New Hampshire HOA Audit Requirements: What Your Board Must Know

New Hampshire HOA Audit Requirements: What Your Board Must Know

New Hampshire has no state statute that mandates financial audits, reviews, or compilations for homeowner associations. Your condo or HOA board's obligation to perform financial oversight flows entirely from your governing documents and fiduciary duties under common law. The New Hampshire Attorney General's Charitable Trusts Unit oversees some nonprofit HOAs that register as charitable organizations, but most residential associations operate outside that jurisdiction.

Because state law does not prescribe audit thresholds, your first task is to read your declaration and bylaws. Check whether your documents require an annual audit, a review, or a compilation. Some New Hampshire associations adopted governing documents in the 1980s and 1990s that contain audit language borrowed from other states. If your bylaws say you must conduct an audit when annual revenue exceeds a dollar threshold, you must follow that rule even though state law does not impose it.

Understanding Audit, Review, and Compilation

An audit is the most rigorous financial examination. A certified public accountant tests your financial statements, examines internal controls, and issues an opinion on whether your statements present a fair and accurate picture of your association's finances. Audits cost between 5,000 and 15,000 dollars depending on association size and complexity.

A review is less intensive. The CPA performs analytical procedures and inquiries but does not test transactions or examine internal controls in depth. A review costs between 2,000 and 5,000 dollars and provides limited assurance that your statements conform to accounting principles.

A compilation is the least rigorous service. The CPA assembles your financial data into statements but performs no verification and expresses no assurance. Compilations cost between 1,000 and 3,000 dollars and serve as a sanity check on your bookkeeping.

Your governing documents may specify which service your board must obtain. If your documents are silent, your board still has a fiduciary duty to ensure accurate financial reporting. Most New Hampshire associations with annual budgets under 100,000 dollars choose a compilation or review unless their bylaws require an audit.

New Hampshire Fiduciary Standards and Transparency

New Hampshire courts recognize that HOA boards owe fiduciary duties to members, including the duty of care and the duty to act in good faith. These duties require your board to maintain accurate financial records and disclose material financial information to members. A 2019 case in Rockingham County involved a condominium association that failed to disclose a 40,000 dollar budget shortfall until after the annual meeting. Unit owners challenged the board's actions, and the parties settled after mediation. The association agreed to conduct an independent review of its finances and publish quarterly statements.

If your association has not conducted any financial examination in the past three years, you risk exposure to claims that your board breached fiduciary duties. Even if your bylaws do not require an audit, obtaining a review or compilation demonstrates that your board takes financial oversight seriously.

When Your Board Should Consider an Audit

You should consider an audit if your association's annual revenue exceeds 500,000 dollars, if you manage a reserve fund above 1 million dollars, or if you have experienced internal control failures such as unauthorized transactions or missing documentation. An audit provides the highest level of assurance and protects your board in disputes over financial management.

You should also consider an audit if your association is planning a large capital project financed by a special assessment or loan. Lenders and bonding companies often require audited financial statements before approving financing. If your association plans to borrow 250,000 dollars or more, budget for an audit as part of your project cost.

New Hampshire associations in resort communities such as Waterville Valley and Conway face unique audit considerations. These associations often manage amenities including ski lodges, golf courses, and marinas that generate rental income and require complex accounting. If your association operates commercial facilities, an annual audit protects your board from claims of mismanagement and ensures compliance with IRS rules for unrelated business income.

What Your Bylaws Might Require

Many New Hampshire associations adopted governing documents based on templates from the Community Associations Institute or the Urban Land Institute. These templates often include audit thresholds tied to annual revenue or unit count. Common thresholds in New Hampshire bylaws include:

• An audit when annual revenue exceeds 300,000 dollars.
• A review when annual revenue is between 100,000 and 300,000 dollars.
• A compilation for associations with annual revenue below 100,000 dollars.
• An audit every three years regardless of revenue if the association has more than 100 units.

If your bylaws specify a threshold, you must follow it. Failing to conduct a required audit exposes your board to liability and gives dissatisfied members grounds to challenge board decisions.

How to Choose a CPA

Your board should solicit proposals from at least three certified public accountants licensed in New Hampshire. Ask each CPA to provide references from other HOA or condo clients and to describe their experience with reserve fund accounting and common interest community financial statements.

Check whether the CPA is a member of the American Institute of CPAs Community Associations Committee. Membership signals that the CPA understands HOA accounting nuances such as deferred revenue, replacement reserves, and special assessment tracking.

Request a written engagement letter that specifies the scope of work, the timeline, and the fee. The letter should state whether the CPA will provide an audit, review, or compilation and whether the deliverable will include a management letter identifying internal control weaknesses.

Your Next Steps

Pull your declaration and bylaws and search for the words audit, review, compilation, and financial statement. Document any threshold or frequency requirement. If your documents are silent, determine whether your board has adopted a financial examination policy by resolution.

Review your association's annual revenue and reserve fund balance. If revenue exceeds 300,000 dollars or reserves exceed 500,000 dollars, budget for at least a review in the coming fiscal year. If your association has not conducted any financial examination in the past five years, schedule a compilation immediately.

Consult your attorney for your specific situation to clarify your board's obligations under your governing documents and New Hampshire common law. Your attorney can advise whether a compilation meets your fiduciary duty or whether your board should obtain a review or audit.

Manorway's AI assisted platform helps you track financial examination deadlines, store engagement letters and audit reports, and schedule recurring tasks such as CPA selection and proposal review. When your board uses a centralized system to manage audit cycles, you reduce the risk of missing a required examination and create a compliance record that protects the board in disputes.