Condo Associations: Reserves and Accounting Issues

Author: Pat Patterson

This course explains most of the varied and unusual details of Condominium Associations (CONDOS) Reserve issues for property repairs and replacements and the Generally Accepted Accounting Principles (GAAP) that apply. There are specific Topics in the Financial Accounting Standards Board (FASB) that deal with the Common Interest Realty Association industry and Condominium Associations specifically. The CIRA industry also has auditing standards that relate often to state laws and rules for Condominium Associations.

Publication Date: August 2021

Designed For
The course is designed for CPAs, Property Managers, Investors, and other accounting professionals working in the accounting and audit areas of Condos. The tasks include Reserves for repair and replacement areas in associations, audits, reviews of financial statements of the associations as well as Compilations, and Preparation engagements. The AICPA’s Code of Professional Conduct is also important to understand as it relates to Independence, documentation, and form and content of financial statements.

Topics Covered

• Reserve considerations for associations
• Differences between associations like residential and commercial Condos
• Timeshares and Condos (both residential and commercial) as required
• How the differences effect the filing of federal and state tax returns
• Is depreciation any different in a Condo compared to another entity?
• What level of service is required and when?
• Revenue Recognition specifically for Condos

Learning Objectives

• Identify the types of engagements available to a Condominium Association, such as, audits, reviews, compilations, and preparation engagements
• Describe the mechanics of providing financial statements to a CIRA depending on the type of CIRA and the level of attention needed.
• Recognize the procedures that CIRAs may make concerning reserves for repair and replacement, revenue, capitalization issues, and deductions for the association
• Identify when an owner/member of an association may be affected by the CIRA's accounting implications especially around repairs and replacements
• Identify and explain the capitalization policy of a Condominium Association
• Identify a form of land development in which various residential and nonresidential structures are clustered to allow optimal use of the property
• Identify a basis of accounting that an entity uses to comply with the requirements or financial reporting provisions of a regulatory agency to whose jurisdiction the entity is subject
• Recognize best practices regarding CIRA disaster recovery

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Accounting (2 hours)

Program Prerequisites
Participants should be familiar with the basics of CIRA accounting. GAAP, GAAS, and SSARS standards are important in the industry.

Advance Preparation
None