Proper financial management is critical to the success of a homeowners association. However, many HOAs rely on volunteers rather than experts to oversee day-to-day operations. For this reason, financial irregularities might go unnoticed. Conducting an HOA audit can help detect fraud and discrepancies in financial reporting and improve transparency. It allows the association to strengthen controls and plan better for the next fiscal year. This guide provides a comprehensive breakdown of Florida HOA audit requirements.
Florida HOA Audit Requirements
Different states have varying HOA audit requirements, and Florida is no exception. Some states require HOAs to schedule audits yearly, while others leave it at the association’s discretion.
Under the Florida Homeowners’ Association Act Section 720.303(7), all HOAs with an annual revenue exceeding $500,000 must have audited financial statements yearly to comply with Florida HOA audit requirements. HOAs with an annual revenue of $300,000-$500,000 do not require an audit. However, they must have reviewed financial statements.
Associations with annual revenues of $150,000-$300,000 must compile financial statements. Those with total revenues of less than $150,000 must prepare a report of cash receipts and expenses.
While audits are mandatory for HOAs with annual revenues exceeding $500,000, community members can vote to waive HOA audits through a majority vote and select a lower level of reporting. Conversely, residents can petition the board to increase the level of financial reporting. Board members can also demand a higher reporting level than the state minimum.
The association must prepare financial statements within 90 days of the date specified in the bylaws or the end of the financial year. Once complete, the HOA must provide members with copies of the statements within 21 days and not later than 120 days from the end of the fiscal year.
Florida Condo Association Audit Requirements
Florida condo associations have similar audit requirements to regular HOAs. The revenue thresholds and financial reporting requirements remain the same for Florida condo associations. The only difference is that the Florida Homeowners’ Association Act does not have a deadline in case members want to vote on raising or lowering reporting levels. The Florida Condominium Act has an established voting deadline for reducing reporting levels before the end of a financial year.
Read more: How Often Should You Audit an HOA in Florida?
Get Professional Help Today!
Auditing your HOA’s financial records comes with numerous benefits. HOA audits help detect fraud, correct financial discrepancies, and reconcile accounts. They also increase transparency, assist in enforcing financial controls, and improve the relationship between the board and community members. Contact Abel Accountants to determine whether your association requires an HOA audit.
