Financial Statements for HOAs

Kendra Gangal, CPA

Financial Statements normally consist of a Balance Sheet, Income Statement, and a Cash Flow Statement. 

  

For Associations, the following describes each financial statement and the potential line items they may include:

 

A Balance Sheet shows the financial position of your association at a specific point in time; for example:  December 31, 20XX.  It's a snapshot of the association's assets, liabilities, and owner's equity(or fund balance).

 

Assets:

  • Cash
  • Member assessments and other receivables
  • Prepaid expenses
  • Property & Equipment 
Liabilities:
  • Accounts payable (otherwise know has vendor invoices not yet paid)
  • Accrued expenses
  • Prepaid assessments (members who have paid their dues in advance)
  • Loans

Equity(or fund balance):

  • This is the association's net worth
  • This is a cumulative balance of the revenues and expenses of the association since it began.



An Income Statement shows the association's financial performance over a specific period; for example: 

January 1, 20XX - December 31, 20XX.  It's a snapshot of the association's revenues, expenses, and net income or loss for a particular period.

 

Revenues may include:

  • Member assessments (dues)
  • Late fees/fines
  • Interest income
  • Rental revenue (pool or clubhouse)

Expenses may include:

  • Administrative costs (management, office supplies, etc)
  • Maintenance and repairs
  • Utilities
  • Insurance

Net Income (Loss):

  • The is the amount left over after subtracting all expenses from revenue.  



 

A Cash Flow Statement represents the cash inflows and outflows over a specific period.  It offers a comprehensive view of how cash moves through the association's operations, investments, and financing activities.

 

Operating activities include:

  • Cash received from assessment/late fee/ interest/dividend income collections
  • Cash payments for day-to day normal operating expenses 

Investing activities include:

  • Cash used for property acquisitions
  • Cash used for capital expenditures

Financing activities include:

  • Loan proceeds
  • Repayment of loans

 

 

 

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