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Hello everyone and thank you for joining us today. My name is Jen and I’m excited to welcome you to the first ever collaboration between Managed Casa and our trusted partner Balanced Asset Solutions or BAS for our year-end closeout accounting webinar. As we approach the end of the fiscal year, today’s session is designed to guide you through the key steps, best practices and tools that ensure your community’s financials are accurate, compliant and fully ready for board review.

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I’ll keep this introduction brief because we have invited fantastic speakers from BAS and Managed Casa who will be walking us through the complete year-end process. For this session, we’re joined by Mo Hazane, CEO at Balanced Asset Solutions, and Stephanie Song, Product Specialist at Managed Casa. We’ve got a fantastic agenda lined up for you. First, we’ll start with what the year-end close really means and why it’s such a critical part of your financial cycle.

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Next, we’ll walk you through the key differences between HOA accounting and rental accounting so you can understand how year-end requirements vary depending on your portfolio. Then we’ll dive into the core components of a clean, accurate year-end close. After that, we’ll explore how to prepare complete and board-ready financial statements, budget comparisons, and the full year-end board packet.

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We’ll also cover common pitfalls, the issues that slow down audits, cause variances, or create inaccurate balances, so you know exactly what to avoid. From there, our guest speakers from BAS and Managed CASA will expand on these best practices and share expert insights to help you strengthen your year-end accounting workflow. And finally, we’ll wrap up with a Q&A session to answer your questions and help you get the most value out of today’s session.

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Just before we dive in, just a few quick housekeeping items. All microphones are muted so everything stays crisp and clear. But don’t worry, you can still interact with us using the chat feature to share your thoughts, comments, and questions.

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This session is being recorded. If you miss anything or want to review later, you’ll find the recording in our Help Center. You can submit questions at any time in the Q&A box. We’ll answer as many as we can live, and if we run short on time, we’ll follow up with you individually. All right, with that out of the way, let’s get started. We’re thrilled to have you here and excited for what you’ll learn today.

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Just a quick note, you can follow us on different social media platforms. We are Manage Casa Inc. on Facebook and Manage Casa OnX, Instagram, LinkedIn, and YouTube. And so without any further ado, I will now hand you over to Mo from BAS. Over to you, Mo.

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Thank you, Jennifer. Hello, everyone. Quick introduction. My name is Mohamed Mohussein. I am the CEO and the founder of Balanced Asset Solutions. We are a CPA and accounting firm that’s specifically focused on trust and HOA accounting. So I’ll be kind of going through concepts around year-end closing, things to kind of look for, and definitely will help kind of address any kind of Q&A questions. So

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What is year and close? So this is an accounting term in a process that you would need to go through kind of at the end of the year and putting together your financials, closing out the previous year’s accounting. So this would happen usually in the month of January in the subsequent year, next month, if you will, for the 2025 year.

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It’s goal is to essentially validate the accuracy of the financials going into the new year, closing out what’s called your P and L your income statement, your income statement at the end of the year goes to zero. And that balance moves over to the retained earnings on your balance sheet. Uh,

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providing accurate financials and having a clean foundation is what’s going to allow you as a business to have a better decision making, having the right data to be able to recognize areas of operational inefficiency, and especially for things like HOA reserves and capital expenditures and understanding projections and the needs for potential increases associated with the monthly HOA dues. So it’s important to go through this critical step and process at the end of the year.

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to ensure that you’re getting a great accurate financial picture and having great footing starting going into the new fiscal year. Let’s go ahead and move on to the next slide. So why this matters. Usually for most HOA organizations, there’s usually a bylaw that’s required by the board to be able to provide an annual audit report. You need to provide taxes at the end of the year, so your income statement.

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as well as user balance sheet need to be kind of assessed and for accuracy, closing out the bank reconciliation, the last bank reconciliation from the year before, and

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And again, all this information allows the board to, one, present an accurate financial picture to the rest of the organization and the homeowners, and also be able to have validation on areas where budgets need to be changed for certain expense items or even reserves that need to be changed or dues, monthly dues that need to be either increased or edited or changed for reasons for capital expenditures, renovations, and things that might happen there. And so this is a very, very key area.

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key process in order to be able to actually go through these things in your annual kind of board meetings. Let’s go ahead and move on to the next slide. So we have HOA, Homeowners Association, Condo Association, however you want to

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abbreviate that and then you have rental accounting. Rental accounting, the kind of explicit differences between the two is that homeowners own their homes and they pay usually some type of a monthly due. This is not the same as rent on the rental accounting side. You are either an owner operator and managing your own rentals or you’re managing rentals on behalf of other owners. If you are managing rentals on behalf of other owners,

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you are obligated by the Department of Real Estate to uphold certain level of compliance associated with how you are tracking the financials, how you are engaging with both your tenants and managing what’s called the trust accounting because you are managing the assets on behalf of third-party owners. And so the primary focus in HOA is the homeowners.

