Audit for Your Association
By Andrew Rand, Director of Association Accounting at CSI Management Services
As a member or board member of a condominium association, there may be a requirement to have an annual financial independent audit. Whether there is a requirement or not, there are many benefits to engaging an independent certified public accounting firm to audit the Association. The ultimate responsibility of deciding to have an audit remains with the board of directors. As a board member, making the decision to have an audit is in the best interest of the association, which will assist in the budgeting for the future. The benefits include getting that annual physical or checkup of the financials and having an independent accountant provide assurance to the financials that are being presented to the board of directors and members. The primary purpose of an audit is to assure users of the financial statements that these statements are reliable.
What is an independent audit? The objective of the independent audit is to express an opinion stating whether the financial statements, taken as a whole, are fairly presented in all material respects to conformity with accounting principles generally accepted in the United States of America. The certified public accountant will normally provide audit inquiries to gain an understanding of the Association and the internal control environment, the risk assessment process, the internal control communication process and the internal control monitoring process. What goes into an audit would be a thorough review of the past fiscal year as well as disclosure and reporting on material events right up to the issue date of the report.
Once the board decides to have the independent audit, what does the board of directors look for when picking the auditor? The board of directors should consider an auditor with experience with condominium and homeowner associations. This is very important because they have current knowledge of requirements and understand how associations work. Due diligence on the auditor’s part means that the auditor should be interviewing the Association and asking certain questions and be provided basic information including prior year audited financials, current year financials and a list of relevant topics going on in the Association.
Lastly, the adage “You get what you pay for” applies to all services and that includes the audit services. It is very important to gather the audit proposals and evaluate the choices. The board of directors should not pick an auditor based on price only but also experience, communication and quality.
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