Audits and Reviews

LuciusD, an audit goes beyond the source documents to confirm they are real and true. Whereas, a financial review only compares the source documents to the financial statements. There can be significant variations in the depth to which an audit 'digs'.

After January 1,2006, Colorado statue 38.33.3-303 requires an audit by a CPA every two years --IF-- the annual revenue or expenses exceed $250,000. Also, an audit must be done when it is requested by atleast 1/3 of the units represented by the association. A review can be done by an accountant or other knowledgeable person using statements on standards for accounting and review services. It also, will be required every two years. This statue exempts time-share unit associations. Also, starting in 2006 GAAP is required.

A financial review may be done by homeowners servng on a finance committee of the HOA who are knowledgeable in accounting and their liability can be covered by the HOA insurance. The cost of a financial review might range from $0 to $1000+.

The cost of an audit will vary significantly depending on several factors including the thoroughness of your records; how deeply the CPA 'digs'; and the cost per hour of the CPA used. The auditor certifies the books and may have more potential liability. Expect the cost for a 'minimal' audit by a very inexpensive CPA to exceed the maximum cost of a financial review.

Roger