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The reserve accounts, reconciliation of budgets versus on the rental accounting side, you have management, you have management fees, trust accounting requirements, like making sure that you’re handling and recognizing and addressing security deposit liability, prepaid rent, etc.

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When it comes to revenue sources on the HOA side, you have just assessment fees and fines versus on the rental accounting side, you have monthly rent, you have deposit, tenant charges like prepaid rent, application fees, NSF fees, things of that sort.

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On the expenses side, on HOA, you have usually common area maintenance and fees associated with common bills that are shared across the entire association. And then there’s usually a reserve fund and a separate bank account from the operating funds that needs to be kind of sequestered.

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needs to be kind of managed and separated out and a reserve study should be done at the end of the year. That’s part of your annual board financial report packet. On the rental accounting side, you have trust accounting. So reconciling your security deposits, ensuring that your liabilities tie out to what you actually have at the bank, segregating the funds associated with one owner versus another, uh,

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what’s called a separation of funds and not commingling your corporate accounting funds associated with your management company with that of the tenants and the owners that you are overseeing. From a financial reporting perspective, usually HOA boards want to have the big three reports,

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And that includes a balance sheet, income statement, cash flow in some instances, and usually some type of a reserve study and a budget comparison report. On the rental accounting side, it’s usually looking at financials from at a per property level or per trust account level. And you’re usually looking at, aside from the three reports aforementioned on the HOA side, you’re also looking at things like security deposit liability, last month’s rent, and things of that sort.

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That’s kind of the primary kind of overarching kind of differences between HOA versus the rental accounting. On the rental accounting side, you have the Department of Real Estate, which is there as a regulatory board to ensure compliance and that you’re managing funds on behalf of your owners correctly and accurately. On the HOA side, there’s usually a dedicated board that is ownership or oversees kind of the financials and the management of the dues and the revenues being received from the homeowners. Okay, let’s go ahead and go to the next slide.

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So the year and closing goal. So firstly, you want to make sure that you’ve reconciled all your bank accounts. Bank reconciliations are something that should be done on a monthly basis for each bank account.

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On the bank reconciliation, you want to ensure also that the bank account balance ties to the property cash balance, taking into consideration of uncleared items. Uncleared items are items that transactions that are in your accounting system, managed costs in this case, and that are not, that haven’t showed up on your bank statement there. The big red flags you want to look for in previous bank reconciliations are things like uncleared or stale deposits.

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So if a tenant makes a payment or a deposit revenue entry is created, those funds need to go to the bank account. Once they go to the bank account, that clears off on the bank reconciliation. Having funds that are

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stale or sitting on your bank reconciliation as uncleared that are deposits is a red flag because each time you create a deposit, you’re increasing the property cash balance, but the bank account balance doesn’t increase until after the deposit clears. And so having stale deposits will potentially, you’ll run into a scenario where you’ll have checks that bounce because those funds haven’t made it to the actual bank account.

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Secondarily, you want to look at also uncleared items on the payment side. So checks after six months, they’re not going to be able to clear and they won’t be able to clear the bank. And so those need to be either given to the state if it’s a stale security deposit refund or something like that, or a vendor that hasn’t been paid or reaching out to whoever that recipient is and creating a new check. So you don’t want to have items that are sitting stale.

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on your bank reconciliation. So ensuring that at the end of the year that the only uncleared items that are on your December bank reconciliation are deposits dated for maybe the last week of December that haven’t cleared or will clear in the beginning of January, and there shouldn’t be any checks or outbound payments that are over six months old.

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You want to ensure that you have accurate reserve balances. Again, this should be segmented into a separate bank account from that of your operating funds. You want to produce complete financial statements. You have the big three, the balance sheet, income statement, and cash flow. Main items you want to kind of look for are things like negative items that show up on the balance sheet. So on the balance sheet, there shouldn’t be any negative items aside from distributions or depreciation and amortization line items.

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but anything else in the liability section or asset section should not be showing negative. And then under the equity section, only the distributions would potentially show negative balance, but there shouldn’t be any other negative balances. On the income statement, unless you have a concessions account or what’s called a contra income account, you shouldn’t have any other negative income accounts or negative expense accounts.

