Transparency in HOA Financial Reporting: Why It Matters
Aurora, CO, HOAs are responsible for managing the financial resources of all the members of a community, and as such, they must exercise a high degree of responsibility and accountability to ensure that resources are managed properly and efficiently.
Understandably, many homeowners want to know that their money is being handled in a responsible manner, and transparent financial reporting is crucial for giving your residents that peace of mind. As an HOA, it’s important to ensure transparency in financial reporting to maintain trust and open communication with residents. To improve resident satisfaction and foster a trusting relationship between your board and your homeowners, try these four tips for transparent financial reporting.
Invite Homeowners to Board Meetings
One of the most effective ways to promote transparency is by inviting homeowners to attend board meetings. These meetings provide an opportunity for residents to voice any concerns or questions they may have regarding the association’s finances.
By being able to attend these meetings, residents can see firsthand how their money is being used and managed. It also demonstrates that your HOA board values their input and is committed to transparency and open communication.
Give Residents Access to Financial Information
Another vital aspect of promoting financial transparency is giving residents access to pertinent financial records and documents. Residents should be able to review the HOA’s financial statements, budgets, and other important financial documents upon request. In fact, it’s legally required that HOAs share these documents in some states.
This level of accessibility shows residents that you have nothing to hide and are committed to keeping residents informed about their finances. It also gives homeowners the opportunity to verify the accuracy and integrity of the community association’s financial reporting, giving them greater peace of mind.
Publish an Annual Financial Report
In addition to providing access to financial documents, HOAs should also publish a financial report each year for all homeowners to review. This report should include important information such as capital expenditures, revenue and expense statements, replacement reserves statements, association-provided insurance coverage, and the status of any pending judgments or litigation.
This report should be published prior to your yearly homeowner meeting so residents may discuss any concerns they have during the meeting. Encouraging discussion openly and honestly not only increases resident satisfaction in your HOA’s financial health, but it also shows residents that you prioritize transparency and trust.
Perform Annual Reviews and Audits
Performing an annual review or audit of the HOA’s finances is another essential step in ensuring transparency. An audit is a formal examination of the association’s financial records, performed by an independent CPA. In an audit, the CPA will ensure that all statements are accurate and in line with official accounting practices.
An annual review similarly verifies your HOA’s financial statements, but it isn’t as extensive as a full audit. This option is best for smaller HOAs who still want to show that their board is upholding financial transparency and accountability.
At The Management Trust, we can assist Aurora, CO, HOA boards with ensuring financial transparency and accurate financial reporting. With over 30 years in the industry and over 1,500 successfully managed communities, The Management Trust has the expertise to guide you in all aspects of community association management, including HOA financial management. To learn more about our comprehensive HOA management services in Aurora, CO, call The Management Trust at 303-750-0994 or fill out our online contact form today.
