Homeowners' Association Audit, Review & Compilation

Audit, Review & Compilation:
HOA Auditor

Auditing the financial statements of a 2,000+ lot Homeowners' Association situated on over 4,000 acres, in California, may have intimidated some, but Phil approached the engagment without great concern.

The huge Common Interest Realty Association (CIRA), established nearly 40 years prior to Phil's acceptance of the engagement to audit the Association's financial statements, and having undergone as many yearly audits, did present a bit of a surprise, as it was apparent that another esteemed regional CPA firm had passed on the inappropriate reporting, and depreciating, of materially large amounts of property that was not owned by the Association, at all! (The common area property was actually owned by the lot owners and not by the Homeowners' Association.)

Furthermore, nonexempt function income was not segregated from exempt function income, and it was inappropriately exempted from tax using an IRC Section 501(c) non-profit status. Several IRS Revenue Rulings of three and four decades earlier, which precluded such treatment, seemed to have been ignored!

All of this was quite a lot to handle, but the Board of Directors took Phil's findings to the Homeowners' Association attorney, who agreed with the findings, and management thus made the decision to correct the reporting and taxation, as necessary.

Indeed, it was quite a task, that year, to adjust out the inappropriately reported assets and to petition the Internal Revenue Service and California Franchise Tax Board for the purpose of obtaining the proper tax exempt status for the mammoth project. In the end, all was a success.

Homeowners' Associations:
CIRA Financial Statements/Taxation/Budgets

Leslie was the treasurer on the Board of Directors of Quail Run/Curtner Glen Homeowners Association, a 10-unit planned unit development (PUD), in Campbell, California.

After coming home from a long day at work, her first priority was to maintain the peace and love within the walls of her home, rather than to make sure she met all of the regulations of the Department of Real Estate, Civil Code Section 1365-1365.6 (Davis-Stirling Act) , the intricacies of the Internal Revenue Service, and the various standards of financial statement reporting, promulgated by The American Institute of Certified Public Accountants.

"Phil has aided the Board of Directors of our homeowners association in maintaining a realistic approach to complying with all of its requirements,… since 1988…and without catastrophe! Thank you, Mr. Foster!”

— Leslie Pano, Campbell, CA

In addition to offering treasurers of homeowners associations, such as Leslie, peace of mind, Phil has prepared compliant operating budgets, according to Operating Cost Manual for Homeowner Associations, and reserve budgets, according to Reserve Study Guidelines for Homeowner Association Budgets, for decades!

Especially noteworthy was that Phil led the revolution of Common Interest Realty Association (CIRA) accounting and income taxation, in the early 1980s! Taking advantage of uncommonly-known Tax Code, Regulations and Official Guidance, Phil reduced the tax rates homeowners associations were paying from 46% down to 15%, providing a full two-thirds in income tax savings!

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The New Era of Homeowners' Associations: Audit, Review, Compilation and Taxation

Indeed, after having his many articles published, in ECHO Journal, and after delivering presentations at numerous seminars, sponsored by Executive Council of Homeowners, the industry of accounting and taxation for homeowners associations was turned upside down, and what was revolutionary thinking, in the early 1980s, is now considered commonplace!

New, Local Authority on Condominiums and Townhouses

Phil made his Utah debut on November 8, 2007, when he was the guest speaker, along with HOA attorneys, Lincoln Hobbs and John Richards, in a Lorman Education Services seminar on Condominium Conversions, in Salt Lake City, Utah.

Homeowners' Associations: Audit, Review or Compilation?

If you are on the Board of Directors of a homeowners association and have a requirement to provide audited, reviewed or a compiled financial statements to the members of your association, Phil will be glad to meet with you to assess your needs and objectives.

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