By Beth Mulcahy, Esq.
It’s that time of the year again… Fiscal year 2014 has ended for most of our association clients and boards are now considering the next requirements with regard to the association’s 2014 financial books and records. Many boards have contacted our office asking if an association is required to have an audit done by a CPA every year.
The answer is… it depends…First, you need to examine and review your association’s documents (CC&Rs, Articles of Incorporation and/or Bylaws). Do your association documents address the need for an audit, review or compilation? If so, the association needs to follow what the documents state on this important issue.
Arizona law also addresses this topic. Pursuant to Arizona law (A.R.S. Section 33-1810 for planned communities and 33-1243 for condominiums), a board of directors is required to conduct a financial audit, review or compilation of the association annually. The annual audit, review or compilation shall be completed no later than 180 days (6 months) after the end of each fiscal year and shall be made available upon request to the members within 30 days of its completion.
Under Arizona law, if the association’s documents require an annual audit by a certified public accountant, then the association must hire a certified public accountant to conduct the audit. If the association’s documents do not require an audit or do not mention the need for a review or compilation, then the board must conduct a review or compilation for each fiscal year. Anyone, (such as a bookkeeper, committee, treasurer, board member, management company, etc.) can conduct this review or compilation. However, best practices dictate that an independent person conduct the review or compilation (you do not want to have the fox guarding the hen house).
It is a good idea for associations to complete a verification of completion of annual financial audit, review or compilation every year. A sample verification form can be found on our firm’s website
If your association needs a referral for a C.P.A. for this purpose, please contact Beth Mulcahy, Esq. at (602) 241-1093.