How do we hire a CPA firm for our HOA's annual review or audit?

By OurHOA · General information · Revised September 26, 2026

How an HOA board hires a CPA firm for its annual review or audit: what the law requires, license and peer review checks, proposals and the engagement letter.

Part of the HOA board handbook: treasurer and money.

The short answer

Figure out which report you need first, then ask two or three licensed CPA firms that already work for community associations to quote the same job in writing. Check each firm's license with the state board and its peer review status with the AICPA. Pick on experience and turnaround as much as on price, read the engagement letter line by line, and have the board approve it in an open meeting before the fiscal year ends. State law and your governing documents decide what you must have, so treat this as general education, not legal or accounting advice.

Confirm what you are buying

A compilation, a review and an audit are different products with different prices. Our guide on the difference between an audit, a review and a compilation explains what each one covers. Before you ask for quotes, write down which one you need and why. Florida: section 720.303(7) ties the level of the annual financial report to revenue. Under $150,000 the association can prepare a report of cash receipts and expenditures itself. From $150,000 up to $300,000 it needs compiled statements, from $300,000 up to $500,000 reviewed statements, and at $500,000 or more audited statements. An association with 1,000 or more parcels needs an audit regardless of revenue. Owners can vote at a properly called meeting to drop to a lower level, and 20 percent of owners can petition for a higher one, which then takes a majority of the total voting interests. 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 can require an audit only if the association has at least $250,000 in annual revenues or expenditures. The statute says the person doing a review need not be a CPA, but an audit requires one. Owners can get a copy within 30 days after the work is done. Texas: chapter 209 does not set a statewide review or audit requirement, so the bylaws, the declaration and any bank loan agreement decide. California Civil Code section 5305 requires a review by a licensee of the California Board of Accountancy when gross income tops $75,000. If the bylaws call for an audit, a smaller association still needs one until the owners amend the bylaws.

Check the license and the peer review

In Texas, Occupations Code section 901.351 says a firm may not provide attest services, which include audits and reviews, or call itself a CPA firm unless it holds a firm license or practices in the state under the statute's mobility privilege. Other states have similar rules. Look up both the firm and the partner who will sign the report on the state board's license search: the Texas State Board of Public Accountancy, Florida's Department of Business and Professional Regulation, or Colorado's Division of Professions and Occupations license lookup. You want an active license and no open discipline. Then search the firm in the AICPA Peer Review Program's public file. It shows whether the firm is enrolled and the date of its last peer review. A peer review is another CPA's inspection of the firm's audit and review work. Ask the firm to send you its most recent peer review report and letter of acceptance. A firm that does reviews and audits and cannot produce one is a firm to skip. Last, ask how many community associations the firm works for. Association accounting has its own quirks: reserve funds, assessments paid in advance, special assessments, Form 1120-H. A firm that already has association clients bills fewer hours learning yours.

Ask for proposals on the same job

Florida's competitive bid statute, section 720.3055, exempts accountant contracts. Texas section 209.0052(c) requires a bid process only for service contracts over $50,000, which a small association's review rarely reaches, and Colorado's statute has no bid rule. Get two or three proposals anyway. It is the only way to learn what the work costs, and it gives the board a record of why it chose the firm it did. Our guide on how to write an HOA request for proposal has a longer template. For an accountant, a one-page request is enough. Send each firm the same packet: 1. Number of homes or units, fiscal year end, and last year's total revenue. 2. The engagement you need (compilation, review or audit), the reporting basis your documents require, and whether you also want the federal and state tax returns. 3. Number of bank and investment accounts, and whether a manager or a volunteer keeps the books and in what program. 4. Last year's report and the accountant's letter to the board, if you have them. 5. Your deadline. In Florida that is 90 days after year end to finish the report. Pick a date that leaves room. 6. A request for a fixed fee, the hourly rate for work outside it, and the name of the partner who will sign. Give the firms three weeks to respond. Many firms are fully booked from January through April, so send the request in late summer or early fall.

What to ask before you choose

Put these questions to each finalist on a short call, and write the answers down: - Who will do the fieldwork, and will the same people be on our job next year? - What will you need from us, and by what date, to finish on time? - What made last year's fee for a client like us go over the quote? - Do you prepare Form 1120-H, and will you tell us if Form 1120 would cost less tax? - Will you send a letter to the board on weaknesses you find in our controls, and will you present the report at a board meeting? - Do you have any relationship with any of our directors, our manager or our vendors?

Independence and conflicts

Reviews and audits require the accountant to be independent of the association. A compilation does not, but the report has to disclose that the accountant is not independent. In practice, this rules out a CPA who is a director, a director's spouse or close relative, or the person who keeps the books. It also raises questions when the same firm keeps your books and reviews them. The AICPA's rules allow that only with conditions, so ask the firm how it handles it and get the answer in writing. Texas adds a statute on top of the professional rules. Section 209.0052(b) lets an association contract with a director, a relative within the third degree, or a company either one controls only if it has at least two other bids, the director sits out, and the other directors approve it and certify the conditions by resolution. For the accountant, the simpler answer is to not hire anyone tied to the board. Have every director disclose any tie to the firms on the list before the vote, record the disclosures in the minutes, and have anyone with a tie sit out the discussion and vote.

Read the engagement letter, then vote

The engagement letter is the contract. Before the board signs, check that it states the level of work, the fiscal year covered and the reporting basis; the fixed fee and what triggers extra charges; the hourly rate for extra work; the delivery date and what the firm needs from you to meet it; whether the tax returns are included; and how either side can end the engagement. It will also say the board must provide complete records and sign a representation letter at the end. Make sure the treasurer and president understand that before signing. Approve it at an open board meeting. A motion the secretary can copy into the minutes: "Motion to engage [firm name] to perform a [review or audit] of the association's financial statements for the fiscal year ending December 31, 2026, and to prepare the association's federal and state income tax returns for that year, for a fixed fee of $[amount] as set out in the engagement letter dated [date], and to authorize the president to sign the engagement letter."

A sample calendar and when to switch firms

For a calendar-year association: - August: confirm the level of work required by statute and the documents. Send the request for proposal. - September: interviews, license and peer review checks, conflict disclosures. - October board meeting: vote on the engagement letter. - January and February: close the books and send the package. Our guide on getting the books ready for the CPA covers what goes in it. - March and April: fieldwork, draft report, representation letter, final report. Once you have a good firm, sign one-year letters and renew them, rather than a long contract with no way out. No Texas, Florida or Colorado association statute requires you to rotate accountants. Many boards take new proposals every five years or so, or ask the firm to put a different partner on the job, to get a fresh look. Switch sooner if the firm misses deadlines two years running, bills well over its quote without warning, or keeps sending staff who have never seen an association's books. The common mistakes are all avoidable: hiring after January, when good firms are full; comparing a compilation quote with an audit quote; hiring a director's relative; skipping the license and peer review checks; and signing an engagement letter that nobody on the board read.

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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