When it comes to monthly financial reports for homeowners’ associations, it’s easy to get your numbers in a knot. The challenge of presenting financial reports that are on the mark and make sense to the board can be a recurring and inevitable bane in your existence that can darken the end of every month or quarter.

Your board members may have access to plenty of information that can help them understand what monthly financial reports mean and how to read them correctly. However, if the reports contain confusing or inaccurate information, you won’t be able to deal with their questions, and your credibility may be on the line.

There is a solution. It will ensure that your monthly financial reporting is on the money, and it will keep you from getting lost in the distressing morass of questionable information. Using the step-by-step instructions below, you can get your numbers right and have all the information you need to crank out clear, confident and factual HOA financials.

This guide will work for you whether your accounting format is monthly, bimonthly, quarterly, twice a year or annually. Just apply the information to the time period you will be working with. The outcome? You’ll turn out bang-up reports month after month that will present the board with everything they need to know.

Balance Your Bank Statements

Reconciling the condo association’s bank account and balancing it with your accounting ledgers is step one. You can’t generate meaningful financial reports based on incomplete information. Be sure to account for all funds due you and all monies you owe. Verify that your accounting system includes an entry that matches every entry on the bank statement.

Be on the lookout for any discrepancies such as bank errors (yes, banks do make mistakes from time to time), and make sure that you account for any unexpected or unusual items such as bank fees or overdraft charges. Don’t forget to check for duplicate payments on your end and for over-payments credited to the condo associations’ account. Attach a copy of your bank statement reconciliation to your bank statement, and include an explanation of any discrepancies.

Make A Complete Accounting Of All Homeowners’ Fees Currently Owed Or Paid In Advance

This listing should set forth the names of all homeowners who currently owe the condo association money in the form of unpaid dues. The listing should also include the names of homeowners who have prepaid their fees. Amounts owed and amounts prepaid should be clearly indicated on the list.

Make An Accounting Of All Amounts Currently Owed By The Homeowners’ Association

This listing should set forth all payments made by the condo association by check which have not yet cleared the bank.

Create A Balance Sheet

What is a balance sheet? A balance sheet lists assets. Assets include cash accounts, such as bank accounts. Cash accounts should be listed at the top of a balance sheet, and they should display end-of-the-month balances. Balance sheets also include receivables. Receivables are outstanding balances that are owned to the homeowners’ association. Balance sheets include insurance premiums that are paid up in advance.

Balance sheets also list liabilities. Liabilities include accounts payable. Accounts payable are amounts that you owe to others, such as bills and invoices. Prepaid balances are also liabilities. These are homeowners’ dues that property owners have prepaid to the homeowners’ association.

For purposes of end-of-the-month reporting, your balance sheet should show the condo associations’ current assets and liabilities. If you are using the accrual method of accounting, your statement should present a clear comparison of balances and receipts, as well as the receivable section’s bottom line.

Create A Profit And Loss Statement

What is a profit and loss statement? A profit and loss statement displays income and expenses. Your income accounts will be only your current billings. In accrual accounting, income accounts do not include money you have taken in during the month. The bottom line figure on this report is current net/year and income/loss; this figure should match the figure on your balance sheet.

The second part of the profit and loss statement is income and expense statements. This includes payments for services and supplies; it should include any expenses paid from your reserve amount.

The profit and loss statement should agree with your balance sheet. As explained above, the bottom-line figure, the current net and year, and the income and loss figures from the profit and loss statement should match the numbers that appear on your balance sheet.

Compare This Month’s Performance With Last Month’s Projections

At this point, you can compare your projections from last month to what actually happened this month. It will give you and the board a clear look at how well real-world financial performance is keeping up with projected financial performance.

Double-Check Your Numbers For These Common Blunders

  • A balance sheet should always be balanced. That means your total assets should be equal to your total liabilities and equity.
  • Double-check any negative balances on the income statement and the balance sheet.
  • Make sure that the current year net income and loss on the balance sheet is equal to the year-to-date current year net income and loss on the profit and loss statement.
  • Check to see that the reserve accounts listed in the asset section match the balance sheet reserve accounts listed in the liability and equity section.
  • Look for any discrepancies between the actual amounts and the budgeted amounts on the income statement.

If all has gone well, you now have a clear and correct homeowners’ monthly financial report that’s board-ready.

To polish up any rough edges, and to keep your community’s books beyond reproach, download our convenient guide for foolproof condo association financial reporting. This guide comes with a handy checklist to keep you on track.

Make it work even better by customizing it to include any additional information you need to take into account. Check the box to indicate when each item is completed. This will ensure that everything gets done on time and that you will have everything you need to knock out epic HOA financials month after month no matter what the numbers throw your way.

Brought to you by Clark Simson Miller – the nation’s leader in community and condo financial management.

Need help with your community’s accounting?