Who can initiate an HOA audit and how to conduct it

After receiving the keys, homeowners in an apartment building will have to choose a management organization. The latter is called upon to maintain order in the building and resolve any important issues. The most popular form of government today is considered to be an HOA.

The owners' association is formed directly by the apartment owners. Each of them has the right to know how and on what money is spent by members of the HOA board. An independent inspection - an audit - is called upon to answer this question. Let's take a closer look at how to check the activities of an association.

Why is verification needed?

The need to check the HOA is due to the regular receipt of funds into the organization’s accounts. Lack of proper control is fraught with waste, which is a violation of current legislation.

The most common variations of deception and their consequences are as follows:

1. Signing fictitious contracts, and subsequent withdrawal of funds to the accounts of interested parties through third-party companies. As a result, only part of the funds from the general fund remains under the management of the HOA. Lack of money negatively affects the maintenance of the house and surrounding area.
2. Ignoring laws and audit requirements. Members of the HOA board take funds in cash, which can be regarded as theft and tax evasion.
3. Negligence in the provision of services. It is fraught with the deplorable condition of the house and surrounding areas.

A practical example of a claim to the Housing Inspectorate

On September 27, 2021, the head of the Housing Inspectorate of the city of Saratov received a private complaint from citizen Kulikova A.V.

The owner of the apartment claims that after the roof repair was carried out by the HOA, the ceiling in her bedroom is leaking heavily. At the beginning of September, Kulikova hung new wallpaper in the bedroom and installed a suspended ceiling. The cost of repairs was 18,000 rubles.

On September 15, the planned roof repairs began on the house, which lasted 5 days. On the morning of September 20, the owner discovered that after a heavy rain, her room was flooded - the wallpaper had peeled off, the suspended ceiling had sagged.

Sample complaint to the Housing Inspectorate

Kulikova called the HOA, within an hour employees arrived, a leak report was drawn up, the cost of the damage was 18,000 rubles. Without waiting for action from the board, Kulikova made new repairs - she whitewashed the ceilings and put up cheap wallpaper.

Based on Article 1064 of the Civil Code of the Russian Federation, the owner demands that the quality of the roof repair be checked, as well as oblige the HOA to pay her damages in the amount of 18,000, as well as reimburse the cost of new wallpaper - 5,400 rubles.

The complaint is supported by a roof leak report, receipts for the purchase of wallpaper, a copy of the contract and invoice for the installation of suspended ceilings, as well as a copy of the contract for the management of the apartment building in which Kulikova lives.

As a result of an unscheduled inspection, the housing inspector appointed an examination of the repair work carried out during the period from September 15 to September 20. It was discovered that old slate was laid on the roof instead of the new material specified in the estimate.

The chairman of the HOA was brought to administrative responsibility, the damage to the apartment owner was compensated in full - 23,400 rubles.

Who has the right to conduct an audit?

The audit of HOAs is carried out not only by specialized organizations. Any homeowner can initiate an inspection.

To do this, you must first carefully study the contract concluded with the organization. Based on specific points, you can obtain from board members the most detailed information about the activities of the HOA.

Audit committee

It is a body that includes some residents of an apartment building. Moreover, the latter should not be involved as members of the HOA board.

Mention of this organization can be found in Art. 150 of the country's Housing Code. By law, the commission does not have the right to correct decisions made by the board of the partnership. Her responsibilities include auditing and supervising the activities of the HOA chairman.

Prosecutor's office

The Law on the Prosecutor's Office regulates its rights regarding control over the actions of legal entities. In order for the activities of the HOA to be within the framework of the law, the organization must be registered.

A correctly completed complaint to the prosecutor's office will be considered or forwarded to the appropriate address to initiate an investigation.

Other authorities

The following organizations are entitled to conduct an audit:

1. Rospotrebnadzor.
2. Housing inspection.

In the first option, more attention is paid to specific cases of unqualified provision of services. In this case, sanitary standards and the signed agreement with the residents of the house must be taken into account.

The inspection, which is initiated by the State Housing Inspectorate, is aimed at assessing indicators such as:

• General condition of the construction site.
• Existing infrastructure and local area.

It is important that both of these factors comply with established fire and health safety standards. Sample complaint to the housing inspection:

The essence of the audit and the reasons for its conduct

An audit of the activities of an HOA is a control measure designed to verify the partnership’s compliance with its obligations established by Article 148 of the Housing Code of the Russian Federation:

• compliance with housing standards;
• timely hiring of workers who must service a multi-story building;
• carrying out major repairs;
• housekeeping;
• maintaining accounting and financial reporting.

