Proposal to Establish a Rotation for Official Audits of Great Oak Cohousing Association's Book

Great Oak Community 2017-04-05

Summary:

Next audit will be performed in 2020 for the 2019 books, and then follow a rotation of undergoing an audit every third year.

Background:

Jessica Myles, the auditor from the firm of Myles and Szczpka, who performed the audit of GOCA's 2015 books in 2016, recommends that we establish a rotation for official audits, official reviews or to do neither (tax returns only). The community may deviate from the established rotation if desired. In accordance with Michigan condominium law, the community needs to reach a formal agreement each year in which an audit is not performed. Since Great Oak reaches agreements using consensus, that is the process that should be followed.

The Great Oak community reached consensus on March 20, 2017 to conduct an audit of the 2016 books during the calendar year of 2017. Also, see the list of F&L and community questions relating to audits, reviews, etc. and the answers to those questions documented in the 3-20-17 Proposal for an Audit of GOCA's 2016 Books (see BOA#256), and in the minutes of the 1-28-17 Finance and Legal Committee meeting.

Proposal:

Immediately following the audit of GOCA's 2016 books, conducted in 2017, Great Oak will establish a rotation of undergoing an audit every third year, with doing the usual tax returns in the off years, except when the community decides otherwise through the consensus process. (This means that the next audit will be performed in 2020 for the 2019 books.)

Pros

- An official audit is much more thorough and provides more information about our bookkeeping processes than an official review, and costs only $300 or $350 more than a review.

- F&L feels that by having audits done with this frequency, official reviews (which are similar to what we do in our annual community budgeting process) are not needed in the off years, thus providing a cost savings in the off years of approximately $2000 or $2100 per year (the cost of a review minus the cost of having taxes done).

Cons

- The community will need to budget approximately $2500 every third year for an official audit.

- More of the internal bookkeeper's time will be needed every third year to work on the audit.

-In the off years, the community will not have the limited assurances provided by an official review.