HOA audit help!!! (insurance, attorneys, houses)

[pimpninja]

Hi All,

Our community may be looking to do an HOA audit on our managment company who currently was picked by the builder as we are still in transition with houses being built.

I so far have asked the managment company for all transactions/ balance sheets, etc.

Has anyone ever conducted an audit on their HOA in the state of georgia?

Any help/advice would be greatly appreciated!!

[wilful]

Originally Posted by pimpninja

Hi All,

Our community may be looking to do an HOA audit on our managment company who currently was picked by the builder as we are still in transition with houses being built.

I so far have asked the managment company for all transactions/ balance sheets, etc.

Has anyone ever conducted an audit on their HOA in the state of georgia?

Any help/advice would be greatly appreciated!!

I am the President of our HOA and we had an audit conducted a year ago. It was done by a local accounting firm and the cost was approximately $1500. Your comment says you want to audit the management company. I assume you mean you want to audit the financials being prepared by the management company?

[cully]

It is prudent to audit the HOA books and records whenever a developer turns over a community to the homeowners. Now is a good time to address any possible errors. Small mistakes starting out now can become large later. Perhaps you will find items that cannot be depreciated are being depreciated at the moment to look good on paper; perhaps you will want more money toward reserves, better or different insurance coverage. I know of one situation now where people are confusing assets which could be sold in an emergency with so-called 'assets' that no one would ever want to take on. Makes their statement look good though.

You may find assets assessed higher than they really are worth and you know this from your experience or from living there.

You may feel insurance could be gotten less expensively. You may find they are depreciating things they should not be or vice versa.

You may be surprised to learn there are more residents than you expected who are not paying their fees and this would then become your problem.

[pimpninja]

Yes, mean th finances would need to be audited. Is this something I will need to go directly to the HOA managment compnay about and tell them that we as a communit want an audit?

[cully]

I know there's a good expression about that last, but I can't think of it now. Basically, no. If you mean asking the management company to get an auditor for itself. You want someone as disconnected from the management company as possible. Generally, these are people who in doing their job are instructed not to speak much to, definitely not to socialize with or get snacks from the people they are auditing. Just not the right thing to do.

There should already be financial pages which are at the ready to slip into a homeowner disclosure packet or some version you have there of info to the prospective buyer. Not a welcome to the purchaser who already settled. The CPA can look into that so that you have a professional on the hook for verification that all is good or all is not good and not someone connected to the management company. Well, as distant as possible. It is difficult the smaller the city or town.

Those pages the mgt company hopefully keeps should list income (and from where), expenses (and for what), operating costs, management salary, assets (list), Liabilities (list). Of course, the CPA will get paperwork to back all that up.

BTW, you want to plan for a reserve study in a few years maybe...depending on how new all the homes are now...so you know where you stand as far as whether the monthly fee is enough.

[AnsleyPark]

I would engage an accountant. I betcha that one lives in your HOA.

[IC_deLight]

Originally Posted by pimpninja

Hi All,

Our community may be looking to do an HOA audit on our managment company who currently was picked by the builder as we are still in transition with houses being built.

I so far have asked the managment company for all transactions/ balance sheets, etc.

Has anyone ever conducted an audit on their HOA in the state of georgia?

Any help/advice would be greatly appreciated!!

The control structure pursued by HOA management companies and HOA attorneys is designed to facilitated control fraud. The management company sends demands for money to homeowners, collects monies from homeowners, deposits funds in accounts owned by the management company, prepares "financials" rather than delivering bank statements to client HOA corporation boards, controls communications between the HOA board and others including insurance, bank, attorneys, and homeowners, and (among many other things), collects plenty of money off the books of its HOA client.

You don't request an "audit" from the management company. You have a third party that is not part of the management company's trade group perform the audit. Unfortunately it's the HOA board that has to initiate this process and if the management company has its hooks into the board too deeply the board will not pursue an audit. If you research the management company much you will probably find they conduct "new board member training" sessions. These are brain-washing sessions designed to cast the management company as the "authority" figure for board members who are trained to pursue and adopt policies, resolutions, and business practices that facilitate the management company's predation on the HOA corporation and the homeowners.

It sounds like you are currently under declarant/developer control. Unfortunately, the developer probably has control of the HOA corporation and will likely defer most everything to the management company - an environment that likewise facilitates control fraud. So you can't count on the "board" and your ability to do anything as a homeowner will be limited to the records you can access by law in your state. Even then if there is something underhanded going on it is the developer-controlled HOA corporation that can pursue it, not you. Your remedy would largely be limited to public disclosure of what's going on. HOA supporters will of course discourage you from publicizing anything because it might "hurt property values". You might have some luck if the developer felt that public knowledge of financial shenanigans could impact the developer's sales.

[AnsleyPark]

Originally Posted by IC_deLight

The control structure pursued by HOA management companies and HOA attorneys is designed to facilitated control fraud. The management company sends demands for money to homeowners, collects monies from homeowners, deposits funds in accounts owned by the management company, prepares "financials" rather than delivering bank statements to client HOA corporation boards, controls communications between the HOA board and others including insurance, bank, attorneys, and homeowners, and (among many other things), collects plenty of money off the books of its HOA client.

You don't request an "audit" from the management company. You have a third party that is not part of the management company's trade group perform the audit. Unfortunately it's the HOA board that has to initiate this process and if the management company has its hooks into the board too deeply the board will not pursue an audit. If you research the management company much you will probably find they conduct "new board member training" sessions. These are brain-washing sessions designed to cast the management company as the "authority" figure for board members who are trained to pursue and adopt policies, resolutions, and business practices that facilitate the management company's predation on the HOA corporation and the homeowners.

It sounds like you are currently under declarant/developer control. Unfortunately, the developer probably has control of the HOA corporation and will likely defer most everything to the management company - an environment that likewise facilitates control fraud. So you can't count on the "board" and your ability to do anything as a homeowner will be limited to the records you can access by law in your state. Even then if there is something underhanded going on it is the developer-controlled HOA corporation that can pursue it, not you. Your remedy would largely be limited to public disclosure of what's going on. HOA supporters will of course discourage you from publicizing anything because it might "hurt property values". You might have some luck if the developer felt that public knowledge of financial shenanigans could impact the developer's sales.

Interesting info here. In my case, our HOA's management company never touches our financial accounts or homeowner payments; further, we engage an independent accountant to perform an audit each year, which is distributed to the homeowners. If the practices described above are those occurring in your neighborhood, I would highly recommend inciting a homeowner revolt!