Academy/Taxes, Audits & Financial Compliance
Choosing a CPA
What to check before you sign an engagement letter, so your books get real scrutiny instead of a rubber stamp.
Look for a CPA with community association experience, no financial ties to your management company, and a habit of confirming bank balances directly with the bank rather than trusting numbers a manager forwards. There is no license called HOA CPA; these are practical checks a board can run in an interview, not credentials to search for.
Look for community association experience
A CPA who has never signed a homeowners association return may not know that filing Form 1120-H is a choice the board makes fresh every year, not a status that sticks once it is picked. Ask a candidate how they decide, each year, whether Form 1120-H or the regular Form 1120 produces less tax for your association; a firm that files the same form out of habit is not running that comparison.
Whether your state also taxes association income, and how, is a separate question your CPA should be licensed to answer for your state. Ask directly rather than assuming the federal answer settles it.
Insist on independence from your management company
Some management companies recommend a CPA who also keeps the company's own books, or who receives a referral fee for every association client it sends that CPA's way. That arrangement gives the CPA a financial reason to go easy on the manager's numbers, which is the opposite of what a board needs from its accountant.
A second concrete test: ask whether the CPA confirms bank balances directly with the financial institution, rather than relying on the statements a manager forwards. Direct confirmation cannot be altered by anyone who already has access to the association's own records, which is why it works as a basic fraud safeguard.
Match the CPA to the job your documents require
Not every CPA firm performs every level of service. The accounting profession's own standards, summarized by the Journal of Accountancy, lay out an ascending ladder: a compilation presents the numbers with no assurance, a review adds limited assurance built on inquiry and analysis, and an audit is the only level where the accountant tests the underlying records and states an opinion.
Before interviewing anyone, find out which level your bylaws, CC&Rs, or state statute require this year, then ask each candidate whether they actually perform that level of engagement; some firms only compile, and not all of them audit.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
Your property manager recommends a CPA who also keeps the management company's own books and gets a referral fee for each association client sent her way. What's the concern?
You are interviewing two CPAs. One relies on the statements the manager emails her each month. What should you ask the other one to confirm she does instead?
A CPA tells your board that since the association filed Form 1120-H last year, it must file the same form again this year. Should the board push back?
Sources
- Instructions for Form 1120-H (2025), IRS
- Statements on Standards for Accounting and Review Services, overview of preparation, compilation, and review levels of service, AICPA, summarized by Journal of Accountancy
Taxes, Audits & Financial Compliance
Once you know which engagement level your documents require, learn how to read what comes back: see Reading an audit report.
State licensing rules for CPAs, and whether your bylaws, CC&Rs, or state statute require an audit, a review, or a compilation, vary by state and by association. Confirm both before you interview candidates.