Hi,
Most HOA boards just renew whatever financial report the last board ordered, assume it’s the right one, and never check. That guess is expensive both ways – pay for a full audit your state never required, or skip the one your governing documents or your lenders did, and find out when a unit sale collapses at closing.
An audit, a review, a compilation, and a reserve study get treated as interchangeable. They are four different things, and only some of them are what your association is actually required to have:
- Compilation – your management company’s numbers put into statement format, with no assurance they are accurate
- Review – limited assurance through inquiry and analysis, but no real testing of transactions
- Audit – the highest assurance; the CPA tests transactions, examines evidence, and gives an opinion on whether the statements are materially correct
- Reserve study – not a financial statement at all. It projects when big-ticket components (roof, elevators, pavement, plumbing) need replacing and how much to set aside. Having one does not mean your financials were ever audited
Which one you actually need is set by three things that don’t always agree:
- Your state law – many states require a review or a full audit once the association crosses a revenue or unit-count threshold
- Your governing documents – CC&Rs and bylaws often mandate an annual audit or review no matter what the state requires
- Your lenders – if you’re a condo association, Fannie Mae and Freddie Mac tightened their rules in 2026, and a building that can’t show adequate reserves and clean financials can be labeled “non-warrantable” – meaning no conventional mortgage for any unit in it, which freezes sales and drags down every owner’s value
The trap is always the same: the board pays for the wrong report and loses thousands, while gathering more documentation, and explaining the delay to owners.
That is what we sort out for our HOA clients – reading your state rules, your governing documents, and your lender requirements together, and telling you exactly which report your association needs and which it doesn’t.
Reply to this email by Friday and we will set up a free 15-minute call with one of our senior audit professionals. Bring your CC&Rs and your most recent financial report, and we will tell you which report your association is actually required to have.
Sincerely,
—
George Dimov, CPA
Licensed and Insured
(833) 829-1120 toll free
(212) 994-8081 Fax
www.dimovtax.com