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You should also have a reserve study and a budget comparison report, which compares actual to actual budget. And all this process at the end of the year you should be going through should help kind of maintain compliance and transparency. It will also greatly reduce the administrative burden and the chaos that usually ensues when it comes to tax season. Many folks will

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spend a lot of time and usually a lot of resources and whoever their tax accountant is on adjustments and doing all these reviews because of inaccuracy and the lack of upkeep associated with the balance sheet or the income statement. And so all this work gets bottled up at the end of the year and your tax accountant starts billing you for all this cleanup. And so generally speaking, our recommendation is to kind of go through this year end closeout process, actually monthly. And then that way at the end of the year, it doesn’t become a huge, a huge, a huge task.

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Let’s go ahead and move on to the next slide. Bank reconciliations. So on the HOA side, usually you’ll have a operating and a reserve account. So again, this should be reconciled through December 31st. This should be done kind of on a monthly basis. If you are behind on your bank reconciliations, let’s say, you know, the last reconciliation you did was June. You’ll need to complete June, then July, August, September, October, November, and then December 31st.

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You can’t just arbitrarily start on and doing December’s bank reconciliation without completing the prior months. And you need to do that on a monthly basis. The whole point and kind of the goal of a bank reconciliation is to match what is in your accounting system versus what is showing up on the bank statement. And so ideally, your accounting system is your place of truth. Every time there’s a payment going out, whether it’s a vendor, a bill, what have you,

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That invoice should originate from your accounting system, in this case, Managed Casa, and the payment should go through the accounting system rather than just doing it at the bank account level. Then you have to keep in mind and remember to enter that into the accounting system. And it’s very easy to kind of forget, and this work will kind of pile up.

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And so ensuring that you have kind of a clear kind of accounting process internally to ensure that your accounting system is your place of truth and you’re following and adhering kind of an accounting process where everything originates from your accounting system ensures that you have a smooth bank reconciliation in every transaction that is on your bank statement is also in your accounting system. Let’s go ahead and move on to the next slide. So it looks like we’ll be jumping into a bank reconciliation demo.

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Awesome. Thank you, Jennifer. Thank you, Mo. So I will be doing a quick demo of our reconciliation feature in Managed CASA. So I’m logged into a demo account here that manages multiple HOAs and the banking transactions tab, which you can find in accounting transactions. This is where you get to select a bank account and see a side-by-side view of transactions imported from your bank account and a matching record in Managed CASA.

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To import your bank transactions, you have two options. The recommended option is to use our BankSync feature and have our system auto-import your banking transactions regularly. You can do this by hitting Connect Bank and going through the steps required to connect your bank account.

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We support all major banks and for two banks in particular, Alliance Association and Columbia Bank, we offer a special direct integration that provides support for Lockbox. So if you use Lockbox and would like automated Lockbox posting, you could reach out to our team to learn more about that.

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If for any reason you run into any issues connecting your bank, like for example, you have a bank not supported by our platform, you could manually upload a CSV or a QBO file of your banking transactions. So here I have a sample example.

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account for my that I’ve already set up for my Gryffindor Association and I’ve already uploaded some sample transactions. Here you’ll notice three tabs. The “For Review” tab shows transactions that you have not worked on yet so this is where you’ll typically spend most of your day today. The left hand side shows transactions imported from your bank and the corresponding box on the right shows the best match to a transaction on MatchCasa.

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So when the transactions get imported, either via Binksync or via CSV upload like we talked about, our system will attempt to match these as they come in. So you can review the potential suggested match and hit OK to approve, or you can undo the match and select something else. So I’ll go over an example where the system did not find a match so you know how to do these. So this third one down.

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For Lakeside Cleaning Services, on the right, it says no automatic match found. So I can select either match with existing or categorize slash add. You’ll want to do match with existing if the transaction is already in managed costs and you simply want to match it to that. If it does not exist in managed costs, you’ll want to select categorize slash add.

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So you’ll, which creates a new transaction in Match Casa. I know off the top of my head, I added this one already. So I’ll go ahead and select match with existing and use the search bar to find the right one. And you could search by vendor name or you could search by amounts and you just filters to narrow down the selection. Here I found the payment I made to Lakeside. So I’ll select that for matching and hit save.

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save matches. Of course, you can also select multiple items if there are multiple records that roll up to the item amount on your bank statement. Once you officially approve the match, the transaction will be removed from the For Review tab, and it will show up in the Categorized Slash Matched tab. So this is the one that I approved just now.

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You can also ignore certain transactions. Like say, for example, I don’t care for this Amazon bill. I’ll just do exclude and then it’ll show up in the excluded tab. And you can also undo if you change your mind. So I’ll go over one where I didn’t already record the payment and the transaction doesn’t exist. So here’s one for an Uber trip. I’ll do categorize slash add. For vendor, I will choose Uber accounts. I will book it to Uber.

