When Is an Audit Required or Recommended? - Washington
Old Act Condominiums – Those created before July 1, 1990
64.32.170 (Horizontal Property Regimes Act) – Requires an audit once a year by an auditor – all condominiums. However, Washington state attorneys have advised that the Old Act defaults to the New Act audit requirements, UNLESS the Old Act Association’s governing documents require an audit. Then, an audit is required, regardless.New Act Condominiums – Those created after July 1, 1990
64.34.372 (Washington Condominium Act) Condominiums with 50 or more units must be audited annually. Condominiums with fewer than 50 units – audit is required; however, can be waived by 60% of the owners (other than the declarant/developer)64.34.308 (Washington Condominium Act) Transfer of control from the Declarant to the unit owners – a CPA audit is required as of the date of transfer unless two-thirds of the unit owners (other than the declarant) elect to waive the audit.
Homeowners Associations – excludes condominiums, non-residential developments and residential cooperatives
64.38.045 (Homeowners’ Associations) Associations with annual assessments of $50,000 or more requires an audit; however, can be waived by 67% of the owners. Note the test is “assessments” and does not include other income.Common Interest Communities (CICs)- CIC’s created after July 1, 2018
64.90.530 (Washington Uniform Common Interest Ownership Act) Associations (CICs) with annual assessments of $50,000 or more must be audited annually by a CPA. If less than $50,000, annual audit is also required, but may be waived annually by unit owners other than the declarant of units to which a majority of the votes in the association are allocated, excluding the votes allocated to units owned by the declarant. See 64.90.075 and 080 regarding new and preexisting CICs. See 64.90.095 regarding election of preexisting CICs into this Chapter. See 64.90.100 regarding non-residential and mixed-use communities.
Washington law allows some exceptions to the audit requirement of financial statements. Our firm has identified ten particular circumstances where we strongly suggest that an audit be performed. They are as follows: