Audit
I asked my HOA for a copy of the audited financial statement. They said they do not need to do one, but did send me a copy of the Tax Compilation.
Our CCRs state
14.4 Right of Inspection of Records. Any Owner, First Mortgagee, or Eligible
Insurer or Guarantor shall be entitled to: (a) inspect current copies of this Declaration
the Articles, the Bylaws, the Design Guidelines, the Association Rules, and the books,
records, and financial statements of the Association during normal business hours; and
(b) receive, upon written request therefor, an audited financial statement of the
Association for the immediately preceding fiscal year of the Association, free of charge
to the requesting party.
The CCR’s make no mention of a compilation or review which are the other options in ARS 13-1810.
I am interpreting this to mean they must do an audited financial statement , and can not substitute a compilation or review, which have much lower standards, in lieu of what the CCR’s state.
How do you interpret this?
Thanks
John
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John;
What I need you to do is actually see if the bylaws actually state that the association must do a independent audit annually. It will be specified somewhere. This provision that you cites, implies that it is something that would be available for review, but it does not specify that an audit must be performed annually. This is a records request provision not a financial review provision.
The law is written to allow three options to any common interest community that does not have a specific provision in the governing documents that require an annual or audit under any frequency. For example if the bylaws state that the association must perform an audit of it’s finances every 5 years then it could do a review or compilation for 4 year and an audit on the 5th year. This does not prevent the association from performing an audit at any time if they believe that it is necessary, which in my opinion is appropriate on some frequency if not annually. If you have ever seen a compilation it is nothing more that a duplication of the year end financial summary and a pretty useless document.
Dennis