Cohousing-L Mailing List: Re: Annual audit ? Bookkeeping? Reserve studies?

[R Philip Dowds (rpdowds]

Cornerstone is organized as a condo association.  In Massachusetts, 
associations of less than 50 units are NOT required to purchase an annual 
report from a CPA, but associations of 50 units or more ARE so required.

We're 32 units, but chose to buy an "annual report" (well below the grade of a 
true audit) because it seemed fiscally prudent and duly diligent.  But we ran 
up against two chronic problems:  (1) A "literal" report is basically derived 
directly from our QuickBooks file, and isn't much different from reports we can 
run ourselves.  On the other hand, an "interpretative" report re-classes all 
our income and expenses, and then doesn't agree with our books.  In fact, last 
we got a report which claimed to show we (our Treasurer and QuickBooks) had 
under-stated income and over-stated expenses — which are the classic indicators 
of embezzlement.  Well phooey on that, we know full well that no embezzlement 
is occurring at Cornerstone, and that we're looking at accounting "anomalies" 
because the CPA and QuickBooks can't agree on standardized accounting practices.

But why pay $3K a year for a report that is wrong?  This year we wised up, and 
exercised our option to save $3K a year and not buy the annual report.

Things may be different for other cohos and associations, but for us, financial 
life is hardly complex:  We do not have a payroll; we do not have business 
income; and we're not a 501(c)(3).  So both our accounting and our tax filings 
are dead simple.  We can run our own reports quarterly, and that gives us much 
better information than a single annual report which quickly deteriorates into 
obsolescence.  A Treasuer, Assistant Treasurer, and a "Bookkeepers, Corps" get 
the job done.

We've purchased but a single reserve study, and I think it was about $5000.  
But for better or worse, we're very hands-on in our own self-management, and 
merely used some of the information in that study to craft our own reserve 
plan.  We are now about three years through a five year plan of assessments and 
expenditures the community has agreed to as binding.  In another year or so, 
we'll do an evaluation, and most likely adopt a second five year plan.

R Philip Dowds AIA
Cornerstone Cohousing
175 Harvey Street, Unit 5
Cambridge, MA 02140
617.354.6094



On Dec 22, 2011, at 5:56 PM, Joani Blank wrote:

> 
> For those of you whose community is structured as 
> condominiums or another sort of planned unit 
> development, does your homeowner's association have an 
> annual audit by a CPA? And if so, what is the 
> approximate cost of that audit?
> 
> If you do not have an annual audit, your bookkeeper 
> undoubtedly reviews the year's financial affairs in 
> order to provide a report to all the homeowners. He or 
> she may also file a tax return for you and complete any 
> state reports required of homeowners' associations in 
> your state. Do you use an outside bookkeeper or are you 
> lucky enough to have a community member who keeps the 
> books for your HOA as all or part of his or her share 
> of the work that we share. Finally, if you do pay an 
> outside bookkeeper for all or part of the bookkeeping 
> work how much is she or he paid annually?
> 
> While I'm at it, one more money related question. Does 
> your state require that your HOA have a [replacement] 
> reserve study every X years?  If so, how often are you 
> supposed to have one?  Do you have a reserve study as 
> often as required by law OR have you had reserve 
> studies, but less frequently (if less frequently, about 
> how often)?  Finally, again, how much do you typically 
> pay the person who does the reserve study.
> 
> Joani Blank
> Swan's Market Cohouising
> Oakland CA
> 
> p.s. I think your responses to this post will be of 
> interest to others. But I no longer read posts to this 
> listserve regularly like I used to, so I'd much 
> appreciate your also sending a copy of anything you 
> post to the list in response to these questionsto me at 
> joani [at] swansway.com
> 
> p.p.s.  Remember to tell us which state you are in even 
> if you know that I know where your community is 
> located, because others reading your response may not 
> be familiar with as many cohousing communities as I 
> am...(I've lived in two for a total of almost 20 years, 
> and visited 72 others.
> _________________________________________________________________
> Cohousing-L mailing list -- Unsubscribe, archives and other info at: 
> http://www.cohousing.org/cohousing-L/
> 
>