What it is
An HOA has a few accounts and a few risks. Assessments are the main revenue, and the allowance for delinquent dues, collection and lien activity, and prepaid assessments follow from them. The replacement fund is the area owners watch: the balance, its use, and the supplementary information on future major repairs and replacements.
The program covers assessments, receivables and collections, reserve funds and the supplementary information, common property, insurance, income taxes and the management company relationship. Steps carry an assertion, a sample-size note, a W/P reference and sign-off.
When to use it
- Planning the audit of a homeowners or condominium association or a master association.
- When the association has a reserve study, special assessments or a management company that holds funds.
- To document how you test the replacement fund and delinquent dues.
What’s inside
- Assessments, special assessments and prepaid assessments
- Receivables, the allowance, collections and legal activity
- Replacement fund, designated and restricted funds, and supplementary information
- Common property, insurance, expenses, taxes and the management company
- Tie-outs and general procedures
Standard cited
This template follows AU-C 330 / ASC 972. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 330 explained.
Questions
What is the supplementary information on future major repairs and replacements?
Associations that collect assessments for future repairs and replacements of common property present information from the reserve study: the study basis, the estimated remaining lives and costs, and the funds set aside. It is required supplementary information, not audited, but the auditor applies limited procedures to it and reports if it is omitted (ASC 972, AU-C 730).
Are reserve funds restricted?
It depends on the governing documents and state law. Funds designated by the board are not donor or legally restricted unless the documents or statute require it. Document the basis for the classification and for any borrowing from the replacement fund.
What do you test for management company funds?
Whether cash held by the manager is in the association’s name, reconciled and confirmed, and whether the manager’s reports agree to the association’s books. A manager holding commingled funds is a control and fraud risk.
Related templates
- Audit Program: Cash and Bank
- Audit Program: Real Estate Entity
- Bank Confirmation Letter (AU-C 505)
- Related Party Questionnaire for Management (AU-C 550 / ASC 850)
Last updated 11/05/2026. All free templates.