HOA Fund Accounting

Fund accounting is utilized by non-profit corporations which includes non-profit mutual benefit corporations which are utilized by more than 99% of all homeowner associations in California.

HOA fund accounting is designed to report cash flow as opposed to profit and loss. With HOA fund accounting, homeowner associations will establish three types of bank accounts:

  1. Operating Accounts: This is used for general operations which includes the receipt of assessments and the payments of contractors and vendors. Periodically, funds will be transferred to the Reserve Account.
  2. Reserve Account: This is used for long-term repairs and replacements such as roofs, replacement of pipes, and the painting of the building. California law requires the signature of two directors to withdraw reserve funds. A reserve account is a form of savings account.
  3. Special Account: This type of account mayor may not be required by an association. It is used for special purposes such as to account for litigation settlement funds and/or insurance proceeds.

Pacific Reserve Studies