The balance sheet reports the resources (assets) of an HOA, the HOA’s obligations (liabilities), and the HOA’s equity which is the difference between what it owns (assets) and what it owes (liabilities).

Note: Assets are resources owned or controlled by a HOA. In the context of HOAs, assets consist of the amount of money currently in a HOA’s bank account(s) or money that is currently owed to a HOA. Most money owed to an HOA comes in the form of homeowner assessments or dues and are reflected in the Cash Accounts (usually a checking account, savings account, or Certificate of Deposit) and the Accounts Receivable (Money owed to the HOA, usually in the form of Homeowner Assessments). HOA Messenger breaks these Asset categories into Operating Assets, Reserve Assets, and Accounts Receivable.

Note: Liabilities are obligations that your HOA must pay, so it’s important to document liabilities so one can properly understand a particular HOA’s financial condition. In the context of an HOA, pre-paid assessments (Assessments paid in advance of their due date) are the most common type of Liability. However, Accounts Payable is another common type of Liability.

Note: The total equity of a HOA is represented by adding the total assets then subtracting the total liabilities. In the context of HOAs, the most common form of equity is held in various Reserve Allocation or Retained Earnings accounts. The Reserve Allocations reflect money that has been set aside for future long term expenses such as resurfacing a HOA’s streets.
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If you are using the HOA Messenger Accounting Feature, you can review a HOA’s balance sheet by selecting “Reports”, then select “Balance Sheet”, then confirm the “As of” date, then click “View Report”. The “As of” date indicates you want to review the HOA’s financial condition as reflected in the balance sheet on or “As of” the specified date.