Condo Association Management Blog

Have you calculated the total expense times your percentage of ownership interst as defined in your association's governing documents? Everything should start and end with how the association's governing documents dictate how expenses are to be shared with all owners. Just becuase they may have reported a 5% increase in expenses does not necessisarily this converts to a 5% increase to your specific ownership interest's allocation of maintenance fee.

First of all the accounting for a nonprofit versus a for profit corp is the same. Secondly, if a CPA cannot figure out what your treasurer or the accountant at the prop mgmt co is doing then I would definitely have someone else doing the accounting! On the other hand, if calculating the increase in assessments is the only thing wrong with the accounting, that is minor and should be able to be fixed quite easily. Of course it could mean that some units have been charged way too much, or way too little and the BOD would have to decide how to rectify that. You may have been told there was a 5% increase which may only apply to your particular unit. Different size units may have a different percentage. 
Bottom line: it may be time for a new prop. mgmt. co. if they are doing the accounting. If they cannot figure out the increase in assessments it makes you wonder what else they cannot figure out correctly!!

Have you asked to see the yearly audit?

Accounting is accounting, period. "Nonprofit" applies to your tax status, not the proper maintenance of your general ledger. You collect revenue (HOA fees) and you pay expenses (utilities, landscaping, maintenance, etc.). If revenue is greater than your expenses, you have a profit; if it's less, you have a loss. 
 
Your property management company is blowing smoke. They should be using a prepackaged software program that does all of the "thinking" for them; therefore, they should be able to provide you with sound financial statements at the end of each month. If they can't, they've probably made some serious mistakes. Have they failed to deposit all of the HOA fees they have collected? Have they forgotten to pay bills? 
 
Find another owner who understands accounting, ask them to spend a day or two in the PM's office, and see if he/she can't "sort the spaghetti."

I would surmise that your association is a not-for-profit corprofit vs. a non profit. I also agree that accounting is accounting and it makes no difference what your tax status is. Please let us know your State so an expert from that State can give you a better answer.

All comments are probably correct. 
 
To add to this, I would speculate that your manager is probably preparing your budget using Microsoft Excel, and is short-cutting by going with a blanket increase of 5% to avoid doing any real budgeting work. 
 
And since she's using Excel, and she most likely doesn't know how to use it very well, there are probably formula errors in several cells. Her numbers are then imported by hand into the management company's management software.  
 
The bottom line is, if your manager can not explain your budget, then it is because it is inexplainable. 
 
Take it for granted that your fees will be going up, but don't take this crap from your incompetent management company. 
 
Show her this comment and watch her face turn red. 

The different types of accounting are a cash basis (like most people operate their checkbooks) or an accrual basis (like most corporations) and accrual is diffficult for the average person to understand. 
 
The increases should be explainable. Your math is correct, so the percentage increase is incorrect as given.  
 
What you need to look at as an association is what it takes to operate, maintain and improve the association and not get hung up on percentage increases.