To build trust within your HOA, demonstrating financial transparency is vital. Association members deserve to know where their hard-earned money is going, and management should be able to provide them with that information. At RowCal, we know you need accurate and timely financial data to run your HOA effectively.
We also know that making this information available to your members builds trust and accountability in your leadership team. For your HOA to run as efficiently as possible, transparency is critical. Here are a few tips to help you achieve that:
1. Invite Owners to Board Meetings
Encouraging owners to attend board meetings allows you to keep them informed of pertinent financial issues in your HOA. Provide an agenda for the meeting far in advance so that attendees may develop an understanding ahead of time. During meetings, create an open dialogue to allow expression of opinions and concerns.
Allowing residents to discuss issues openly helps to ensure them that their concerns will be taken seriously.
2. Disclose Financial Information
Minnesota state law requires that owners living in HOA communities have access to various documents. Should an owner request financial records, he or she has a right to inspect them. Being open to sharing your HOA’s financial information demonstrates to residents that you have nothing to hide.
After all, owners paying monthly dues may expect to learn about funding allocation. It is when board members attempt to keep this information confidential that residents become suspicious. A good property management company can provide you with accurate and timely financial information so that you can report back to your members promptly.
3. Furnish an Annual Report
Because owners have a right to stay informed about their association, HOAs must furnish an annual report. You should send this report to each owner before your yearly owner meeting to encourage financial understanding. At a minimum, the report must contain the following items:
● Capital expenditures
● Revenue and expense statements
● Replacement reserves statements
● Association-provided insurance coverage
● Status of pending judgments or litigation
Encourage owners to attend the annual owner meeting so that they may discuss any concerns about the financial health of the association. By encouraging discussion and answering questions openly and honestly, you can demonstrate that transparency is a priority in your HOA.
4. Perform Reviews and Audits
An annual review or audit provides a thorough assessment of your association’s finances. During an audit, a CPA performs an official examination of your association’s financial records, books, and statements to verify their accuracy. This process also determines if your financial statements are in line with the association’s official accounting practices.
A review is a much less stringent examination but still provides assurance that there is no misrepresentation of financial data. You should undergo a financial review annually and conduct an audit approximately every five years.
Your HOA Management Company in the Twin Cities
Running an HOA can be difficult. At RowCal, we’re here to help make your job easier. When you need accurate financial data, we are here to provide it. We specialize in financial administration and HOA management, so we are aware of the unique challenges your association may be facing.
Our goal is to help you improve the experience for everyone involved in your association, and our full-service management approach will help you achieve that. To learn more about our services, contact us at 651-233-1307, or you can message us on our contact page.