Financial Health Tips for Your HOA

Maintaining your HOA’s financial health—just like maintaining your personal health—boils down to moderation and good decision making. Eating one deep-fried blooming onion every once in a while isn’t a problem. Eating three or four several times a week is.
 
To keep your HOA financially fit, start with these four “health” tips:
 
1. Separate financial duties. Keeping responsibilities for receipts and deposits separate can help prevent financial mishandling. A good community management company will have the staff to segregate these duties.
 
2.  Obtain the right insurance coverage. Your HOA needs to have a variety of insurance coverage. This includes: 

• Casualty insurance to protect common areas
• Liability insurance in case of legal action
• Excess or umbrella coverage
• Coverage to protect directors and officers from personal liability while they are fulfilling their HOA duties
• Fidelity insurance in case of theft 

3.  Make sound investments. When it comes to your reserve fund, focus on balancing liquidity with safety. CDs are a safe bet for your HOA’s investments. Avoid stocks, municipal bonds, and corporate bonds since they pose too much risk. Check your governing documents and local laws to make sure you are following legal and HOA regulations.
 
4.  Conduct audits on a regular basis. A CPA should do an in-depth analysis of your financial records and documents regularly, usually on an annual basis. If yours is a smaller HOA, you may want to opt for a less in-depth (and less expensive) review.
 
These guidelines provide a starting point. However, partnering with an experienced community management company in Arizona can go a long way in keeping you on the right track for your short- and long-term financial health. Find out how. Contact FirstService Residential, Arizona’s leading community management company.