If you are responsible for the task of preparing the documents, work papers and schedules for the year end financial audit of a condominium or homeowner association, it is important to be certain that all of the items to be provided are well organized, complete and timely.
Some suggestions, guidelines and document listings to assist you are as follows:
Getting Started
- Verify the Auditor hired by the Association
- Recommended to hire the Auditor 3 to 4 months prior to year end
- where the Auditor can perform some preliminary work
- Walk-through of the System
- Internal Control Analysis
- Bank Confirmations
- Legal Representation Letter
- Insurance Confirmation
- Determine whether it is the first year for the Auditor or if they did the prior year
- Communicate with the Auditor as to the acceptable delivery of the records
- Paper Copies
- Electronic
- Back up Copy of Accounting Software – if Auditor has same software
- where the Auditor can perform some preliminary work
- Ascertain that the year end has been completed and all accounts reconciled based on your normal monthly procedures
- Make certain that the prior year audits entries have been posted and that the books agree to the prior year audit report
- Do a final internal review to make certain that all accounts are reconciled and all supporting sub- ledgers and schedules agree to the general ledger
- Recommended to hire the Auditor 3 to 4 months prior to year end
Guidelines when Accumulating the Required Documents and Records
- A first year Auditor will require more information than a recurring Auditor
- Advisable to use a checklist to indicate records provided
- If you are responsible for more than one association and/or working with multiple auditors you may find a control list helpful
- General Rule is that all Balance Sheet Accounts should have a supporting reconciliation or schedule to support the ending balance
- In addition to providing support for the account balances other administrative type documents should be provided as well
Typical Records to be Provided to the Auditor
- Administrative (Provide as much before Year End as possible)
- Association’s Documents and Bylaws
- Prior Year Audit Report and Adjusting Entries
- Prior Year Tax Returns
- List of Officers and Directors
- Budget for Current and Following Year
- Minutes of Meetings
- Reserve Study
- List of Bank Accounts – Name of Bank, Address and Account Number
- Attorney – Name and Address
- Insurance Agent – Name and Address
- Financial
- Working Trial Balance
- Balance Sheet
- Report of Excess Revenues (Expenses) with Budget Comparison
- Year to Date General Ledger
- Bank Reconciliations for all Months (Even for Accounts Closed During Year)
- Bank Statements for all Months and After Year End if Available (Even for Accounts closed during the Year)
- Copies of all Certificates of Deposits
- Past Due Maintenance Report
- Allowance for Bad Debts Calculation/ Policy
- Prepaid Insurance Schedule
- Prepaid Expenses Schedule
- Property and Equipment Schedule
- Utility Deposits Schedule
- Schedule of Accounts Payable
- Security or Escrow Deposits Schedule
- Loan Agreements
- Special Assessments Notices
- Reserve Schedule
- Paid Bills
- Cash Disbursements to Date After Year End
- Contracts
- Payroll Reports
- Items of Special Interest or Concern to be brought to the Auditors Attention
Delivery and/or Office Visit
- The more organized, complete and accurate the records you are providing should save both you and the auditor time and effort once the Auditor begins
- Delivery should be made based on venue agreed to
- Suggested to have Auditor sign off or confirm the records provided
- If some of the records are going to be seen by the auditor in your office, schedule a date for the auditor as soon as the records are available
- The auditor will usually want a contact for questionnaires and general questions
The above is prepared only as a guide and does not purport to be all inclusive or authoritative. Your policies and procedures should always be considered if adopting or incorporating any of the suggestions or listing outlined above. If you would like an excel spreadsheet in a checklist format of the above items, please use the Contact form and in the Other section enter Preparing Checklist.