7 Signs You Should Switch HOA Accounting Providers
Learn if Your Community Association Needs a Change (and How to Do It Seamlessly)
Managing an HOA or condo association finances is a serious business. When done right, communities run smoothly like a well-oiled machine, as dues are paid and bills are covered. However, if the current COA or HOA accounting provider is dropping the ball, a community could face costly mistakes, compliance headaches, or even fraud.
What are the signs that your community association should make a change? Here’s how to spot HOA accounting red flags and how to make a smooth switch to a provider who gets it right.
Red Flag 1: Communication Black Holes
Timely, transparent communication is the backbone of trustworthy accounting. Knowing what’s happening to the association’s finances is crucial for making informed decisions, avoiding costly errors, and ensuring that residents stay informed. A reliable HOA accountant must act like a partner who’s always ready to provide the information needed, not a black hole that offers nothing.
According to a recent HOA Management study, only 50% of owners rate their community association boards positively when asked if they share “clear and timely” communications. Poor communication leads to lack of trust, which increases risk and grievances.
Instead, board members should demand that their COA and HOA accounting partners help them avoid communication black holes. When evaluating your provider, ask questions such as, “Are our emails and calls going unanswered?” “Are we getting vague, delayed, or incomplete responses to financial questions?” If the answer to these questions is yes, then it might be time to reassess your community association’s accounting service provider. HOAs boards and owners deserve an accounting team that responds clearly and communicates proactively, not one that disappears without warning.
Red Flag 2: Financial Statements That Don’t Add Up
There has been a recent high-profile news story about the Hammocks HOA in Florida, which involved the arrest of several accountants on charges of fraud and other financial crimes. In total, the perpetrators stole approximately $6 million over the course of several years. Your COA or HOA board might face fines or even charges if you hire so-called accounting professionals with nefarious intentions.
Don’t let this financial fraud happen to your community. Ensure that monthly reports are not late, missing, or contain errors. HOAs and COA board members should also be vigilant for discrepancies between statements and actual account balances. Even if no theft occurred, inaccuracies can be a sign of incompetence and system or process breakdown. Accurate, on-time financials are the foundation of effective governance. If your community organization or board members spend more time cross-checking the accountant’s work than reviewing timeline and accurate results, then it might be time for a change.
Red Flag 3: Surprise Fees and Hidden Costs
Ask yourself, is your association getting billed for services it never agreed to? Is the board finding “extra” charges that weren’t in the contract? Unexplained charges and surprise invoices could be red flags. If the HOA is receiving bills for services that weren’t part of the contract or add-ons that nobody requested, there may be a lack of transparency and communication from the service provider. These issues erode trust and, left unchecked, may devastate the association’s budget.
A trustworthy COA-HOA accounting provider should be upfront about the included fees, software, and services. If there are any potential changes, your bookkeeping partner should communicate these with the board immediately. Transparency is a key trait that makes one accounting service more cost-effective than another in the long run.
Red Flag 4: Outdated or Clunky Technology
Today, AI and other innovations are transforming the way various accounting processes are conducted, helping to improve productivity and efficiency. And much of this, if being accomplished quickly and effectively via mobile apps. Any association accounting provider that wants to remain competitive and offer the best solutions to its clients should already integrate modern solutions into its workflow. Expect these teams to provide user-friendly portals, mobile apps, and AI-driven analytics.
Some providers, however, refuse to evolve. The result is clunky technology and outdated features. Without a modern accounting partner, HOA board members and community owners can experience delays and a lack of convenience, which limits the association’s ability to operate effectively. As a board member with fiduciary responsibility, it’s essential to select HOA accountants and bookkeepers who can effectively integrate with modern systems to deliver an enhanced people plus software experience.
Red Flag 5: Inconsistent Rule Enforcement
Inconsistent handling of late fees, violations, or collections can lead to both operational confusion and community conflict. If some homeowners receive warnings while others do not, or if enforcement timelines vary without explanation, this lack of procedural integrity can put your COA or HOA community association at risk.
