Get 1 year of free community web site hosting from Community123.com!
Monday, February 17, 2020
Get 1 free year community web site hosting from Community123.com!
Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.
Subject: Accrual Basis vs Cash Basis
Prev Next
Please login to post a reply (click Member Login on the menu).
Author Messages
JaredC
(Texas)

Posts:242


02/11/2020 5:18 PM  
While I have a bookkeeping background I honestly have no experience with how most HOA's keep their books. My HOA recently changed management companies and the new MC is using cash based accounting.

Our balance sheets no longer have an Accounts Receivable and show ZERO liabilities despite us having a 80k loan. There is no account for unspent special assessment money or even a reserve account (required by our CC&R's). All money is now a single line item of "Current Assets" and I don't think the A/R is part of that.

When I ask for financials I get a Balance Sheet and Income Statement that are so deficient that I feel they are a material misstatement of our financial position.

I need a reality check. I personally think our new financials are a fantastic way to hide money by a corrupt board. AT the same time I am not convinced our MC is acting with malice. Why aren't our assets more detailed? What happened to our liabilities? How would an auditor react to this type of reporting? Is it fair to expect knowledge of A/R, special assessment spending, reserve account balances etc? How to other HOA report their financial position?
SheliaH
(Indiana)

Posts:2946


02/11/2020 5:32 PM  
I'm not an accountant either, but you do have some great questions - have you asked these of the board AND property manager? If so what was the response?

Your board should be reminded this is everyone's money and you really should need an accounting degree to figure out what's going on. That old saying figures don't lie, but liars figure may be appropriate here.

I know our association uses a cash based system and we have a fairly extensive financial report. For some reason I suspect someone somewhere thinks this method requires less work and money to prepare it. If someone wants to cut corners on essential items like financial report production, what's next?
JaredC
(Texas)

Posts:242


02/11/2020 5:44 PM  
SheliaH our board is utterly, completely corrupt. They agree to not pursue legal collection enforcement actions in trade for votes. The MC seems somewhat incompetant. I asked for the A/R and they refused. I asked for the balance of all delinquent homeowners and they gave it to me. I asked for financials and all I received was an income statement. It's a s**t show.
MarkW18
(Florida)

Posts:476


02/11/2020 5:58 PM  
From my experience, most associations that utilize a management company using a modified cash accrual, meaning income is accrued and expense are done on cash basis, meaning recorded in the month paid.

Based on what the OP stated, the MC either setup the ledger correctly or doesn't have a wide array of report available.
SheliaH
(Indiana)

Posts:2946


02/12/2020 4:17 AM  
Trading no collection for votes? How do you know that's what's happening - and why haven't you rallied your neighbors together to vote these people out and replace them with folks who will do what you want? For the 10,000th time, rouge boards do what they do because the HOMEOWNERS will not hold them accountable. If they don't know what's going on, that's part of the problem because as association members, they need to make it their business to know. When you live in a HOA community, it's not enough to pay your assessment and go on with the rest of your day.

From what I can see, there's nothing inherently wrong with accrual-based accounting, provided you know what you're doing and the numbers are complete and accurate. I think you need to get together with your neighbors (the honest ones, anyway) and show them what you have. Hopefully, there are enough of you where you can make changes to the board (by the way, one of the new members may have to be YOU). From there, you can take a really good look at the books with an accountant who can help you determine what system you should be using.

Good luck - sounds like you'll need it!
GenoS
(Florida)

Posts:3545


02/12/2020 10:21 AM  
Posted By SheliaH on 02/12/2020 4:17 AM
For the 10,000th time, rouge boards do what they do because the HOMEOWNERS will not hold them accountable.

This is HOA 101. Required reading.
CathyA3
(Ohio)

Posts:737


02/12/2020 2:52 PM  
Posted By GenoS on 02/12/2020 10:21 AM
Posted By SheliaH on 02/12/2020 4:17 AM
For the 10,000th time, rouge boards do what they do because the HOMEOWNERS will not hold them accountable.

This is HOA 101. Required reading.