The rights of residents to inspect the activities of the HOA are secured by Article 143.1 of the Housing Code of the Russian Federation, according to which they have the right to familiarize themselves not only with the Charter and the certificate of state registration of the organization, but also with income estimates, financial reports, accounting reports, and property documents.

During the audit the following is checked:

• technical documents for multi-apartment buildings;
• estimates for major or current repairs;
• reports on their implementation;
• minutes compiled as a result of meetings of members of an organization.

In addition to documents, the tax office can view all financial transactions of the HOA (receipt and expenditure of funds, agreements with contractors, economic situation of the organization).

Control methods

If doubts arise regarding the honesty of the chairmen of the partnership, a corresponding complaint should be sent to representatives of the competent authorities. The latter will conduct the necessary inspection of the HOA (audit). Based on its results, penalties will be applied to the organization.

How to conduct a self-check? You should start by contacting the audit committee. You will need to familiarize yourself with the following documents:

• Accounting department reports.
• Results of the last inventory carried out.
• Reports on completed work.

It is necessary to compare the information received and try to identify any discrepancies. If any work commissioned by the HOA was carried out by contractors, find out information about them through the Unified State Register of Legal Entities.

The progress of the audit and its consequences for the governing bodies

The initiator of the audit can be any owner of an apartment building who is a member of the HOA. He collects signatures from other residents, who organize a general meeting.

Audit committee:

• draws up an audit plan;
• sends a written request to the chairman of the partnership for the provision of organizational, management and accounting documentation;
• draws up a written report on the activities of the governing bodies for 12 months;
• convenes, if necessary, an extraordinary meeting of the board, as well as a meeting of residents to inform everyone about the presence of signs of a crime;
• requires the chairman to provide written explanations regarding the violations identified.

If the audit reveals signs of a criminal offense, write a collective complaint to the Prosecutor's Office or the Organization for Combating Economic Crimes and attach to it the report of the audit commission.

Carrying out verification

To ensure that the audit is independent and objective, a special commission performs the following actions:

• Gives an assessment of the activities of the HOA from the point of view of legality.
• Checks inventory lists.
• Makes a request for accounting information.

Actually, the purpose of the inspection commission is to detect cases of illegal embezzlement of funds. Exceeding official powers by board members will also not go unnoticed. Sometimes, to obtain information, it is enough to talk with the residents of the house.

Sometimes residents do not know who can initiate an HOA audit. Such legal incompetence entails impunity and a worsening of the existing situation.

It is permissible to make a decision to conduct an audit at a general house meeting. The latter can be convened by any owner as necessary. This is evidenced by the Housing Code of the Russian Federation (Article 45). Please note: an unscheduled meeting is counted if the share of those present is more than 50%.

Involvement of private audit firms

In addition to official supervisory authorities, there are commercial companies that also have the right to audit the economic activities of HOA CJSC for a certain fee.

How is this decision made? Residents convene a general meeting, in which at least ½ of all owners are required to participate.

The cost of the auditor's work will be:

1. From the number of documents checked;
2. Number of analyzed business transactions;
3. The need for the presence of an auditor at a meeting of residents and his personal appearance;
4. Time spent on the audit (usually no more than 10 days);
5. The number of transactions analyzed and agreements concluded by the partnership.

For an additional fee, the company will collect a package of documents to go to court and protect your housing property rights.
By using the services of an independent expert, you will receive an honest result and will also be confident in the confidentiality of your cooperation. Previous article: Registration and calculation of tax deductions for life insured persons Next article: Rules for the return of high-quality and defective building materials

Work of the counting commission

The Counting Commission is a body that, at each HOA meeting held, counts how many residents voted. Its formation may be provided for by the charter of the partnership. If we are talking about absentee voting, members of the counting commission conduct a door-to-door survey.

If you have any suspicions about the work of the members of the HOA board, you should take care of a thorough check. It can be carried out either on your own or with the help of third-party organizations. Both options are regulated by current legislation.

Did the article help you?

The procedure for auditing HOAs

Homeowners should initiate an HOA audit first of all.

The initiative to conduct an audit should always come from the apartment owners. There are several ways to evaluate how fairly an association operates in relation to residents. You can send a complaint to the authorities authorized to handle such issues:

• prosecutor's office,
• housing inspection,
• the audit commission of the HOA.

