Setting Up Your HOA General Ledger

A general ledger is a complete record of all financial transactions that your HOA has made over a designated period (month, year, lifetime). It contains all financial information that your property manager or HOA accountant will use to formulate income statements or expenditure reports. A general ledger is useful for internal or government audits.

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A general ledger includes:

  • Accounting information

  • Assets

  • Liabilities

  • Organization equity

  • Revenue and income

  • Expenditures and liabilities

A general ledger gives your organization the ability to quickly identify and retrieve information as needed. RowCal property managers maintain a digital general ledger for HOAs through online accounting software. The cloud-based platform is available to the HOA board members.

General Ledger Columns

When you set up your ledger, you should add these essential columns:

  • Date. You will enter the date of the transaction.

  • Reference Number. You will record the ID posted to a specified account. By adding the account or reference number, you can easily identify and find a transaction when necessary.

  • Description. Add a brief explanation of the transaction. Make sure the description can be referenced or identified by anyone who has access to the ledger. Avoid making notations that only you would understand.

  • Debit Amount. These are journal entries that account for expenditures or payments.

  • Credits. These are journal entries that account for income or revenue.

  • Ending Balance. Since both the debits and credits offset each other, each transaction creates a new balance. Make sure to update the balance every time you add a new entry so you know exactly how much money is in your account.

Creating A Separate Page For Each Account

The term general ledger is somewhat misleading, as it implies all financial activities within an organization. However, general ledgers can be assigned for any specific account. In fact, you can add new accounts on separate pages within a physical ledger or a digital file.

Your property manager can create a separate file for each account and make it available for you to view online at your discretion. All you have to do is pull up the file online and you can view or update any transactions and the balance on the ledger.

Establishing An Accounting Period

Most HOAs establish a ledger period based on the calendar year. This means that the period commences on January 1 and concludes December 31. Some HOAs choose to create a ledger for a fiscal year. This is a 12-month period that starts according to the HOA designation and ends 365 days later. For instance, you may choose to commence on April 1 and conclude on March 31.

Accounting & Property Management Services

RowCal provides comprehensive property management services for HOAs, condos, high-rises, and townhouses. Our services include governance administration, financial administration, consulting services, and maintenance and project management. To find out more about how we can help you with your organization, call us at 651-233-1307.

Mark Zubert