Understanding your HOA Balance Sheet

Diversified Association Management strives to educate both the Board Members and Homeowners on how to read, and understand, your Association’s financial statements.  At first glance, they can seem overwhelming and foreign to most, however with a little explanation you can see clear indications of an Association’s health, or indications of possible concerns.
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In looking at the Balance Sheet, the top section starts with the Assets, first with your bank accounts (cash on hand).  You may see that the Association has several bank accounts ranging from Operating, Reserves, CD’s, Prepaid Assessments, or Insurance Claim Accounts.  Each of these accounts have a specific purpose.
 
The next section will be your Liabilities (money the Association owes) and Equity. Equity is an accumulation of the net income and/or net losses over the years since the inception of the Association.  Basically, if the Association were to disband, this is the amount that would be owed, or due if negative, by the owners based on the same calculation of assessments paid (i.e. normally equally or based on a percentage of ownership).
 
To learn more about how to read the financial statements for your Association, please attend a Board Meeting, training session held by Diversified, or contact your Community Manager for further explanation.  Diversified Association Management strives to educate our homeowners and board members on many topics, however transparency and understanding of the financials is key.

​Thanks for Reading!

Delaine Elsrode CMCA® - Community Manager

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