Common Interest Realty Associations
Common Interest Realty Associations (CIRAs) include homeowners associations, condominium associations, property owner associations, townhomes, timeshares, cooperatives, planned unit developments (PUDs), and Common Interest Developments (CIDs).
Audit & Review Services
At Nigro & Nigro we understand the complexity of performing HOA audits and reviews and that’s why we have a dedicated team of auditors that possess the specialized knowledge and experience to help ensure compliance with the appropriate standards and changes in regulations that may impact your HOA’s audit or review.
California law requires a CIRA’s financial statements to be reviewed by a CPA when gross income exceeds $75,000 in any year. Many association by-laws require even lower thresholds, or in some cases, an annual audit is required. So, what is the difference between an audit and a review?
A review consists of the auditor inquiring of association or management company personnel and performing analytical review procedures in order to verify the financial records of the association. Unless deemed necessary, the accountant is not required to obtain any independent corroboration to substantiate the amounts in the financial statements. In contrast, as part of an audit, the auditor must obtain independent evidence to substantiate the assertions made by the association’s management in the financial statements. An audit also includes assessing risk through gaining an understanding of and testing the association’s relevant internal controls. In addition to a big difference in detail and thoroughness, a review can cost hundreds or even thousands of dollars less than an audit. The board of directors makes the decision on what level of attestation is performed.
Since 1991, our team members have experience with a wide variety of common interest realty associations including, small three unit condominium associations to large 4,200 unit property owner associations. Our team of HOA specialists stays current in this highly technical practice area by adhering to continuing professional education requirements of the AICPA. We also annually review the updates from the AICPA Audit & Accounting Guide for Common Interest Realty Associations.
In addition to the annual audit or review, all of our CIRA clients are required to file annual federal and state information returns, regardless of their level of income. We have industry expertise to help you navigate these highly complex returns. An HOA may choose to file its federal return as either a homeowners association under IRC section 528 or as a regular corporation. Keeping in mind that your minimizing your tax liability is critical to your operations, we assist with decisions related to your tax filing requirements.