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my auto and travel. And for associations, I’ll do Gryffindor. And here I could do confirm or confirm and add a rule. So adding a rule allows you to create automation rules to speed up the whole process. And an automation rule basically tells the system what to do if it encounters a similar transaction in the future. So for example, say I know for a fact that I tend to have an Uber expense monthly, I can say if the name of the

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transaction contains the word Uber automatically added to the system as an expense and tag it to the expense account auto and travel. So that way I don’t need to like manually add this every time an Uber expense comes in. So I’ll just do confirm for now.

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And you could always review like what automation rules you have in place using the rules tab. You already had something set up for Ericsson legal expense to say if the rule starts with the name Ericsson Legal Services at that as an expense against the legal and professional services chart of accounts. So back in the review tab.

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You’ll see this one says, the second one for Ericsson Legal Services says categorized by rule. And basically, it means that the system had already added this for you based on the automation rule that you set up.

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And a note about the income transactions, if you’re recording, for example, HOA dues using our bank deposit feature, our system will automatically match the bank deposit based on date and amount. So you can see here this deposit of $300 you created. Back in the bank deposit section, you have individual owner payments that rolled up to the deposit total. So that was already…

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Our system had matched that based on the date and amount. So that’s pretty convenient and makes the matching process quick when you use our bank deposits feature. And if you’re using Managed Plus’ ePayment system, our system will auto-match those easily since there’s a unique reference number that we can use to precisely tie back the bank transaction to the owner payment records.

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So generally, your goal is to clean up the for review page as new transactions come in and you can take advantage of automation rules to reduce manual work. Once you have nothing left in the for review page for a particular month, you’ll know that everything has been accounted for. And so it should be really easy to complete reconciliation for whatever period you need to reconcile. So to start a new reconciliation, go to reconciliation statement, do create reconciliation.

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Enter in the start and end date as well as the start and ending balance exactly as listed on your bank statement. I’ve already created one for last month. And this reconciliation is open. So as you hit reconcile on each individual item, you’ll see the difference changing. And of course, you’ll want to get down to a difference of zero ideally in order to close out the reconciliation for that period.

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And lastly, we have a reconcile report. So you can view any in progress or completed reconciliation. And of course, with any reports that we offer, you can download it into Excel or PDF format and share it with someone else. Yeah, I will hand it back to. So much.

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Great, great feature, by the way, on the auto-reconciliation. This is definitely something that’s fairly unique to Managed Kasa. Our team works with a lot of different accounting systems that are in this space, and Managed Kasa actually is the first system we’ve seen where you can actually build rule logic on how transactions are auto-reconciled based on certain recognition of strings of characters. So definitely a feature to take advantage of.

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Continuing on with our year end closeout. So we have the assessment income review. So usually on an annual basis, the board should be going through a process of reviewing the annual assessments. Usually looking at the budget that has been allocated. What is the difference between

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the actual versus what was budgeted. And this will give you some type of indication on whether the revenue aligns with the budget or if there’s any issues and shortfalls that should be considered, which would necessitate an increase in the dues. We also have credits and owner balances as well and things like late fees. Let’s go ahead and move on to the next slide.

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Expense and vendor review. So confirming all vendor invoices have been entered. This is critical for 1099s. So at the end of the year, if you are a LLC or a non-corporation, corporations do not have to send out 1099s to vendors. But if you are either an LLC or a

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a 501 or nonprofit, you do have to send out your vendor 1099s to the IRS. That is due at the end of January. The way that this is calculated is based on the amount of payments that have been made to a particular vendor. So any vendor that’s been paid over $600 for a given calendar year from January through December, you need to submit the 1099s to the to the IRS. This is the NEC form.

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The IRS did change their portal system two years ago, and so you do need to have what’s called a TCC code in order to be able to send that to the IRS. This is something that you can generate and create from the managed cost of platform. But again, rather than using journal entries, you need to make sure that you’re creating actual invoices in the system so that the system recognizes that a payment went to a vendor. A journal entry is not tied to an actual vendor. Let’s go ahead and move on to the next slide.

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accruals and adjustments. So, uh,

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The big hiccup here is usually around kind of prepaid assessments. And so usually there’s prepayments that some owners will make. Let’s say some owners make a payment, quarterly payment for their monthly dues, and they make an annual payment that needs to be amortized over the entire year if they make an annual payment. So, you know, if they make a payment at the beginning of the year, that needs to be amortized over 12 months. And so it is a liability, what’s called a prepaid assessment. And then each month that balance will decrease by a 12th.

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Accruals also take into consideration accounts payable and accounts receivable. So bills, your accounts payable balance should match the amount of invoices that need to be paid. The open charges or either open dues or assessments from the owners should also match your AR balance. And so interest income also needs to be recognized.

