Preparing for your audit or review
Most of the work that makes an engagement go smoothly happens before the first document is uploaded. These steps apply to compilations too.
- Reconcile every bank account. Reconcile each operating and reserve account through the last day of the fiscal year. Clear or explain old reconciling items.
- Close the year. Record the year's invoices in the year, list unpaid bills at year-end, and post all assessments, interest, and transfers. Make sure amounts the operating and reserve funds owe each other agree on both sides.
- Gather the minutes. Collect the minutes of every board and owner meeting held during the year, and any held since year-end, in one place.
- Update the owner ledger. Bring the owner ledger up to date at year-end. It should agree with the general ledger, show prepaid assessments, and note the collection status of delinquent accounts.
- Update the reserve schedule. Update the reserve schedule or reserve study, and record reserve contributions, interest, and spending in the reserve fund.
If something cannot be finished, such as a reconciliation with an unresolved difference, say so when you upload the records.
The checklist
This is a sample. Your association's actual request list will include client-specific requests that are not shown here.
Requests vary with each association and the level of report. Items marked Audit apply mainly to audits. Your request list is the final word on what is needed.
Governance
- Declaration, articles, bylaws, and any amendments made during the year
- Minutes of board and owner meetings for the year and through the date of the report
- Approved budget for the year
- Any special assessment resolutions
- Any owner vote on the level of financial report, as recorded in the minutes
- Management agreement, if the association is managed
- Prior year's financial report
Cash and investments
- Bank statements for every operating and reserve account for the full year
- Year-end bank reconciliations for every account
- Statements for certificates of deposit and other investments
- Loan or line-of-credit agreements and year-end statements
- Authorization for us to request bank confirmations Audit
Assessments and receivables
- Owner ledger or aged receivables report at year-end
- List of prepaid assessments at year-end
- Collection or attorney status of delinquent accounts
- Bad-debt write-offs approved during the year
- Assessment rates for the year, including any special assessments
Expenses, contracts and insurance
- General ledger and trial balance at year-end
- List of unpaid bills at year-end
- Major vendor contracts, including any signed during the year
- Insurance policies in force at year-end
- Payroll reports, if the association has employees
- Invoices and approvals for transactions we select for testing Audit
- Name and contact details of the association's attorney, for the legal letter Audit
Reserves and major projects
- Reserve schedule or reserve study used for the budget
- Reserve account activity for the year: contributions, interest, and spending
- Any owner vote to waive or reduce reserves
- SIRS or milestone inspection reports, for condominiums that have them
- Contracts, special assessments, and financing for major projects
Tax
- The association's prior-year federal income tax return
- Any notices or correspondence from the IRS
- Detail of income that does not come from owner assessments, such as interest and fees from non-owners
When you are ready
Once the association is engaged, upload records through the Feldman One client portal against the request list. If you have not yet engaged us, request a proposal. To see where this fits in the engagement, read how an engagement works.
Financial statements report reserve balances and activity. They do not replace a reserve study, a structural integrity reserve study (SIRS), or a milestone inspection.