Financial Statement Audit
An Audit is the highest level of service that we provide, and can only be performed by a CPA. An Audit will give the Association the highest possible level of assurance regarding the financial statements. To provide this assurance, we perform a variety of in-depth testing procedures throughout the Audit.
Why Have an Audit
The importance of homeowners associations conducting an annual audit cannot be overstated. An annual audit serves as a vital tool for ensuring financial transparency, accountability, and the overall fiscal health of the association.
Comply With State Statutes
Per Florida Statutes, associations with more than $500,000 in annual revenue are required to have an annual audit performed.
Assist in Financial Decision Making
Audits can be powerful decision making tools for board members. An audit can help detect and correcting errors and omissions, providing a clear picture of the association’s financial position. An audited set of financials can assist boards when making financial decisions and allow for any needed course corrections earlier.
Deter and Detect Fraud
Like all organizations, associations are susceptible to fraud. A recent example of how damaging fraud can be is evident with the Hammocks HOA near Miami. There, more than $2 Million was allegedly stolen, with the association ceasing their annual audits in 2018. Although financial audits are not specifically designed to detect fraud, annual audits are one of the most important tools for detecting fraud and also serve as an effective fraud deterrent.
Provide an Accurate Financial Record
Having a record of annual audits can assist an association through transitions in board members or management companies. The audit can help assure new board members and managers that there are no lingering financial issues or errors that could otherwise stay on the books for decades.
Fulfill Fiduciary Duties for Board Members and Property Managers
Both board members and property managers owe fiduciary duties to the association and its members, including the duty to care for the association and its finances. Having an annual audit performed is one of the most effective ways that board members and managers can fulfill these duties.
Provide Transparency to Homeowners
For many association members, their homes are their largest investment. An annual audit can provide needed transparency and assure homeowners that their investment is in good hands.
Common Situations Where Associations
Will Elect an Audit over review or compilation
- Required by state statutes (annual revenue exceeds $500,000)
- Change in management company
- Significant board turnover
- Association holds a significant amount of investments
- Association has insurance claim activity during the year
- Association is seeking loan approval
- Association is considering a special assessment
- Association has significant replacement expenditures
- Replacement fund is underfunded
- Deficit in the operating fund
Our Simple 5 Step Process
At Mehrhoff & Wright, our exclusive focus on associations allows us to provide our clients with a simple and efficient audit process.
If you would like to know more about our simple audit process, or have questions on any of our services, our team is ready to answer them.