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projected invoices and expenses. This is usually a huge thing, especially when it comes to reserve studies and being able to understand and be able to prepare for things like capital improvements and changes to fixed assets. And so unrecorded expenses. So if there are certain expenses that are auto-debiting from the bank account, those need to be also entered into the accounting system and accounted for.

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And then usually at the end of the year, when your tax accountant usually looks at when you submit your financials to the tax account and they look at your income statement and your balance sheet, they may give a certain level of an adjustment, adjusting journal entry that then needs to be entered in the system. Usually these adjustments are around things like depreciation. Like, for example, if there are certain fixed assets that the actual association owns,

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that you need to depreciate kind of over time or building improvements that need to be depreciated over a time period. Additionally, you have any debt, like uncollectible debt. So if there are past homeowners that have an open balance, even current homeowners where certain balances won’t be collected, there’s usually an adjustment that needs to be done both at the owner ledger level and also at the property ledger level so that the two balances kind of reconcile with each other.

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and that’s accruals and adjustments let’s go ahead and move on to the next slide reserve accounts so reserve accounts are usually a separate bank account from the operating account it’s used as the name implies as a reserve and it’s usually held there for things like capital expenditures and renovations and improvements in the common area or the building structures that

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are collectively owned by the association. And so usually on a monthly basis, there’s some balance from the operating account that’s not used that should be swept and moved over to the reserve account. This needs to be reconciled kind of on an annual basis. Ideally, you do this on a monthly basis, and then that way at the end of the year, it’s not a huge process.

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to reconcile 12 months of activity. And so all the activity that’s happening in the reserve account, each approval from the board for whatever renovations or other expenses that the reserve funds are kind of dipped into, there needs to be kind of an approved reserve study. Those transfers and contributions and expenditures need to be reviewed and kind of reconciled at the end of the year. And that’s used as kind of a roll forward and part of the packet that’s given to the board at the end of the year.

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I think I talked about this a bit. So again, the reserve impacts for planning, especially when it comes to capital projects, improvements.

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There’s certain things like a building’s roof, for example, usually after about 15, maybe 20 years, there’s probably some renovations and improvements that need to be done there. There’s probably a bunch of common area stuff that needs to be addressed as well, things like water heaters that are shared and whatnot. And so proper funding and regular funding of this is very important so that by the time that there is a capital expenditure event that happens,

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capital expenditure event that gets brought up, then that’s something that can be addressed with the reserve funds that are already available versus like an aggressive hike and increase in the dues. And so this is important to have visibility, transparency, and kind of alignment with both the board and the association members.

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Financial statement. So we have the balance sheet report. Balance sheet has three primary sections. This includes assets, liabilities, and equity. At the end of the year, each of those sections tell a different story about the entity. The asset section usually houses the value associated with the asset, fixed asset. And then additionally, any depreciated value associated with those fixed assets, cash,

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And then any prepayments. So if you’ve prepaid property taxes or insurance and other things that need to be amortized over time, or even capital expenditures or capital improvements, those will show up in the asset section. Then you have your liability section, which shows any liabilities associated with the entity, which includes things like mortgages, loans,

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Prepaid rent, security deposits, those also show up. Then you have your equity section, which usually has your capital, the value of the actual enterprise, and then also retained earnings, which is a roll-up of your net income. So each year, your income statement zeroes out. That balance moves from your income statement over to prior year’s retained earnings. Current year’s retained earnings would be the net income.

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And you have your income statement report that has two broad sections, income and expenses. The way that income gets categorized is very important. So, for example, things like prepayments, if a homeowner or tenant makes a prepayment for a due, that is considered a liability. It is not considered income until that gets recognized as income for that month when that prepayment gets applied.

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And so things like prepayments should not be showing up on your income statement. If they do, then you’re overstating the income, which then eventually hits your bottom line. And so you’re overstating your net income. And so those are kind of the things you want to look for on the income statement. And then additionally, usually items that are showing up as negative. So on the income statement, the only things that should be showing up as negative is things like contra accounts. Contra accounts are

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are accounts that are coupled with like income accounts. So this can be something like a concession account or credit account. So for whatever reason, if you’re giving credits or write-offs for a particular owner or tenant, those would show up, those concessions would show up as negative income coupled with the actual income. You get the actual net income that’s received net of credits and concessions. Now we’ll go ahead and hand it back over to Stephanie to go over these key reports within Nishikasa.

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Thank you, Mo. So I’ll go over a few reports that we have. So first of all, when we go into the contact section, you could look up an individual property owner. I’ll search for an owner by name. And in the contact details page, we’ll show the AR and credit balance, and you’ll also be able to view the owner ledger here in this ledger section.

