It is important for the board members to know about the financial reports to be able to know about the expenditures, collect dues, manage reserves and make decisions that will be good for their community. HOA bookkeeping services transform the raw financial data into useful information.
When you have good numbers, you will make good decisions in your community. The board members do not need to be accountants, but they should know what information the report provides and at what point in time they should take a look at the report.
The Balance Sheet Depicts the HOA’s Financial Position
The balance sheet indicates the financial status of the association at a specific point in time. The balance sheet consists of the following elements: assets, liabilities, and net worth. This report should be analyzed monthly in order to draw conclusions regarding cash, liabilities, and other changes in the financial situation. HOA Bookkeeping Services will make it possible to keep accurate records.
Income Statement Shows Financial Performance
An income statement allows comparisons between HOA income and expenses for the period. This way, boards can see if the current expenses are still in line with the adopted budget.
Board members need to compare actual numbers with the budget each month. If the expenses related to maintenance services are higher than expected, the board will be able to find out why and plan accordingly. This allows making decisions all year round.
Accounts Receivable Report Tracks Outstanding Dues
An accounts receivable report provides information on assessments and other amounts owed by homeowners to the association. This information allows the board to track delinquencies and know more about collections.
Board members have to monitor the total amount owed, aging of delinquent balances, recent payments and collections.
Budget Comparison Report Identifies Financial Variances
The budget comparison report offers an opportunity for comparing budgeted amounts of income and expenditure against actual figures. It helps identify variances easily.
As an illustration, the HOA bookkeeping services allocate the budget for maintenance to $10,000 but uses $13,000. In such a case, there is a variance of $3,000, which needs to be looked into. The board will be able to establish whether this is because of the unexpected cost of repair or an increase in the price of services.
Reserve Report Facilitates Long-Term Planning
The reserve information can be quite useful for making plans for major repair works and replacement works concerning the typical parts of the community like the roof, pavement, exterior, or anything else of the kind.
The analysis of the reserve balance and cost of the planned project needs to be conducted by the board. It can be done using the reserve study, which may predict future expenses.
Conclusion
Being knowledgeable about finances allows HOA board members to know how their board is performing, handle fees, budgeting, and plan future projects. HOA bookkeeping services will help in maintaining the record system organized and consistent with reporting. Modern Community Management offers financial management and reporting for small communities.