Amen. I think COAs are even worse than HOAs - they're often advertised as Carefree! Low Maintenance! Living, and buyers interpret that as No Responsibilities Including Understanding What I Bought.
JaredC
(Texas)

Posts:242


02/12/2020 9:31 PM  
Not so much. We good folks are in the minority. We go to court and win. Over and over. We try to rally neighbors but they want to believe bad guys... despite court rulings. Despite court orders.
JaredC
(Texas)

Posts:242


02/12/2020 9:36 PM  
Meh. I’m working to have an official 2018 audit completed despite the legal requirement to have it done in 2019. The responses here confirm my thoughts.
MelissaP1
(Alabama)

Posts:8996


02/13/2020 4:50 AM  
Maybe they realize suing your HOA is suing yourself and your neighbors. You can NOT assign a reason for others not joining your side. You can only assign the reason why you believe that way. So stop saying others are going with the "bad guys" when it's YOU making them the "bad guys".

Former HOA President
TimM11


Posts:333


02/13/2020 7:46 AM  
Posted By MelissaP1 on 02/13/2020 4:50 AM
Maybe they realize suing your HOA is suing yourself and your neighbors.




Well, sometimes you need to force a confrontation if that's what it takes to get people to pay attention. It's not the ideal way to do things, but it's better than letting bad situations go on indefinitely.
SheliaH
(Indiana)

Posts:2946


02/13/2020 11:15 AM  
Posted By JaredC on 02/12/2020 9:31 PM
Not so much. We good folks are in the minority. We go to court and win. Over and over. We try to rally neighbors but they want to believe bad guys... despite court rulings. Despite court orders.




Sometimes having a majority really means all the fools are on the same side. If people don't believe you, it may be they don't want to face reality, afraid of taking a stand, or don't care about any of it. That's disappointing, but that's also human nature. It may be you and your neighbors need to change your approach and concentrate on educating the others. Changing minds isn't easy and doesn't happen overnight, so it's a matter of you deciding how far you're willing to go.
Please login to post a reply (click Member Login on the menu).
Forums > Homeowner Association > HOA Discussions > Accrual Basis vs Cash Basis



Get 1 year of free community web site hosting from Community123.com!



News Articles Provided by: Community Associations Network
News, articles and blogs about condos/HOA's

Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.







General Legal Notice:  The content of forum messages are from the posting member and have not been reviewed nor endorsed by HOATalk.com.  Messages posted by HOATalk or other members are for informational purposes only, are not legal or professional advice and do not constitute an attorney-client relationship.  Readers should not act upon this information without seeking professional counsel.  HOATalk is not a licensed attorney, CPA, tax advisor, financial advisor or any other licensed professional.  HOATalk accepts ads from sponsors but does not verify sponsor qualifications nor endorse/guarantee any sponsor's product or service.
HindmanSanchez Legal Notice:  (For messages posted by HindmanSanchez) This message has been prepared by HindmanSanchez for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Members of HOATalk.com should not act on this information without seeking professional counsel. Please do not send us confidential information unless you speak with one of our attorneys and get authorization to send that information to us. If you wish to initiate possible representation, please contact an attorney in our firm. Our attorneys are licensed to practice law in the state of Colorado only.

Legal Notice For Messages Posted by Sponsoring Attorneys: This message has been prepared by the sponsoring attorney for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Readers of HOATalk.com should not act on this information without seeking professional counsel. Please do not send any sponsoring attorney confidential information unless you speak with the sponsoring attorney or an attorney from the sponsoring attorney’s firm and get authorization to send that information to them. If you wish to initiate possible representation, please contact an attorney in the firm of the sponsoring attorney. Sponsoring attorneys that post messages here are licensed to practice law in a specific state or states as indicated in their message signature or sponsor’s profile page. (NOTE: A ‘sponsoring attorney’ is an attorney that is a HOATalk.com official sponsor and is identified as such in the posted message or on our sponsor page.)

Copyright HOA Talk.com, A Service of Community123 LLC ( Homeowners Association Discussions )   Terms Of Use  Privacy Statement