HOA Accounting and Bookkeeping

HOA Accounting & Bookkeeping

Associated Professional Services offers the following HOA accounting and bookkeeping services in San Diego. All of these services are flexible and can be customized to accommodate the needs of each association.

Our HOA Accounting Services

Our HOA accounting and bookkeeping services are comprehensive, and include:

Assessments

Billing statements, payment coupons, credit cards, and ACH (automatic withdrawal) are methods that can be used to collect assessments. The payment coupon system is preferred, as it typically costs much less than monthly billing statements. Payment coupons are pre-printed with the name of the owner, unit number, and assessment amount and are mailed to each homeowner every year.

Late Notices

Associated Professional Services’ San Diego team will mail a late notice to any delinquent homeowners shortly after the homeowner association’s late period. A late processing fee will be assessed to cover the cost of bookkeeping delays, etc.

Collections

APS will take action on delinquent accounts according to the homeowner association’s collection policy. A pre-lien letter, which notifies delinquent homeowners before the lien is filed, will automatically be sent out first.

The Board of Directors will have a list of delinquent homeowners that require a lien. After approval from the Board of Directors, APS will have the lien filed, and charge the delinquent homeowner for the collection, pre-lien, and lien filing (in addition to any required attorney fees). If foreclosure initiation is required, an additional charge will be assessed.

Bill Payments

APS will pay bills from the Homeowner Association’s checking or reserve account. These accounts are established in the association’s name, and the Board of Directors can designate APS, other Board members, or both as signers.

APS will pay all recurring bills (utilities, landscape, refuse removal, etc.) automatically. In the case of non-recurring bills (such as plumbers, electricians, and emergency repairs), payment authorization will be required by a Board member, manager, or another authorized person.

Additionally, a petty cash fund may be established with a Board member or on-site manager for smaller purchases. All receipts for purchases should be retained by the association until another petty cash check is required, and receipts should be submitted immediately.

Financial Statements

Each month, APS in San Diego will provide a clear, concise financial statement. These can be customized to meet any homeowner association’s specific needs. Our typical basic reports include:

  • Balance sheet
  • Income statement (shows month-to-date and year-to-date figures with budget comparisons and variances)
  • Check distribution report of services provided
  • Accounts receivable report (includes a status line for delinquent accounts over 60 days)

Additional reports or lists can be provided to your association as required.

What is an HOA Account?

There are a few types of HOA accounts. An operating account is a financial fund that’s used to pay for the services that carry out everyday functions of a community. This includes items such as:
  • Contracted services
    • Landscaping
    • Maintenance of common areas
    • Security
    • Property management
  • Utility expenses
    • Plumbing
    • Heating & cooling of common areas
  • Insurance and taxes
  • Office expenses
    • Postage
    • Office supplies
    • Accounting and legal fees

How long should the HOA keep important accounting documents and records?

The answer depends on state laws, what the document is, and how much time has passed.
Here are some good rules of thumb to follow:

  • Tax Records

Audits can occur up to three years after the HOA has filed its taxes, so it’s a good idea to keep records for four years and then destroy them. You should, however, keep any paperwork granting tax exemptions or issuing a tax ID number.

  • Financial Records

Audits can occur up to three years after the HOA has filed its taxes, so it’s a good idea to keep records for four years and then destroy them. You should, however, keep any paperwork granting tax exemptions or issuing a tax ID number.

  • Legal Papers

If there has been any legal action taken by or against the HOA, it’s a good idea to retain all files related to these claims. Check with your attorney about how long to keep these records.

  • Vendor Agreements

A good rule of thumb is to keep these documents until the next agreement is filed. A new contract will supersede the old one. The same often applies for insurance policies as well – but hang on to documents if there are any unresolved issues.

How much should an HOA have in reserves?

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Ideally, the HOA wants to have a 100% funded reserve – meaning that it has enough money to cover all anticipated costs. However, most reserve experts suggest that the reserves be funded at 70% or higher of the property’s calculated deterioration.

Less than that and the HOA runs the risk of having to implement special assessments or raise association fees to cover costs, both of which can be a burden for the homeowners who need to come up with that money on short notice.

If funding is coming up short, look for ways to readjust the budget and allocate a higher percentage of association fees to the reserve fund. Typically between 25% and 40% of fees should be put toward the reserve fund.

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APS maximizes efficiency and reduces overall HOA management costs.

To find out if our 100% customizable services are right for you, request a proposal or contact us to schedule a consultation.