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When it comes to keeping your community’s finances accurate and transparent, few responsibilities are more important than the HOA audit.
Whether your association is required to perform an annual audit or simply wants to confirm its financial health, understanding how audits work helps board members make informed decisions and maintain homeowner trust.
What Is an HOA Audit?
An HOA audit is a detailed examination of your association’s financial statements and records, performed by an independent certified public accountant (CPA). The goal is to confirm that finances are accurate, complete, and compliant with state laws and your HOA bylaws.
During an audit, the CPA reviews:
- Bank statements and reconciliations
- Reserve fund balances
- Assessment income and expense reports
- Vendor invoices and contracts
- Meeting minutes and governing documents
An HOA audit is more than a box to check. It’s a safeguard for your board, protecting against errors, fraud, and financial mismanagement.
When HOAs Are Required to Perform an Audit
Not every HOA must perform an audit each year, but many associations choose to do so for greater transparency and accountability.
In Texas, most HOAs aren’t required by state law to conduct annual audits unless their governing documents call for it or owners petition for one. Many communities still opt for voluntary annual financial reviews or audits, especially with large budgets, leadership changes, management transitions, or major projects.
Condominium associations, governed under Texas Property Code Chapter 82, must obtain an annual independent audit or review as a common expense.
Even when not legally required, a voluntary audit provides peace of mind and demonstrates strong governance to homeowners.
What an HOA Audit Includes
Once an audit is approved or scheduled, here’s what the process typically looks like.
The audit process includes a comprehensive financial review and testing of internal controls.
A CPA typically:
- Verifies bank and reserve accounts
- Reconciles assessments against owner ledgers
- Reviews expense classifications and supporting invoices
- Evaluates internal controls for weaknesses
- Assesses compliance with bylaws and state laws
Audits often uncover opportunities to improve accounting practices and increase community transparency.
Board Member Responsibilities During an Audit
Board members play an essential supporting role while the CPA conducts the independent examination.
Core responsibilities include:
- Providing prompt access to financial reports, invoices, contracts, and minutes
- Reviewing the auditor’s findings and recommendations
- Implementing stronger internal controls to prevent future issues
At RISE, we guide boards through every step, backed by our in-depth experience providing HOA accounting and financial management across Texas communities.
Active board involvement leads to smoother audits and better financial outcomes.
HOA Audit Checklist
Preparation is the foundation of a successful audit. Gather these essential documents in advance:
- Current and prior-year financial statements
- Bank and reserve account reconciliations
- Budget and reserve study
- Vendor contracts and invoices
- Governing documents (bylaws, budgets, meeting minutes)
- Records of board approvals for major expenses
Having everything organized upfront reduces delays and helps identify potential issues early.
Common Issues Uncovered in HOA Audits
Even well-managed associations can have inconsistencies. Common findings include:
- Missing documentation or receipts
- Incorrect reserve tracking or fund transfers
- Budget vs. actual discrepancies
- Weak or delayed internal reconciliations
Discovering issues during an audit is an opportunity, not a failure, to strengthen controls and build homeowner trust.
Why Choose RISE for HOA Financial Management
At RISE, we understand that financial accuracy and transparency are essential for thriving communities.
Our team provides:
- Clean, organized financial statements
- Regular internal reviews and reconciliations
- Expert guidance on audit and reporting requirements
- Seamless coordination with independent CPAs
We partner with boards to deliver confidence and compliance throughout the entire audit process.
Make Your HOA Audit Smooth and Stress-Free with RISE
Your community deserves an efficient, accurate, and understandable financial process. Whether you need help with record preparation, auditor coordination, or internal control improvements, we’re here to support you.
Make your HOA audit smooth and stress-free with RISE. Request a quote or contact us today.
What is included in an HOA audit?
An HOA audit involves a thorough, independent examination by a certified public accountant (CPA) of the association’s financial records, statements, and supporting documentation. Key elements include verifying bank and reserve account balances, reconciling assessment income with owner ledgers, reviewing expense classifications and vendor invoices, evaluating internal controls for weaknesses, and assessing compliance with state laws and governing documents. This process confirms accuracy and completeness while identifying risks like fraud or mismanagement and offering recommendations to strengthen financial practices.
How often should an HOA perform an audit?
The frequency of HOA audits depends on state laws, governing documents, and specific circumstances. In Texas, most HOAs are not required by state law to perform annual audits unless specified in bylaws or triggered by owner petition. Condominium associations, however, must conduct an annual independent financial review or audit. Many HOAs choose voluntary annual or biennial audits, especially with large budgets, leadership changes, or major projects, to maintain trust and catch issues early. Industry best practices recommend at least an audit or review every one to three years for optimal transparency.
Are HOAs legally required to conduct annual audits?
Legal requirements vary by state and association type. In Texas, most HOAs (under Property Code Chapter 209) are not mandated by state law to conduct annual audits unless required by governing documents or owner request. Condominium associations (under Chapter 82) must obtain an annual independent audit or review as a common expense. Some states impose audits based on revenue thresholds, while others leave it entirely to bylaws. Even without legal obligation, voluntary audits remain a strong best practice for ensuring financial health and homeowner confidence.
What documents are needed for an HOA audit?
To ensure a smooth HOA audit, boards should compile a comprehensive set of documents ahead of time. Essential items include current and prior-year financial statements, bank and reserve account statements with reconciliations, the annual budget and reserve study, vendor contracts and paid invoices, governing documents (bylaws, CC&Rs, meeting minutes), owner assessment ledgers, records of board approvals for major expenses, tax returns, and insurance policies. Organizing these materials minimizes delays, enables efficient CPA work, and helps uncover discrepancies early.
