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How an engagement works

From Proposal to Final Report

Every audit, review, and compilation follows the same five steps. Here is what happens at each one, and who does what: the board, management, and FF&B CPAs.

Request a Proposal

The five steps

  1. 01ProposalYou share the association's type, size, fiscal year-end, and the report required. We confirm the scope and provide a proposal.
  2. 02Engagement letterThe association signs a written engagement letter that sets out the service and each party's responsibilities.
  3. 03Records requestWe send a request list. Management or the treasurer gathers bank statements, ledgers, minutes, and reserve schedules.
  4. 04FieldworkWe perform the procedures the engagement requires and raise questions with management or the board.
  5. 05Draft and final reportWe share the draft, resolve open items, and issue the final report. The tax return follows the statements.

01 Proposal

The board or the association's manager contacts us with the association's type, its number of units or parcels, its fiscal year-end, its approximate annual revenue, and the report it needs. If you are not sure which report applies, we will confirm the level Florida requires and whether the governing documents may call for more.

We confirm the scope of the engagement and provide a proposal. Proposals are based on the association's size, its records, and the service requested.

  • The association: provides basic information and decides whether to accept the proposal.
  • FF&B CPAs: confirms the required level of report and the scope, and provides the proposal.

Please do not send financial documents with your proposal request. Records are exchanged later, through the Feldman One client portal.

02 Engagement letter

When the association accepts, it signs a written engagement letter. The letter states the service and fiscal year covered, the reporting framework, the responsibilities of the board and management, our responsibilities, and the form of report we expect to issue. Work begins once it is signed.

  • The board: reads the letter and signs it on the association's behalf.
  • FF&B CPAs: prepares the letter and answers questions about it.

For what the board signs during an engagement, see guidance for association boards.

03 Records request

We send a request list for the fiscal year. It typically covers bank and investment statements, reconciliations, the general ledger, the owner ledger, minutes, contracts, insurance, and the reserve schedule. The list depends on the association and the level of report. An audit draws on more support than a review or a compilation.

  • Management or the treasurer: gathers the records and uploads them through our secure Feldman One client portal.
  • The board: makes sure management has what it needs, including complete minutes.
  • FF&B CPAs: sends the request list and follows up on anything missing.

To prepare, use the documents and records checklist.

04 Fieldwork

We perform the procedures the engagement requires. They depend on the level of report:

  • Compilation: we present the financial statements from the association's records. No testing or analytical procedures are performed, and no assurance is provided.
  • Review: we make inquiries and perform analytical procedures, such as comparing results with the prior year and the budget. A review provides limited assurance.
  • Audit: we test transactions and balances against evidence, confirm balances directly with banks, and ask the association's attorney about legal matters. An audit provides reasonable assurance.

Along the way we raise questions with management or the board.

  • Management: answers questions about transactions and provides any further support requested.
  • The board: answers questions only the board can, such as approvals, commitments, and legal matters.
  • FF&B CPAs: plans and performs the procedures under professional standards.

For more on each level, see audit vs. review vs. compilation.

05 Draft and final report

We share the draft financial statements and resolve any open items with management and the board. In audits and reviews, the board signs a management representation letter on behalf of the association before the report is issued. We then issue the final report.

In an audit, we also communicate in writing any significant deficiencies or material weaknesses in internal control that we identified.

  • The board and management: review the draft, raise questions, and take responsibility for the statements. The board signs the representation letter where it applies.
  • FF&B CPAs: resolves open items and issues the final report.

After the report: delivery to owners

The association delivers the final report to owners. Florida sets deadlines for completing and delivering it, measured from fiscal year-end. See Florida reporting deadlines.

The tax return follows the statements

The association's federal income tax return is based on the year-end figures in the financial statements, so it follows them. Associations normally file Form 1120-H. A member of the board signs the return.

Tax preparation is a separate service. See association tax preparation and Form 1120-H for associations.

Next step

Request a proposal with the association's type, number of units or parcels, fiscal year-end, and approximate annual revenue.

Related reading

Request a proposal for your association

Tell us about your association, its fiscal year-end, and the report you need. We will review your information and follow up to discuss scope and next steps.

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We work with associations throughout Florida.