Balance Sheet - Capital Items

The Balance Sheet that our property management company prepares each month, for assets, shows only cash accounts (e.g. operating and reserve bank balances), receivables (e.g. home and vacant lot assessments due but not paid), and limited other assets (e.g. prepaid insurances, common area maintenance equipment). The amenities (e.g. clubhouse, swimming pool, tennis courts) are not shown as assets, although we are creating reserves for major repairs for these items.

Is this a normal procedure for HOA accounts?

Cap

Exactly what our CPA does. (They are supposed to be smarter than we are...)

...and that's Balance Sheet

Cecil, your management company is not using "normal" accounting procedures. A professional should always use accounting procedures which are acceptable whether the accounting is for an HOA or any other business. Also, to clarify another person's comment, the Balance Sheet is only portrayed as cash basis when cash basis accounting is used. It is not portrayed as cash basis when accrual accounting is used.

It's a pretty simple Balance Sheet

Assets
Operating Bank Account
Petty Cash
Reserve Bank Account
Assessments Receivable
Developer Subsidy Receivable
Utilities Deposit
Fixed Asset - Boat (used for maintenance on the lakes)
Prepaid Insurance

Liabilities & Equity
Accounts Payable
Prepaid Assessments
Developer Subsidy Reimbursable
Reserves
Equity

Unfortunately, they are using the Developer Subsidy accounts as plugs to make the accounts balance. The Management Company's position is that the clubhouse, guard house, etc do not need to be on the Balance Sheet because they are assets jointly owned by all the residents. I am having difficulty accepting this logic.

Is there some text or manual that shows standard accounting principles for Homeowners Associations? (similar to Roberts Rules of Order for standard meeting procedures)

Cecil

The CPA has given this opinion:

"Real and common area property owned by the Association is not capitalized in the Association's financial statements as it was acquired in a nonmonetary transaction from the developer and the fair value of the assets cannot be reasonably determined. As a result, improvements made to the real property and common areas are not capitalized."

The clubhouse was completed in 2008. The guard house, gates, and other minor buildings were completed in 2007. The roads and other infrastructure was done in 2006. Wouldn't the fair market value be what it cost the developer to have these built / installed, less, perhaps, some depreciation for 2007 and 2006?

Cap