COMMUNITY ASSOCIATION   AUDIT PROCESS          DeLeon & Stang, CPAs and                  Advisors              Allen P. De...
Speaker biography – Allen P. DeLeon, CPA Partner with DeLeon & Stang, CPAs and  Advisors Over 25 years community associa...
Speaker biography – Janet Gorden, CPA Senior auditor with DeLeon & Stang Over five years community association  auditing...
Agenda   Introduction   Overview of community association audit    process   Engagement and audit planning   Audit fie...
WHAT DO YOU THINK AN AUDIT IS?   List your ideas.
OVERVIEW OF COMMUNITY  ASSOCIATION AUDITS   Why are audits necessary?    Most by-laws require annual audits    Protects...
ENGAGEMENT AND PLANNING Engagement letter Client prepared materials list Risk assessment and evaluation of internal  co...
AUDIT FIELDWORK   Gathering audit evidence.   Testing account balances   Analytical review   Gather footnote informati...
CONCLUDING THE AUDIT   Preparation of the financial statements     Balance sheet     Income statement     Statement of...
CONCLUDING THE AUDIT(continued)   Supplementary statements       Replacement reserve fund       Reserve study       Bu...
AUDIT REPORTS Auditors’ Opinion & Financial statements SAS No. 115 letter with management  comments SAS No. 114 – commu...
AUDIT REPORTS (continued)   Different types of audit opinions     Unqualified     Exception     Disclaimer
ADVICE TO BOARDS Review   the draft audit report and ask  questions Pay attention to the SAS No. 115 letter for  signifi...
RECENT AUDIT TRENDS Allowance for bad debts and delinquent  assessments receivable Going concern Borrowing from replace...
RECENT AUDIT TRENDS (continued) Books kept on cash basis Filing incorrect tax returns – 1120 vs. 1120H Not recording pr...
FUTURE ACCOUNTING AND AUDITING          STANDARDS Clarity project Going concern Private company accounting standards O...
QUESTIONS
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Community associations audit process

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Community associations audit process

  1. 1. COMMUNITY ASSOCIATION AUDIT PROCESS DeLeon & Stang, CPAs and Advisors Allen P. DeLeon, CPA Janet Gorden, CPA allen@deleonandstang.com LUNCH-N-LEARN
  2. 2. Speaker biography – Allen P. DeLeon, CPA Partner with DeLeon & Stang, CPAs and Advisors Over 25 years community association auditing experience Member of the Community Association Institute (CAI) Chair of the Maryland Association of CPAs
  3. 3. Speaker biography – Janet Gorden, CPA Senior auditor with DeLeon & Stang Over five years community association auditing experience Member of the Community Association Institute (CAI)
  4. 4. Agenda Introduction Overview of community association audit process Engagement and audit planning Audit fieldwork Concluding the audit Audit reports Board approval and other issues
  5. 5. WHAT DO YOU THINK AN AUDIT IS? List your ideas.
  6. 6. OVERVIEW OF COMMUNITY ASSOCIATION AUDITS Why are audits necessary? Most by-laws require annual audits Protects the Board of Directors Provides confidence on the financial statements Available to new members through re- sale package
  7. 7. ENGAGEMENT AND PLANNING Engagement letter Client prepared materials list Risk assessment and evaluation of internal controls What is audit materiality and how is used during the audit? Auditor Independence First year audit issues
  8. 8. AUDIT FIELDWORK Gathering audit evidence. Testing account balances Analytical review Gather footnote information and support Receivable, bank and investment confirmations Record audit adjustments and document any waived adjustments
  9. 9. CONCLUDING THE AUDIT Preparation of the financial statements  Balance sheet  Income statement  Statement of Members’ equity  Cash flow statement Draft footnote disclosures
  10. 10. CONCLUDING THE AUDIT(continued) Supplementary statements  Replacement reserve fund  Reserve study  Budget to actual reports  Commitments and contingencies  Related party transactions  Subsequent events
  11. 11. AUDIT REPORTS Auditors’ Opinion & Financial statements SAS No. 115 letter with management comments SAS No. 114 – communication from the auditor Representation letter
  12. 12. AUDIT REPORTS (continued) Different types of audit opinions  Unqualified  Exception  Disclaimer
  13. 13. ADVICE TO BOARDS Review the draft audit report and ask questions Pay attention to the SAS No. 115 letter for significant control deficiencies or material weaknesses Review audit adjustments and make sure they are recorded by management company Sign representation letter within 60 days
  14. 14. RECENT AUDIT TRENDS Allowance for bad debts and delinquent assessments receivable Going concern Borrowing from replacement reserve fund Out of date replacement reserve studies Inadequate budgeting – resulting in operating fund losses
  15. 15. RECENT AUDIT TRENDS (continued) Books kept on cash basis Filing incorrect tax returns – 1120 vs. 1120H Not recording prior year audit adjustments Lack of fidelity insurance Not recording all year end accruals Not recording insurance claims
  16. 16. FUTURE ACCOUNTING AND AUDITING STANDARDS Clarity project Going concern Private company accounting standards OCBOA accounting standards Review or compliation IFRS – merging US and International accounting standards
  17. 17. QUESTIONS

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