The following is the text of a document prepared by Melissa Spoharski on Audit Guidelines for WRPOA.  They were read, discussed and adopted by the WRPOA Board of Directors meeting of October 22, 2005.
 

Guidelines for Auditors

To be presented to the Board of Directors of the White Rock Property Owners Association

Purpose of Auditing

An Auditor examines the accounting records and accounting practices of an organization under review to enable him to express an informed opinion as to whether or not the books and records of the organization present fairly the financial position and results of operations of the organization and whether the organization complied with the applicable laws and regulations.  In addition, the auditor should be alert to possible irregularities and fraud, as well as weaknesses in internal control
 

Selection of Auditors

For an internal audit, an audit committee should be comprised of auditors who are members of the association but not also Board members.  Ideally, spouses or other relatives of board members should not serve as auditors.
 

Records to Be Made Available to Auditors

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1. Financial Statement

2. General Ledger

3. All records pertaining to cash receipts and disbursements

4. All bank statements, canceled checks, voided checks, duplicate deposit tickets, passbooks and bank charge slips; a list of depositories, their addresses, account numbers, account names and authorized signatures.

5. All invoices and bills

6. The budget for the year under audit

7. Records of all outstanding indebtedness such as bank loans

8. Copies of leases or contracts, if any

9. Minutes from the meetings for the year under audit

10. Any other records maintained by the Treasurer

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Audit Procedures

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1. Verify that cash receipts and disbursements are adequately identified

2. Verify that cash receipts and disbursements can be traced to bank account (For example, cash assessments should be traced to subsequent bank deposit.)

3. Verify that bills and canceled checks match in payee and amount

4. Verify that all checks are accounted for

5. Verify that all transactions match general ledger

6. Verify that bank reconciliations are accurate and reconcile with the general ledger

7. Determine whether Accounts Receivable and Accounts Payable agree with the Financial Statement

8. Ascertain propriety of income and expenditures by referring to budget, minutes and board resolutions as appropriate

9. Be alert for transactions appearing on statements, but not recorded in the ledger and vice versa.  These could be irregularities or merely uncleared transactions.

10. Compare Financial Statement and Budget and obtain explanation for significant variances.

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For an Association the size of White Rock Property Owners Association, the above should be adequate if no problems are found and many of the steps may be spot checked.  However, there are not that many transactions per year, so it should not take long to check each transaction.