A fair and consistent application of finance rules is essential to maintaining homeowner confidence and avoiding potential legal disputes. Be sure to hire an experienced accountant to handle the financials for your associations, a partner who understands the importance of impartial enforcement and helps ensure that accounting policies are applied uniformly across the community. When inconsistency becomes a pattern, it can signal internal disorganization or inattention to detail, both of which warrant thoughtful consideration of a provider change for your HOA accounting.
Red Flag 6: Frequent Turnover or Lack of Expertise
What should you do when the contract or lead bookkeeper for your board’s accounting provider is changed too often? Or what if your chosen accounting team continues to show a concerning lack of familiarity with COA and HOA-specific regulations? More than any other, hese issues can signal you need to switch HOA accouting partners. The inconsistencies are often a sign of deeper company problems, with lots of employees leaving (high turnover rates) or a lack of proper training for unique HOA finance regulations. Not only will these problems in finance slow down operations, but they can also lead to costly mistakes.
A competent HOA accounting provider should have consistent points of contact and be able to highlight specialized knowledge for COA and HOA finance. If your current firm or softwaredoes not, then consider transitioning to a team that can demonstrate expertise and professionalism. Otherwise, the risk of expensive errors and possible non-compliance increase exponentially with each passing day.
Red Flag 7: Overwhelmed Board or Volunteer Burnout
Are you or other board members taking on tasks that the accountant should handle? Are bookkeeping headaches causing stress and volunteer fatigue? Hiring an HOA accounting service should mean that tasks like bookkeeping, financial reconciliation, and reporting are no longer the burden of the HOA management or the team of board volunteers.
Board members should focus on governance and community priorities, and volunteers should not take on a burden that feels like a nine-to-five job—especially when it comes to complex financial accounting. When the responsibility shifts disproportionally to you, the board or your professionally managed team, it might be time to find a more competent COA-HOA accounting provider. Your community association accounting partner should lighten the load, not increase it.
How To Make a Seamless Switch
Once an association spots the red flags, the next best thing is to find a more competent, transparent, and reliable accounting partner. Be sure you choose one that also has specific expertise with community associations and leverages modern tehcnology and mobile apps. Here are some steps to follow to streamline the transition.
- Review the Current Contract
Your HOA board should have a general accounting services contract or agreement, which outlines the types of services your current provider offers. This document should include termination clauses, notice periods, and potential penalties. Check these details to prepare for possible expenses and other conditions before terminating the contract.
- Document Everything
Gather financial records, contracts, and communications. Having a complete set of files organized and ready to share with your new partner will help with a more efficient transition.
- Notify the Current Provider
Give written notice as required by the contract agreement. While this is the most challenging step, keep a professional tone and clearly outline the association’s intent to transition as well as the expectations you have of them to complete work and organize a handoff.
- Communicate With Homeowners
Changing accounting providers can be a significant undertaking for the community, and the way the new firm will handle the association’s finances can be drastically different from the previous one. Let residents know about the change and what to expect so they won’t be confused. Explain the value of the change, and why it’s important for the future health of their community association.
- Coordinate the Transition
Work closely with the incoming provider to transfer financial data, establish new systems, and ensure uninterrupted service. Set expectations for deliverables, timelines, and points of contact. - Monitor the Handover
As the previous firm hands over the financial records to the new provider, ensure that you negotiate the handover. Double-check that all records and funds are accounted for during the transition. This way, the new HOA accounting partner will find it easier to begin working on the association’s finances.
Example Scenario: What real-life benefits can an association expect after the transition? Here’s an example scenario:
An HOA board noticed repeated errors in their monthly statements. After several ignored requests for corrections, they discovered their provider was using outdated software and lacked HOA accounting expertise (two of the red flags we mentioned). The board switched to an HOA-specialized provider, resulting in accurate reporting, better communication, and a happier community.
Ready for a Fresh Start?
Don’t let loyalty to your current COA or HOA accounting services provider get in the way of efficiency and a happy neighborhood. Let Ledgerly help the association. Get a custom quote from Ledgerly today and experience accounting done right.
Sources:
https://www.contractscounsel.com/t/us/accounting-services-agreement
https://www.gsb.stanford.edu/insights/ai-reshaping-accounting-jobs-doing-boring-stuff