When Is a financial Audit Required or Recommended?
From: S. Kashdan (s_kashdanhotmail.com)
Date: Tue, 22 Oct 2019 18:02:53 -0700 (PDT)
Hi all,

I have not received any answers to my initial questions about financial 
audits. But I did receive some more questions. In the process of responding 
to some of them, I found the below checklist that may be of help to some 
other communities:

When Is a financial Audit Required or Recommended?

https://hoacpa.com/wp-content/uploads/2018/08/FAQ-When-Is-an-Audit-Required-or-Recommended.html

Our firm has identified ten particular circumstances where we strongly
suggest that an audit be performed. They are as follows:

1.  When large amounts of money are received for unusual circumstances. Two
examples are construction defect settlements or large insurance proceeds.

2.  When there is unusual replacement fund/reserve activity. This may be
when there are large reserve projects, when the Association is severely
underfunded, or if the Association is not meeting budgeted expectations.

3.  When there is a change in management companies. (This is not an
absolute, but it seems to be a good time to ensure that the transition
between the management companies results in the correct balances being
carried over and properly set up on the new books.)

4.  When there is little or no internal control. An example of this would be
when the Association is self-managed and the treasurer writes the checks,
signs the checks and prepares the bank reconciliations.

5.  When the board has not been receiving financial statements on at least a
quarterly basis. This is especially true when there is no standard
accounting system in place.

6.  When there is suspected fraud or embezzlement. (Please tell your CPA of
your suspicions before the engagement begins!)

7.  When there is a lot of political infighting among the board members or
there is a transition from one board to another which is not pleasant, such
as the case of a recall.

8.  When the developer turns over control of the Association to the
homeowners.(Even when not required, e.g. homeowners associations)

9.  When the Association is having financial difficulties. It may seem
strange that the Association should spend more money when it is losing
money. But, it may be that the Association needs a professional to spend
some extra time on the books to ensure that everything is being properly
recorded. When an Association is in financial trouble is when they need help
the most.

10.  Associations with over $1,000,000 in annual assessments.
Cohousingly,
Sylvie

Sylvie Kashdan
Community Outreach Liaison
Jackson Place Cohousing
800 Hiawatha Place South
Seattle, WA 98144
www.seattlecohousing.org
info [at] jacksonplacecohousing.org 

Results generated by Tiger Technologies Web hosting using MHonArc.