How do you choose the right CPA for your COA or HOA? Every condo association is made up of different independent departments that work hand in hand to ensure the smooth running of the HOA. Most of these departments rely on proper condo financial foundations, strategies, and budgets to carry out their different responsibilities to the fullest. This means that every operation should be financially centralized.
Hence, accounting in HOA cannot be left to chance. Other departments can have a selection of people to handle several responsibilities, but the financial positions in condo associations have to be specially filled with people who are niche-specific to that position – they must not only be certified, but experienced, and in a neutral position – if such an association wants to stay on track.
Finding a good condo accountant
It’s a search for the needle in the haystack if you want to find an accountant who is not only certified, but also experienced in the condo industry, understands laws and regulations in your locality, and has the best interest of your condo at heart. But first what are the duties of a Certified Public Accountant for a Condo?
Who is a CPA and what are their responsibilities for condos?
CPAs are trusted financial advisors that bear the responsibility of planning and managing the finances of businesses, organizations, and individuals. They are also tasked with specialized duties of tax preparations and tax filing. This is important because the tax returns for HOAs are confusing and need a special level of expertise. Apart from tax filing, these are some other responsibilities of a CPA.
Compilation of financial statements
Financial statements in HOAs show the flow of finance and how funds are managed across all levels. The CPA compiles these statements and reports in such a manner that allows for easy review and auditing.
Review financial statements
CPAs can review financial statements to ensure that information provided is correct.
Auditing financial statements
This is the highest step of financial assurance provided by the CPA. Auditing involves reviewing all documents – contracts, records, board meetings – to address errors and ensure accuracy. This is the best step to fish out fraud in condos and a CPA who can do this should be conversant with policies and authority structures at their fingertips.
Depending on the state, by-laws, and other requirements, compiling, reviewing and auditing of financial statements can be done annually or whenever necessary.
Steps to take in selecting the right CPA for your Association
It requires some effort to find the right CPA for a business and we have outlined some steps to make it a simple process.
When looking for a CPA, you need to research firms to understand their expertise. It is recommended to go for accounting firms that are localized since they are more aware of laws and regulations. Customer reviews and news headlines can give you a view of their achievements. Remember that there is a difference between CPA firms specializing with individuals and those who work with associations.
Experience with HOAS
Since HOA has a specialized tax requirement, these requirements are so specialized that they can be elusive even to accounting firms who have corporate and personal tax experience.
This is an underrated factor that most HOA overlook. You do not want to hire an accounting firm that is loyal or has some sort of allegiance to your management, board members, and ties to your vendors. The accounting firm must be in a position to make independent decisions without conflict of interest.
Tax form expertise
Most HOAs can use the 1120 and 1120H tax forms. But there is always a difference between these two forms; one that an experienced accounting firm can leverage to the advantage of the condo either to lower taxes or avoid government audit.
Information such as exempt income vs exempt-function income is minute details that can make a huge difference in tax liabilities depending on the revenue streams of the HOA.
Level of commitment to your association?
You need to establish a common ground to understand the level of commitment that an accounting firm will have to your association. This will determine how proactive they are in shielding you from future events that can rattle the association.
At Core Acct, we are dedicated to offering condominium and homeowner associations a service that not only reviews and standardizes compliant documents, but also detects and prevents fraud. We are dedicated to perfection to ensure that your money is protected by finding new ways to safeguard more money for the association. Need help with condo accounting services? Feel free to contact us.