Required Audit for Condo Association

J.B. from outside of Connecticut writes:

Dear Mister Condo,

Are condo associations required to get an audit?

Mister Condo replies:

J.B, that is a great question! Very few states have legislated audits for condo associations as state law. That leaves the association’s governance documents. Many call for an audit in some type of timely interval; many do not. Unless the governance documents expressly call for an audit, the association is likely to audit as it sees fit, if at all. For smaller associations, an audit can be too costly or the Board may feel no need as the dollars involved are so small there really isn’t much chance of the money going missing. For larger associations, an audit is almost a requirement as there can be millions of dollars in play. Generally speaking, larger associations are more likely to have audit requirements as part of their governance documents. It is certainly recommended and a best practice to help keep theft and embezzlement at bay. Check your documents and see what they say. If they are silent on audit requirements and you feel they are needed, ask your Board to consider adding an amendment that requires an audit every so many years. You may just be helping your association develop its own best practice. By the way, auditors that specialize in condo and HOA accounting are often members of your local chapter of CAI. Be sure to check there when looking for a qualified and experienced auditor. Good luck!

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