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and run the ledger for any particular time period. The accounting reports, we provide a number of common financial and other reports that you can run. So for example, you’re probably familiar with balance sheet reports. Our reports are pretty flexible, so you can typically drill down to association level or even more granularly down to the property level.

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There’s an association filter. So if you’re managing multiple associations, you could select the association that you want to run it for. So I’ll pick Gryffindor. You can pick for as of date, I’ll just do today. And whether you want cash or accrual.

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And you could also turn on and off certain columns for visibility. And you could run the report here, or you could just export and share, which will download the report. So we also have a presets.

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feature. This is something that we released recently. So this is very useful if you have reports and you have a specific set of filters that you typically use over and over. You can just save it as a preset. So I’ll just do my first preset. But you could name it something more descriptive. And here,

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In presets, you’ll be able to see what you’ve set up, all the presets that you’ve set up. So whenever you go back to your presets, it’s already auto-filled. And you could also update the presets as well and run the reports directly from here. So that’s pretty convenient. We also have the usual income statement report.

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And you can again select by association. So I’ll do Lone Star this time. And we do consolidated or detail view. And for date, I’ll choose, for example, I’ll do year to date and run it. And of course, as I mentioned already, you could also export and share the report. So just fill out

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what format could be PDF or Excel and you could download the report, save it to manage class files, send it by email or send it as a message. Oh, and another thing you could also click through to the transaction. So if you’re curious, you know, what is this $500 for? Just click through it and it’ll show you exactly what it’s for and it’ll run the transaction report so you could see what that $500 was made up of.

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And then we also have cash flow, other common reports like budget report. We also have some association specific reports like delinquent donors. And there’s a lot of interval options, 30, 60, 90 common ones. But also if you have like a longer cycle, we added longer, we added some multiple year options.

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Of course, as I mentioned, you could change which columns you want visibility on. That’s a quick overview of our reports feature. I’ll hand it back over to Mo. Thank you.

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so next we have the budget review cycle so this issue usually happen usually this starts in q3 um but it can be done at the end of the year because usually you want to get the budgets into your accounting system for the next year uh so you can start running you know actuals versus uh

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versus budget starting January 1st. And so all you want to do is compare your end actuals against the approved budget and look to see if there are any variances in either revenue or expenses expectations. In areas where there were unexpected cost increases,

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You need to make sure that there’s enough reserve contributions to be able to cover those. There may be a need to increase the amount of or the fees that are assessed for the homeowners on a monthly basis as a result of that.

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But this is very important as part of the kind of planning and the next year’s budget. And so again, going through this process and quite frankly, like this is a process that the board should be looking at on a monthly basis when the monthly financials are produced to see, you know, how tracking year to date on budget and, uh,

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versus actuals and to make an assessment there of whether things need to be increased or accommodations need to be made on reserves being utilized for either capital expenditures or some increase in expenses. Some of these may be seasonal if you’re in certain areas where there are things like snow and whatnot, and you have certain expenses that creep up at the end of the year, like snow removal, which are more seasonal. So those things like all these different things need to be kind of considered and put

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and put into play and how these budgets are structured kind of on an annual basis. But the budget should be broken out month by month.

Speaker
Let’s go board packet. So you have your your packets should have a year end financial statement. So you have your big three balance sheet, income statement, cash flow. It should have the reserve roll forward. The reserve, again, should be a separate bank account. That’s also highlighted as an asset on the balance sheet. You have your budget versus actual report, which compares your income and expenses that were projected or budgeted, if you will, versus what actually occurred.

Speaker
Project summary. So this is usually around like renovations and other things that are planned on the at the actual like property level, if you will. There should be some explanation of major variances. You know, if there’s a significant uptick in a particular expense, that that’s a result of a capital expenditure or if that is a result of a.

Speaker
a certain vendor change or some unexpected expense, like these things need to be kind of addressed and called out. And then you need an updated kind of reserves study recommendation as well. Common pitfalls, unreconciled reserve accounts, and more generally speaking, unreconciled bank accounts, or even worse,

Speaker
In balance bank reconciliations. I can’t tell you how how important and critical this is. If you are not reconciling your bank accounts, you cannot trust any of the financials that are produced because essentially nothing on the accounting system

Speaker
It has been actually recognized as showing up on the bank statement. So you can’t claim accuracy on the income statement or the balance sheet if you’re not doing the bank reconciliations. If the bank reconciliations are in imbalance, then this also has a lot of uncertainty associated.

