M1A2 Discussion

Peer 1

HOA Financial Statements

Ruby Loftin posted May 12, 2018 9:15 PM

Hello everyone,

            Below is my discussion.

Have a great day,

Ruby

 

The HOA board has asked you to provide an opinion on Pennypacker's question. Would you recommend a full audit or a nonaudit attestation service? Explain why.

 

To: HOA Board

 

            According to Louwers, Ramsay, Sinason, Strawser,  and Thibodeau (2014), an audit consists of going over the financial evidence to make sure that all reported income and loses are accurate. Cambridge Business English Dictionary online (n.d.) defined a nonaudit service as services an accountant provides “that do not involve checking the company’s financial records” (para. 1).

 

            Based on these two definitions, I recommend that the Homeowners Association enlist the help of a nonaudit attestation service. Mr. Pennypacker wants to know more about the role that the CPA plays and about the records used for preparing the financial statements. He is not asking for an overview of the financial statements themselves.

 

Sincerely,

 

Dewey, Wright, & Moore Company

 

References

 

Louwers, T., Ramsay, R., Sinason, D., Strawser, J., & Thibodeau, J. (2014).  Auditing & Assurance Services (6th ed.) [Argosy University]. Retrieved from https://digitalbookshelf.argosy.edu/#/books/1259562875/

 

Non-audit. (n.d.). In Cambridge Business English Dictionary online. Retrieved from https://dictionary.cambridge.org/us/dictionary/english/non-audit

Peer 2

HOA Financial Statements

Daniel Ramirez posted May 12, 2018 5:39 PM

To the HOA board:

            In my opinion as a certified public accountant, Mr. Pennypacker’s request for a full audit would not be necessary.  To my understanding there is no evidence of any wrong-doing in the finances of the Homeowner Association’s funds, nor is the HOA undergoing a change in management company or board of directors.  “An audit is such an extreme process, and you really need it if you switch management companies and you suspect wrongdoing or if the board has been in power for, say, 20 years and you don't know where the money went” (HOAleader.com, 2015).  Given that none of these events have occurred, a non-audit engagement or non-audit attestation should be enough to clear up any doubts as for the accuracy of the financial statements that the current HOA treasury has reported to the home owners.

            “Basic accounting and review services are “nonaudit” services, performed frequently for medium and small businesses and not-for-profit organizations” (Louwers, 2014).  Under this definition, a small firm such as a homeowner association would make sufficient financial efforts by hiring the services of an accountant and asking him to attest and make a compilation of the firm’s financial statements, providing assurance to the board, the homeowners, and any other stakeholder of the firm interested in the financial performance of the firm.

Daniel Ramirez

References

HOAleader website. (2015) When Does Your HOA Need an Independent, Third-Party Audit? Retrieved from https://www.hoaleader.com/public/1300print.cfm

Louwers, Timothy, Robert Ramsay, David Sinason, Jerry Strawser, Jay Thibodeau.  Auditing & Assurance Services, 6th Edition. McGraw-Hill Learning Solutions, 01/2014. VitalBook file.