Balancing the Books Without the Headache: A Beginner's Guide to Monthly HOA Bank Reconciliation
Updated: 2 days ago
PROVIDED BY ELITE CLASS PROPERTY MANAGEMENT AND REAL ESTATE COMPANY™
A monthly bank reconciliation is simply a check that your association's records and the bank's records tell the same story. It might sound technical, but it's really careful matching, one line at a time. Here's a simple routine any HOA or condo board member can follow.
WHAT YOU'LL NEED
Bank statement: The statement for the month, for each association account.
Association records: Your check register, ledger or accounting software report for the same period.
A quiet half hour: A calculator or spreadsheet, and time to work without interruptions.
STEP-BY-STEP: THE MONTHLY RECONCILIATION
Step 1, Start with the balances: Write down the ending balance on the bank statement and the ending balance in your association's records for the same date.
Step 2, Match deposits: Check off each deposit that appears in both places. Look for matching amounts and dates.
Step 3, Match payments: Do the same for checks, transfers and electronic payments.
Step 4, List outstanding checks: Note any checks you've written that haven't cleared the bank yet.
Step 5, List deposits in transit: Note any deposits recorded in your books that the bank hasn't posted yet.
Step 6, Check bank fees and interest: Look for service charges, fees or interest on the statement that aren't in your records yet, and add them.
Step 7, Do the math: Take the bank balance, add deposits in transit and subtract outstanding checks. The result should equal your adjusted book balance.
WHEN THE NUMBERS DON'T MATCH
Look for the usual suspects: Transposed numbers (like 54 vs. 45), duplicate entries, missed entries, or an item recorded in the wrong month.
Divide the difference by nine: If the difference divides evenly by 9, a transposed number is a common cause.
Check old items: An outstanding check that's been sitting for months is worth following up on.
Ask for help: If something still doesn't reconcile, it's a good idea to bring it to the association's CPA or community association manager. A fresh set of eyes often spots it quickly.
DOCUMENT AND REVIEW
Save your work: Keep the statement, the reconciliation worksheet and your notes together in the association's files.
Sign and date it: Record who prepared the reconciliation and when.
Get a second look: Have another board member, or your manager, review and initial it. Having two people involved builds confidence and transparency for everyone.
Doing this every month keeps small surprises from turning into big ones, and it helps your board present clear, organized financials to owners.
LEGAL DISCLAIMER
Educational only, not legal advice.
This blog is for informational and educational purposes only and does not constitute legal, financial, tax or accounting advice. Always consult with a licensed professional regarding your association's specific situation.
CONTACT US
For help managing your community association, contact ELITE CLASS PROPERTY MANAGEMENT AND REAL ESTATE COMPANY:
Email: CAM@LocalPMC.com
Phone: (201) 952-4665 (Call or Text)
Website: www.myeliteclass.com
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