There are several key differences between an HOA audit, a review, and a compilation.
● A compilation requires an auditor to present financial statements based on the information submitted by the HOA, with no need for verification.
● In a review, an auditor conducts data analysis and makes inquiries to determine whether the information contained in the HOA financial statements is correct. The HOA provides assurance that the documents do not require any changes.
● In an audit, the auditor must verify all data in the HOA’s accounts and documents. The auditor examines the original documents, third-party confirmations, inspections, and other HOA processes as needed.
What Elements Distinguish an Audit, Review, and Compilation?
The differences among audits, reviews, and compilations can be found in the following elements:
● Organization Assurance. The level of assurance that the HOA fairly and accurately presents all financial statements. The assurance is at its highest with an audit and at its lowest with a compilation. A review is somewhere between the two.
● Management reliability. In all three cases, the auditor begins with the account balances provided by the HOA. An audit, however, requires a significant amount of validation of this information. A review requires some assessment of the information. A compilation almost depends solely on the presented information.
● Work performed. An audit takes an extended period to complete since it requires significant work. A review requires substantially fewer hours, while the effort associated with a compilation is minimal.
● Price. It requires more effort for an auditor to complete an audit. As a result, audits are more expensive than reviews. Likewise, a review is more expensive than a compilation.
Level and Nature of Requests
Another issue is the level of demand for each of these services. Government agencies, investors, and lenders almost always require an audit, since it provides the greatest assurance that the information they are receiving is an accurate representation of the financial position of the HOA.
Property Management Services in the Twin Cities
Whether you are an HOA or a property owner, RowCal can help you with your property management responsibilities. We offer a wide range of services including management, financial administration, online resources and tools, and project management.
To find out more about the products and services we provide in the Twin Cities area, call us at 651-233-1307. You can also send a message on our contact page.