which all other reports are created and verified. Revenue and expenses are recorded immediately, even if money has not been exchanged. This gives the most complete and accurate picture of HOA finances, conforming with Generally Accepted Accounting Principles (GAAP). Remember; dealing with a bankruptcy is a very delicate process, and one that should not be taken lightly. If you’re unsure how to proceed or simply don’t want to invite possible legal action against your association, speak to an <a href="https://www.linkedin.com/posts/bookstime_if-your-business-operates-globally-or-has-activity-7407762741094072320-7h_z/">Foreign Currency Translation</a> HOA lawyer or contact your HOA management company today.</p> <img class='aligncenter' style='margin-left:auto;margin-right:auto' src="https://www.bookstime.com/wp-content/uploads/2021/04/14a10f45-5375-4779-8067-69f52546a173-300x200.jpg" width="250px" alt="accounting for hoa" /> <h2>The Role Of An HOA Board Member In Accounting</h2> <p>HOA accounting is an important aspect of running a homeowners association, but it can be a tedious task. Board members have a responsibility to understand financial interim statements to guide the association’s financial course. This job can be complicated by inaccurate or incomplete financial reports. <a href="https://mansoorfastfood.com/accounts-receivable-in-medical-billing/">https://mansoorfastfood.com/accounts-receivable-in-medical-billing/</a> Therefore, it’s important for all board members to know how to understand and analyze financial reports.</p> <h2>Explanation Of Cash Basis Of Accounting</h2> <img class='aligncenter' style='margin-left:auto;margin-right:auto' src="https://www.bookstime.com/wp-content/uploads/2020/03/Frame-1.png" width="254px" alt="accounting for hoa" /> <p>Our team will collaborate with your community’s CPA to ensure they receive the financial documents and data they need and are available to answer any questions. It’s important to regularly share the community’s general financial reporting to ensure complete transparency and community confidence. Our team also handles all accounts receivable, including mailing homeowner statements, applying charges to homeowner accounts, and receiving payments. All accounts receivable and payable information is available with real-time HOA My Way Board Portal data.</p> <img class='aligncenter' style='margin-left:auto;margin-right:auto' src="https://www.bookstime.com/wp-content/uploads/2021/10/e1fc3dfb-a556-4277-913a-7b006b9ffd14-400x300.jpg" width="250px" alt="accounting for hoa" /> <p>Poor HOA financial management can lead to numerous unwanted consequences for the HOA and its board. An inadequate financial plan disrupts new projects, forces cutbacks, or in extreme cases, may bankrupt the association. Accrual accounting provides a more accurate picture of the association’s financial health.</p>