Speaker
on what your financials, like the statements and what the figures are that are showing up there. And so you need to reconcile all the bank accounts. It needs to be done on a monthly basis. And again, you want to watch out for things like uncleared items, deposits that are over 30 days old, and checks that are over six months old, missing invoices, supporting documentation,

Speaker
is also something that’s critically important. If you have like certain things like auto debits that are happening at the bank account, those need to be entered. If there are invoices that haven’t been entered and the year end closes and you need to now backdate an invoice because somebody forgot to enter it in the accounting system, this will impact your year end financials. Incorrect owner balances. So if you have not been applying prepayments correctly or creating owner payments or charges,

Speaker
It’s, you know, managed costs has a great platform where there is a portal where owners can log in and they can make a payment. This should greatly simplify the ability for you to be able to handle and kind of track and ensure that the owner balances are correct. Usually where clients have a lot of trouble of ensuring that owner balances are correct is if they have a litany of different ways that an owner can pay like Zelle or some other platform, PayPal and other places.

Speaker
misclassified expenses or incorrect GL coding, this will definitely impact the way your financials show up. So if there are certain liabilities that are paid, like for example, like a loan, you know, that’s not an expense. A loan is a liability. So the interest associated with the loan, that is an expense. So that should show up on the income statement. But the entire balance, if you’re paying a portion of the

Speaker
the principal balance that should not be showing up on the income statement that should reside on just the actual balance sheet. This is just a simple example, but misclassified expenses or incorrect GL coding is definitely a common pitfall.

Speaker
The great thing is, is, you know, at least when it comes to an accounting perspective, there’s always a correct answer. There’s no room for subjectivity and, you know, having, you know, accounting is not a space to kind of be creative. You can get in a lot of trouble.

Speaker
incomplete and delayed board packet submission. So incomplete packets, especially if it’s missing kind of the bank reconciliation. When the reconciliation gets done, there’s probably edits and adjustments and things that will be made, which makes that board packet kind of inaccurate. And so it’s important that the board packets are put together ideally on a monthly basis, that they are accurate, thorough, and things have been kind of vetted. Let’s go ahead and continue to the next slide. So tools and support.

Speaker
Um, so you have your, your management software in this case, it’s a, it’s management. It’s, it’s a Casa managed Casa, which allows for you to be able to track all your accounting activity. You have great tooling, like what is available, uh, in the bank reconciliation feature that, uh, is available to help automate that. Um,

Speaker
Streamlining your year-end closes and your reporting processes should be really simplified using the product. At the end of the day, you want to use the accounting system as a source of truth rather than the bank statement. CPA oversight, you know,

Speaker
It’s important that if you are using a CPA, that it is a CPA that understands kind of HOA assessment and kind of that particular space. There’s a lot of different types of accounting. Trust accounting and real estate accounting is a very bespoken particular type of accounting. A general CPA may not understand how a product like managed CASA reconciles, you know, the accounting that’s being done with the property financials.

Speaker
And so it’s important that you’re working with a CPA that not only understands specifically real estate accounting, but also understands like the nuances associated with some of these products.

Speaker
Automation, reducing things like manual errors and speeding up bank reconciliations that can be, you know, reconciliations associated with owner balances, owner ledgers, use the owner portals for that. You have bank reconciliations. And then simplifying, you know, reporting and using the system to generate reports. One of the biggest challenges or like areas where there’s a concern when we’re speaking with clients is if they’re pushing, if the reports that are produced and provided to either the board

Speaker
What were the stakeholders is using Excel. So you want to use the system to produce a report. Excel is very prone to a period being in the wrong place or a zero being in the wrong place, which could potentially impact that. And then education, staying informed of best practices, going and joining sessions like this, and also empowering your staff and your board to be equipped with this knowledge.

Speaker
All right. Thank you, Mo and Stephanie. That was really helpful and we appreciate you sharing your expertise on this area. You know, at the end of the day, we just want to make sure that we have the right tools and support to make here and easier and more accurate for all of our clients. So we already have a couple of questions that have come in. So I think we can start with

Speaker
with the first one. Mo, I’ll give this question to you. The question is, what happens if the person who managed our account before me never closed out the previous years?

Speaker
Okay, so if I understand that question, sorry, I’m trying, what happens to the person who managed our account before me has never closed out the previous year? So at the end of the year, there’s certain processes that need to be followed in order to close out the year. So probably one of the most important things is the closing out of the income statement and moving that figure from the income statement over to the balance sheet. And then additionally, the bank reconciliations.

Speaker
You cannot submit your taxes if you haven’t closed out the year, or at least if you haven’t, then whoever is your tax accountant that’s submitting your financials has to close out the financials because part of the part of the some of the figures that are entered in the tax returns are based on the year and close out financials. So this implies kind of two different things. Either taxes also haven’t been filed for a number of years or.

