Most board members meet the audit for the first time as a one-page request list from an accountant, forwarded by the manager, with a date on it. The list is written in the accountant's language, the manager has most of what is on it, and the board's job appears to be waiting.
That is not quite right. The accountant is forming an opinion about the association's records, and the association is the board, not the management company. When something on the list cannot be produced, it is the board's finding. This checklist is for the board member who wants to know what is being asked for and why, and what parts of it the board has to be able to put its own hands on.
If you are a manager preparing the binder, our earlier property management audit checklist is written for you. This one is for the people who sign the engagement letter.
First: is an audit actually required?
Boards often assume an annual audit is a legal requirement. In most states it is not, or not at every size. What is required is some level of independent look at the financial statement, and the level depends on where you are and how much money moves through the association.
| State | What the statute requires | Source |
|---|---|---|
| California | A review of the financial statement by a licensed CPA for any fiscal year in which gross income exceeds $75,000, distributed to members within 120 days after the fiscal year closes. Governing documents may require more. | Civil Code 5305 |
| Florida (HOAs) | Scaled by revenue: under $150,000, a report of cash receipts and expenditures; $150,000 to under $300,000, compiled statements; $300,000 to under $500,000, reviewed statements; $500,000 or more, audited statements. Any association with 1,000 or more parcels must be audited regardless of revenue. Report prepared within 90 days after fiscal year end; delivered to members within 21 days of completion and no later than 120 days after year end. | Fla. Stat. 720.303(7) |
| Colorado | An audit is required only when both conditions are met: annual revenues or expenditures of at least $250,000, and a request from the owners of at least one-third of the units. A review is required on a one-third owner request alone. Otherwise it is at the board's discretion. | C.R.S. 38-33.3-303(4)(b) |
| Texas (POAs) | No statewide audit requirement for property owners' associations under Chapter 209. The governing documents control. Audit records, when they exist, must be kept seven years under the association's retention policy. | Prop. Code 209.005(m) |
Three terms do the work in that table. A compilation is the accountant arranging the association's numbers into statements with no assurance. A review is limited procedures and inquiry, producing limited assurance that nothing material is wrong. An audit is testing, confirmation with banks and vendors, and an opinion. The request list gets longer as you go up.
Two points for the board. First, check the bylaws and CC&Rs before the statute; governing documents frequently require an annual audit where the state would accept a review, and the stricter standard wins. Second, the statute is a floor. A board that has just changed managers, had a treasurer resign, or discovered a reconciliation problem can order an audit at any size, and often should.
What the accountant will ask for
The request list varies by firm and by level of engagement, but it draws from the same file every year. Grouped the way a board thinks about it:
Organization
- Articles of incorporation, CC&Rs, bylaws, and every amendment
- Current board roster with officer positions and term dates
- Minutes of all board and member meetings for the year under review
- The management agreement and any amendments
Financial statements and books
- Year-end balance sheet, income and expense statement, and budget-to-actual comparison
- General ledger for the full year
- Check register
- The approved budget for the year under review and the one adopted for the next
Banking
- Statements for every operating and reserve account for all twelve months, plus the month after year end
- Monthly reconciliations for each account
- Signature cards and the resolution authorizing signers
- Investment account statements and any certificates of deposit
Assessments and receivables
- Assessment roll and the resolution or budget setting the rate
- Aging of delinquent accounts at year end
- Collection policy and any payment plans in force
- Documentation of write-offs
Reserves
- The current reserve study and the funding plan adopted from it
- Record of every transfer into and out of reserves, with the board approval for each
- Reserve expenditures matched to invoices and to the component list
Contracts and payables
- Every executed contract in force during the year
- Vendor invoices, with the board or committee approval attached where one was required
- Accounts payable detail at year end
- Vendor W-9s and 1099s issued
Insurance
- Declarations pages for property, general liability, directors and officers, and fidelity or crime coverage
- Certificates of insurance from vendors who worked on the property
- Any claims opened or closed during the year
Tax and regulatory
- Prior year's federal and state returns (Form 1120-H or 1120)
- Correspondence from the IRS or state tax authority
- Annual report filings with the Secretary of State
Prior year
- Last year's audit or review report and the management letter that came with it
- Evidence that prior-year findings were addressed
The length of the list is not the problem. The problem is that it assumes each item exists, is final rather than draft, and can be found. An audit is partly a test of that assumption.
