The HOA board as a whole is responsible for the financial health of your homeowners association. However, there are specific duties of the HOA treasurer that must happen to protect the HOA’s assets. Your governing documents—as well as state laws—will specify these exact duties. They can be overwhelming, so most HOA boards will use the help of an HOA manager as well.
Understanding the Role of the HOA Treasurer
What does a treasurer do? When asked to define treasurer, most people will say, “they handle money.” And, on the surface level, that is true. However, the duties of HOA treasurer go beyond simply “handling money.” The HOA board treasurer manages every aspect of the board’s finances and assets, including the reserve fund.
Whether you are running for this position on your HOA board or simply curious, you should know the many HOA treasurer responsibilities that come with the job. So, what do treasurers do? Below, you will find every aspect that the homeowners association treasurers take part in or are in charge of.
You would think record-keeping falls under the job description of the HOA secretary. But, when it comes to financials, the HOA treasurer does that job.
All financial and accounting records are maintained by the treasurer. They also make sure all records are retained properly and kept secure, especially if there is an HOA manager involved.
2. Internal Control
Treasurers look out for any abnormalities in how the funds are handled, such as checks made out to Cash that shouldn’t be in the books. At the very least, treasurers can weigh in on financial matters and how the HOA spends its money. So, if you dislike how the current board allocates its spending, perhaps consider running for HOA treasurer.
The HOA’s annual budget is prepared by the board treasurer. They often work together with a CPA or HOA management to make sure the budget reflects the community’s needs, preferences, and values.
Preparing the annual budget takes time, so make sure to allow yourself a generous head start. Also, you should look at the previous year’s expenses to get an inkling on what the coming year will entail. If some of your contracts are due to expire, renegotiate with your vendors or send out requests for proposals (RFP) well in advance to gauge your upcoming expenses.
The purpose of the annual budget is to make sure you have enough money to cover the year’s expenses. It is also how you can compute the coming year’s assessments.
The accounting and financial records of the HOA should be audited periodically. The treasurer will make sure this happens. An audit is a comprehensive inspection of your association’s accounts. It determines the veracity and accuracy of your financials. Although some states, like California, only require regular financial reviews, others do require audits every once in a while.
Treasurers make sure the association’s investments are fair and on-principal with HOA values. There are usually investment policies HOA boards hold to help guide these decisions, so the treasurer will make sure all policies are followed.
Typically, though, homeowners associations only pursue safe investments. After all, you are not gambling with your own money; rather, you are using the association’s money.
Your HOA should have proper insurance of every type necessary, such as fidelity, worker’s compensation, and casualty. The treasurer will make sure this is the case. Some HOA treasurers have trouble understanding the jargon associated with insurance. In this situation, it is best to seek the help of your HOA manager.
Homeowners associations pay taxes, too, even if it is a non-profit organization. You may not know which IRS forms to use when filing for the association’s taxes, so the services of a CPA will come in handy. The treasurer serves as liaison to the CPA and auditor of the association. They will watch the annual audit’s progress and ensure tax returns get filed in the appropriate amount of time.
An HOA’s reserve fund is there to cover future replacements and major repairs. As such, the HOA should conduct regular reserve studies to ensure their reserve accounts stay at a healthy level. The treasurer should monitor these to make sure they are funded properly in the budget.
The HOA management company will usually take control of delinquent accounts and collect assessments. However, the treasurer is responsible for also watching delinquencies closely and letting the board know about any problem areas. Keep in mind that the HOA relies on assessments to pay for various expenses. Late or delinquent dues could result in a shortage of operating funds.
10. Financial Reports
Financial statements provide the HOA with an overall evaluation of the association’s financial health. It gives you a detailed overview of the period’s income versus expenses. It also tracks the association’s financial transactions.
Although the HOA treasurer does not necessarily need to prepare these statements on their own, they must make sure their CPA or bookkeeper prepares them in time and accurately. Thus, an HOA treasurer should have at least a basic understanding of these reports.
Community members must also receive a copy of the HOA treasurer report, showing the beginning and ending balance, as well as the income earned and expenses incurred throughout the period.
There Is No Shame in Asking for Help
The role of the treasurer is an important one that is necessary to ensure the HOA’s finances are in good standing. However, more often than not, HOA boards consist of volunteers, including the HOA treasurer role.
If your association is looking for a qualified candidate with background or knowledge in finances, then it is a good idea to interview prospects first.
On the other hand, there is also a danger to taking on too many tasks, especially if you have little to no experience in financial management. In such cases, it is best to outsource the more difficult duties of HOA treasurer to a CPA or bookkeeper. A quality HOA management company can guide your board through any questions or problems in this area, as well.
- HOA Reserve Study: The Litmus Test For the Financial Health Of An HOA
- An Overview of HOA Board Duties
- What Are The Fiduciary Duties Of The HOA Board?