Speaker
or taxes have been filed and maybe those adjustments haven’t been entered into the system. Either way, accounting tells a story over time with numbers. And it is not something that you can kind of arbitrarily start from a period of time and ignore everything that’s happened in the past.

Speaker
You know, what’s happened last month cascades into the financials and that story of what happens this month and whatever happens kind of in the future. And so if if at the time that you’re taking over an account, the financials are at a whack, for lack of better words, things haven’t been reconciled. Things are out of balance. You’re now taking responsibility and ownership of those financials.

Speaker
My suggestion is you need to work with probably a forensic accounting firm like ourselves or another firm that focuses particularly in the space to get things balanced and to get things established to a point where you are balanced and you can move forward. For things like bank reconciliations, they’ve never been done in the past. You can’t just you can’t just arbitrarily start today on the bank reconciliations now.

Speaker
Now, you may be able to establish a new bank account and that new bank account can be reconciled and balanced moving forward. However, if there’s anything that’s audited from the past, that will impact like your ability to be able to validate the accuracy of any of those past historical financials because things were never reconciled.

Speaker
And so depending on what exactly the situation is, the ramifications, how bad and how far back, like things haven’t been either balanced or reconciled, you know, forensic accountant and expert in the space can give you some assessment on kind of potential risk and where you should be probably potentially focusing on. But yeah,

Speaker
I would say, you know, especially as a property manager, if you acquire a account and, you know, things are out of balance, like it’s, you know, you do have a kind of fiduciary responsibility to make sure that you ensure that you let the board know or the owners know that this is the case and that you should be working with a professional accounting team to ensure that things are balanced because the assumption is that that liability now lies on you.

Speaker
All right, I think that answered the question. Thank you, Mo. And then Stephanie, I’ll direct the next question to you. Can you manually reconcile if you don’t want to connect to our bank? Yes, absolutely. So we just create a reconciliation statement like normal, and you can just manually reconcile without having to import your banking transaction.

Speaker
Alright, thank you. There are some questions here that are looks like managed classes specific. So I’ll let you answer this, Stephanie, can you approve multiple matches? Or does it have to be one by one?

Speaker
So you can approve one by one or you can hit approve all if you’re confident of all the matches. If you set up a custom automation rule, you have the option to also enable auto approve so that when the transaction comes in and it already falls under that rule and gets added, it’ll immediately go into the categorized slash matched section and skip the for review tab altogether.

Speaker
All right, thank you. And there’s one other question here. If I started with managed CASA with a different bank, but want to switch over to one of the lockbox supported banks, is that possible? So the simple answer to that is yes, it’s possible. It’s going to be an easy switch over.

Speaker
All right, let me see. I think we have another question. Can you close out daily even if the account is not currently attached to the bank accounts? Yes, in Magic Casa, if you have, you need to create a bank account just to reflect that that is the bank account that you’re creating the reconciliation statement for, but you can also, we do have the option to close out daily.

Speaker
All right, thank you. And okay, I think we can accommodate one more question. Does the bank sync import pending transactions or only once officially posted? Also, how often does the sync run?

Speaker
Yeah, good question. It’ll import fully posted transactions and the sync runs at least once a day, but often it runs throughout the day. So you should see the transactions there pretty quickly once we’re notified of it. And if you don’t see it on the page yet, you can also always do refresh transactions so that our system will pull in the latest data instead of having to wait so you can start right away.

Speaker
All right. Thank you, Stephanie. Let’s answer this one last question. What if I want to categorize the transaction to a chart of account not listed in the dropdown? So yeah, you can customize your chart of accounts in the chart of accounts tab. Just click add account and you can create another account. You can also add a sub account under a master account and then you’ll be able to use those going forward. So yeah, that’s all the questions that we have.

Speaker
With that, I’d like to thank both of you once again, Mo and Stephanie, for joining us for today’s session. And of course, everyone for attending today’s webinar. We hope the session gave you a clearer picture of what complete and accurate year-end close should look like and how tools like ManageCasa can support your work.

Speaker
workflows, documentation, and board reporting. If you have any questions, we encourage you to visit our Help Center at help.managegrasa.com. We’ve got a wealth of articles, including new features, completed videos, and screenshots for quick and easy reference. You can also find all our webinar recordings

Speaker
and newsletters in the news section of the Help Center. And if it didn’t get to any of your questions today, don’t worry, we’ll reach out to you directly to follow up. And thanks again for being with us from Managed Gaza and Business Asset Solutions. We wish you a happy holiday. Thank you so much. Thanks, everyone.</pre>