An effective measure of influence on the management of the partnership is an independent audit of the organization’s reporting. To implement this, residents have the right to demand accounting reports and inventory lists. Separately, you should check the contractors with whom contracts for the provision of services are concluded. They must be present in the Unified State Register.

If it is impossible to organize an audit on your own, you can turn to organizations specializing in this matter - audit firms. A professional assessment of the work of the HOA will determine:

• completeness and accuracy of calculations for utility bills,
• rationality and effectiveness of management decisions made by the management of the partnership,
• correctness of accounting in the organization,
• the degree of financial stability of the partnership.

Reports generated as a result of the audit will be a commercial secret and will be communicated only to direct participants. Those, in turn, upon detection of fraud, have the right to transfer the received evidence to the investigative authorities.

Audit stages

The timing, place and cost of the audit are negotiated at the stage of concluding the contract. In general, the check consists of the following steps:

1. Familiarization with the statutory documents of the partnership to determine the verification algorithm.
2. Determining the range of documents to be assessed. Each report is submitted to the auditors according to the inventory.
3. Assessing the correctness of accounting and tax accounting.
4. Comparison of basic current financial reporting indicators with planned ratios, searching for reasons for discrepancies.
5. Writing an audit report based on the results of the audit.
6. Familiarization of the customer with the results of the audit. Moreover, if serious violations are detected, it is necessary to notify all owners about them. For this purpose, another extraordinary meeting is convened. It makes the final decision on what actions need to be taken to eliminate errors and waste in the future.

The act is drawn up in two copies, one of which is handed over to the owners of residential premises, and the second to the management of the HOA. The prepared report must contain the following information:

• about the features and progress of the inspection,
• conclusions drawn from the data obtained,
• recommended methods to eliminate identified deficiencies.

Conducting an inspection by a third-party organization will not only allow you to draw conclusions about the quality of the HOA’s work, but will also help you avoid a subjective assessment of the partnership’s activities. The main goal of such control is not to search for illegal actions, but to optimize the work of the partnership and minimize erroneous calculations due to inattention or ignorance of accounting.

Self-test

In addition to the owners, the audit can be initiated by the HOA itself. A similar possibility is spelled out in Article 150 of the RF Housing Code. For this purpose, the partnership organizes a special audit commission. As a rule, it consists of residents of the building who are not on the board. They conduct regular scheduled audits of the service company's performance. Typically the inspection frequency is 1 year. During this period, each partnership is required by law to report to the owners of residential premises.

The operating procedure of the audit commission has certain features:

• conducts an audit of the financial activities of the partnership for one calendar year,
• the commission sums up the results of the work, but does not have the right to influence decisions made by the management of the HOA,
• draws up consolidated reporting, and also compares income with expenses and makes an opinion on the work of the HOA.

The documents drawn up as a result of the inspection are necessarily brought to the attention of residents. This can happen either as part of a regular meeting or upon receipt of an official request from the owners of residential premises.

Conscientious managers are no less interested in an unscheduled audit than the residents of the house, because The audit helps clarify a number of important points. Based on the identified errors and violations, management can take timely measures to eliminate them. In addition, this is a good opportunity to check the work of the HOA accounting service.

How to carry out this process

First of all, an agreement is concluded with the performing company . The contract with the audit company specifies:

• audit objectives;
• timing;
• location;
• period under review;
• list of required documentation.

Attention! An audit firm must be included in the federal register of audit organizations in order to obtain the right to be called such, and the employees of the firm performing the audit must have an audit certificate (Article 3 of Federal Law No. 307 and Article 4 of Federal Law No. 307 “On Auditing Activities”).

The review period is usually a calendar year . After signing the contract, the company’s employees begin the audit in the following order:

1. familiarization with the structure of the housing association and the peculiarities of conducting business activities;
2. study of financial and reporting documentation for the period selected for inspection;
3. comparison of the actual situation with planned indicators and identification of inconsistencies;
4. searching for causes of inconsistencies;
5. drawing up an audit report.

During the familiarization, the charter, accounting policies and the procedure for its implementation in a particular partnership are studied. If discrepancies between planned and calculated indicators , employees of the executing company begin checking the accounting statements and primary payment documents .

In particular, the compliance of the transactions used by the accountant of the housing association is checked for compliance with the plan of subaccounts of the Ministry of Finance .