How does an HOA board get its books ready for the CPA at year end?

By OurHOA · General information · Revised September 23, 2026

How an HOA board closes the year, builds the package its CPA needs for the annual review or tax return, and meets the Form 1120-H and state report deadlines.

Part of the HOA board handbook: treasurer and money.

The short answer

Close the books yourself before the CPA starts. That means reconciling every bank and reserve account through the last day of the fiscal year, matching the owner ledger to the balance sheet, and sending the accountant one organized package instead of a stream of emails. Sign the engagement letter in the fall so the firm has you on its calendar before tax season. Most of what a small association pays a CPA beyond the quoted fee comes from the accountant doing bookkeeping the treasurer skipped, and most late reports trace back to one missing bank statement or an unanswered question. This guide gives the order of work, the list of documents, and a calendar for a calendar-year association. State law and your governing documents decide which report you need and when owners get it, so treat this as general education, not legal or tax advice, and confirm the details with your own CPA.

Know which job you are hiring the CPA for

A year-end engagement is often two jobs. One is the financial statement work, which may be a compilation, a review, or an audit. The other is the federal income tax return, plus any state return. Some firms do both, and some associations use one firm for each. The level of statement work comes from your bylaws and state law. In Florida, section 720.303(7) requires the annual financial report within 90 days after the fiscal year ends. Associations with less than $150,000 in revenue need a report of cash receipts and expenditures, $150,000 up to $300,000 needs compiled statements, $300,000 up to $500,000 needs reviewed statements, and $500,000 or more needs an audit. Members can vote at a properly called meeting to use a lower level, but not for consecutive fiscal years. In Colorado, section 38-33.3-303(4)(b) lets the board order a review or audit at any time. Owners of one-third of the units can require a review, and they can require an audit only if the association has at least $250,000 in annual revenues or expenditures. California Civil Code section 5305 requires a review by a licensed accountant in any year gross income exceeds $75,000. Texas owners, or a CPA acting as an owner's agent, can examine the association's financial records under Property Code section 209.005, so keep them in a form an outsider can follow. Our guide on the difference between an audit, a review and a compilation explains what each level of work covers.

Close the year before you call

Do these in order in the first two weeks after year end. First, download the final statement for every operating, reserve, money market and CD account, and reconcile each one to the penny. Note any check that has not cleared. Second, post every payment received through the last day of the year, and list owners who prepaid next year's dues, since the CPA will usually treat those as a liability rather than income. Third, run the owner aging report and confirm its total equals accounts receivable in the books. If it does not, find the difference now. Fourth, list unpaid bills dated in the old year. Fifth, check that transfers to reserves match the budget and the board's motions. Sixth, total what you paid each vendor and collect missing W-9 forms. For payments made in 2026, the Form 1099-NEC threshold rose to $2,000, up from $600, and the forms go to vendors and the IRS by January 31. Last, write a one-page note on anything unusual: an insurance claim in progress, a disputed invoice, a special assessment, a loan, or a lawsuit. That note saves the CPA an hour of questions.

The package to send

Put everything in one shared folder with a file name for each item, and send the link once. A complete package has: year-end bank and investment statements for every account, plus the first statement of the new year so the accountant can see which checks cleared; the reconciliation for each account; the general ledger and trial balance exported from your accounting file; the budget with actual figures beside it; the owner aging report and the prepaid list; unpaid bills; invoices for large payments, using a dollar cutoff the CPA picks; contracts signed or renewed during the year; insurance declarations pages; loan statements, if any; the current reserve study or its latest update; minutes of every board and member meeting from the year; and last year's financial report, tax return and any letter the accountant sent the board. Add a list of directors and officers with their terms, and the association's EIN. If the association changed treasurers mid-year, include the handoff notes. Our guide on the new treasurer handoff checklist covers what those should contain.

Tax dates and the vote your CPA may ask for

Most associations file Form 1120-H. The IRS due date is the 15th day of the fourth month after the fiscal year ends, which is April 15 for a calendar-year association. Form 7004 gives an automatic six-month extension to file, but it does not extend the time to pay, so any tax is still due on the original date. To use Form 1120-H, at least 60 percent of gross income must be exempt function income, such as dues and assessments, and at least 90 percent of expenses must go to acquiring, managing and maintaining association property. Taxable income, typically interest on reserves, is taxed at a flat 30 percent. Some CPAs recommend the regular Form 1120 instead. If yours does, ask whether the members need to vote on a Revenue Ruling 70-604 resolution. Under that ruling, as an IRS letter to a taxpayer summarized it, excess assessments that are returned to owners or applied to the next year's assessments are not taxed to the association. The same IRS letter says the ruling does not cover money kept in a working capital reserve. Get the resolution wording from your CPA. A typical version reads: "Resolved, that any excess of membership income over membership expenses for the fiscal year ending December 31 shall be applied against the following year's member assessments, as provided by Revenue Ruling 70-604." Put it on the annual meeting agenda and record the vote in the minutes.

A sample year-end calendar

For a calendar-year association, a workable schedule looks like this. October: ask the CPA for next year's engagement letter and fee, confirm which report and which return you are buying, and put the approval on the November board agenda. November or December: hold the annual meeting, including any 70-604 vote, and send W-9 requests to vendors who are missing one. January 1 to 15: download statements, post the last payments, reconcile every account. January 31: Forms 1099-NEC go to vendors and the IRS. February 15: send the complete package. This date is a target rather than a rule, but it gives the accountant six weeks. March: answer questions within two business days and read the draft. For a review or audit, the CPA will usually ask the board to sign a letter stating that the records are complete. March 31: Florida's 90-day deadline to have the annual report prepared. April 15: the federal return is due, or file Form 7004 and pay any tax owed. April 30: California's 120-day deadline to distribute the review. In Florida, owners must get the report, or notice that it is available, within 21 days after it is final and no later than 120 days after year end. In Colorado, copies of a review or audit must be available on request within 30 days after it is completed.

Mistakes that add fees and weeks

Sending unreconciled accounts is the most expensive one. The accountant will reconcile them for you at an hourly rate. The second is leaving the prior year's adjustments out of your books. If the CPA's report makes adjusting entries, post them to your accounting file as of year end, or next year starts from a balance that does not match the report and the same questions come back. Third, hiring a director's relative or friend as the accountant. Reviews and audits require the accountant to be independent, and even a compilation has to disclose a lack of independence, so ask any candidate about ties to board members before you sign. Fourth, forgetting the state return. Many states expect one even when no tax is due, so ask the CPA which ones apply. Fifth, losing the finished work. Texas section 209.005 requires associations to keep financial records, tax returns and audits for seven years, and a seven-year file is a reasonable default anywhere. Save the final report, the return, the engagement letter and the package itself in the association's records, not on a treasurer's personal laptop. Then add next year's dates to the board calendar the day the report comes back. Our guide on the HOA treasurer monthly checklist shows how a clean month-end routine makes the year-end close short.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

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