Auditor’s statement

Auditor’s Statement in Homeowner Associations

An Auditor’s Statement is a formal, written assertion formulated by an independent, external auditor after thorough examination of a Homeowner Association’s (HOA) financial records. The auditor, usually an accounting firm, is hired by the HOA to perform an audit and deliver an unbiased opinion on the financial health of the association.

The auditor’s statement is a crucial component of the HOA’s annual report because it gives members reassurance about the financial integrity of their HOA. The statement usually contains a balance sheet, an income statement, a statement of changes in equity, a cash flow statement, and accompanying notes. These documents provide a comprehensive overview of the HOA’s financial condition, including assets, liabilities, equity, income, and expenditures.

The auditor’s conclusions in the statement can fall into one of four categories: an unqualified opinion (the financial statements are fair and accurately represented), a qualified opinion (most information is accurate, but there’s an issue that prevents a full endorsement), an adverse opinion (the financial statements do not accurately reflect the HOA’s financial status), or a disclaimer of opinion (the auditor couldn’t complete a proper review for some reason).

Having an auditor’s statement is not only a good financial practice but also a legal requirement in many jurisdictions. It helps maintain transparency and accountability in the management of the HOA’s finances.