The records the board itself is responsible for
The manager can produce most of the banking and payables list. Several items are the board's, and an accountant will notice when they are thin.
Minutes that show the decisions. Reserve transfers, contract awards, assessment increases, write-offs, and the selection of the auditor all require board action, and the evidence is the minutes. Minutes that say "financials reviewed" without saying what was reviewed, or that are still marked draft eleven months later, do not support the numbers. See our guide to what minutes must contain.
Evidence of the board's own financial review. In California, Civil Code 5500 requires the board to review, monthly, the reconciliations of the operating and reserve accounts, actual revenue and expenses against budget, the latest account statements, the income and expense statement, the check register, the general ledger, and the delinquency report. Under Section 5501 that review can be done by the treasurer and one other director outside a meeting, but only if the full board ratifies it at the next open meeting and the ratification appears in the minutes. An accountant reading twelve months of minutes with no reference to that review has found a governance gap before opening a bank statement.
Approvals of vendor proposals and invoices. As of January 1, 2026, written board approval of vendor and contractor proposals and invoices is an "association record" in California under Civil Code 5200 as amended by SB 410, meaning members can request it. If approvals happen by email and the emails live in individual directors' inboxes, the association does not have the record. The board does.
The engagement itself. Who selected the auditor, when, and on what basis belongs in the minutes. In Colorado the statute says the board selects an independent and qualified person; in every state, the decision is the board's and should be documented as one.
Where boards get stuck
In our experience, audit findings about records fall into three situations, and none of them is about dishonesty.
The manager has everything and the board has nothing. The request list goes to the manager, the manager fills it, and the board sees the result. That works until the question is about the board: did it approve this transfer, did it review that reconciliation. The board needs its own file of minutes, resolutions, and approvals, independent of the manager's.
The association changed managers during the year. The new manager has what the old one sent, which is never the whole year. Bank statements for the transition months, reconciliations the old manager did or did not do, and the invoices approved under the old contract are the first things an accountant asks for and the first things that are missing. In Colorado, a departing manager now has 45 days to deliver all association records and accounts under HB26-1099; Florida gives a manager 20 business days under its licensing law; elsewhere your leverage is usually the management contract. Either way, the board should ask for the file in writing with a date, before the auditor does.
Nobody has the older records. A review covers one year, but the accountant will ask for the prior report, the reserve study, the governing documents, and minutes going back far enough to find the approvals behind current balances. An association that was self-managed, then managed by two companies, has those in a former treasurer's email, a box in a garage, and whatever the last manager returned.
In the third case, the useful move is not to reconstruct the file piecemeal for each audit. It is to gather the whole history once, read every page including the scanned ones, organize it by year and type, and produce a written list of what is actually missing so the board stops rediscovering the same gaps. That is a project, not a software subscription, and we do it for boards at a fixed price. The missing list is also what you hand the accountant when a prior-year document cannot be produced: it shows the board knows, and knew before being asked.
Reading the result
The report comes in two parts. The opinion or conclusion is what gets filed. The management letter, or the list of findings and recommendations, is what the board should read.
Findings about records are the ones a board can fix without spending money: approvals not documented, reconciliations not evidenced in minutes, contracts not on file, a reserve study older than the statute allows. Each one is a sentence in a letter this year and a repeat finding next year if nothing changes. Assign each to a director, give it a date, and put the resolution in the minutes, so that next year's "prior-year findings addressed" item has an answer.
Then put the file somewhere the whole board can see it. A retention schedule tells you what to keep; our retention guide and free schedule template cover it. A system like ReadFort keeps the records organized by year and type, searchable across every page including scans, and visible to the board rather than to whoever has the box. The audit request list stops being a scramble when the answer to every line is a folder that already exists.
The short version
Check the governing documents and your state's statute to learn what level of engagement is actually required; it is often a review, not an audit, and often triggered by revenue. Expect the accountant's list to cover organization, books, banking, assessments, reserves, contracts, insurance, tax, and the prior year. Take responsibility for the board's own records: minutes that show decisions, evidence of the board's monthly financial review, and documented approvals. If the file is split across a former manager and a former treasurer, fix that once, in writing, before the next engagement letter arrives.